The founder of ZynCoin, a meme token named after a hyper-popular nicotine pouch, has extinguished a legal threat from the Fortune 500 tobacco giant behind the cigarette substitute.
Philip Morris, the Fortune 500 company that owns Zyn manufacturer Swedish Match, sent ZynCoin founder Colton Kirkpatrick a cease-and-desist letter in the first week of April. The letter, reviewed by CoinDesk, demanded he put the token in the proverbial ashtray.
ZynCoin was to immediately discontinue all use of “ZYN Coin,” “ZynCoin,” and any reference to ZYN products or any other images confusingly similar to the ZYN mark, the letter read.
Kirkpatrick said he pushed back and reached a compromise: the prefix “zyn” will stay in the token’s name, but the team behind it will make minor changes in its marketing.
“They wanted to cease and desist the entirety of Zyncoin, which was problematic because it’s etched into the smart contract and the coin on-chain,” Kirkpatrick told CoinDesk in an interview. “There’s no ‘off’ button.”
Nor is there any entity, centralized or otherwise, behind the Zyn token, which runs on the Ethereum blockchain. So Kirkpatrick was limited in what he could do to satisfy Philip Morris’ trademark fit.
Philip Morris eventually figured this out, and after speaking with Kirkpatrick and his counsel, the company backed down on its demands.
“They went from wanting the whole project to cease and desist to, after researching, realizing they couldn’t easily sue or stop the coin due to its decentralized nature,” Kirkpatrick said.
“For the avoidance of any doubt, Kirkpatrick may use ‘$ZYN,’ ‘ZynCoin,’ ‘Zyncoin,’ and ‘ZYNCoin,’ (the ‘Permitted Marks’),” a final version of an agreement between the tobacco giant and Kirkpatrick reads.
Kirkpatrick’s counsel pointed out to Phillip Morris that there are plenty of other companies with z-y-n in their names, and any infringement created by the Zyn token would be minimal because it’s not a competing product to nicotine pouches.
The compromise: add a dollar sign in front of “Zyn” to clearly indicate Zyncoin is a cryptocurrency, and remove references to specific circular canisters on the project’s website to avoid possible brand confusion.
An email to the U.S. general counsel for Swedish Match, the Philip Morris subsidiary responsible for Zyn, went unreturned.
The contretemps may be a sign of disputes to come as meme coins named after celebrities or consumer products without any formal ties proliferate. It also shows that brands or celebs can do only so much to stop crypto projects from piggybacking on their names.
“The practicalities of enforcing compliance within a decentralized community present unique challenges,” said Florida-based digital assets attorney John Montague, who was not involved in the case. “Even if the founder can change the website to remove infringing materials, the decentralized decision-making process inherent to DAOs adds another layer of complexity.”
For example, “token holders might refuse to approve proposals to alter on-chain details, making compliance with legal demands difficult,” Montague said.
There have been prior attempts to stamp out unofficial, fan-made crypto homages to real-world products. Nintendo’s lawyers quickly doused NFTs and Metaverse games using the company’s recognizable characters during the height of the last crypto bull market.
But these all relied on centralized entities as hosts. Entities that could be served.
Ross Feingold, special counsel at Taiwan’s Titan Attorneys-at-Law, told CoinDesk that if enough effort were made, there could be means to serve entities on-chain through a non-fungible token, though this could be time-consuming and costly.
“You might just consider the cost as being cost-prohibitive to start sending demand letters anyway,” he said.
“But I can imagine where there’d be some situations where you say, ‘we’re not really suffering any harm here,'” Feingold continued, noting that there’s not an obvious case of brand damage or confusion with the token and the Zyn pouch.
After all, Zyn token holders are buying the token out of admiration for the product, the coin is free advertising for a company that can’t buy it. Philip Morris and other tobacco giants have been banned from advertising their products on TV in the U.S. since the 1980s. Then in 1998, the Clinton White House cut off transit, billboards, and product placements, virtually killing tobacco advertising entirely.
Montague said there might be a case for saying that the Zyn token is a parody.
“For trademark purposes, a parody must convey the dual message that it is the original but also that it is not, and serves as a form of satire, ridicule, joking, or amusement,” Montague explained.
He was quick to add that the satire argument has been tried before in the crypto world and ended up burning the defense.
“It did not work out well for Ryder Ripps, and he got hit with approximately $1.6 million in damages, so parodies that involve big business brands need to be careful,” Montague said.
