Note about trademark strategy

[zooko]

Hey Folks: There is a disagreement on strategy about how to manage the Zcash trademark. This post is to make sure you know the current status of the trademark and draw your attention to the strategy questions about how to use it going forward.

ECC is currently the owner of the trademark, having created the trademark along with creating Zcash, and registered it in many countries.

ECC had previously publicly stated that we would sign the Zcash trademark into a novel legal agreement which effectively provided “2-of-2 multisig”, or double-veto, where either the ECC or Zfnd would have the power to unilaterally prevent use of the trademark. We have not yet come to a mutually-acceptable legal agreement with Zfnd on that, so for now the Zcash trademark remains the sole property of ECC. We’ve publicly committed (both me personally, and ECC as a corporation) that as long as we’re the sole steward of the trademark, we’ll use it to honor the community’s decision in the current governance process.

There are a few things that we’ve learned about the disadvantages of the 2-of-2 “double-veto” approach. One is the inherent problem with double-veto, which has been illuminated as we worked on the legal agreement and received 3rd party feedback. The inherent problem with double-veto is that it is prone to inaction or deadlock. Our earlier intention had been that 2-of-2 would be a stepping stone to 2-of-3, or even further decentralization. But, if we were to lock the trademark into a 2-of-2 double veto, and then there wasn’t subsequent agreement on how to further decentralize it, then it would be in a dead end. There would be no way to move on to 2-of-3 or another more decentralized governance structure.

The other thing is that the community-driven governance decision process has surfaced several alternate governance proposals that would impact the agreement. Several of the proposals that seem to have a lot of community support specify 2-of-3 or 3-of-5 control over the funds. If the community settles on one of those proposals, then it might make sense for the trademark to be controlled by the same governance process that controls the funds.

So we believe that we should wait for the governance process to work itself out and we advocate for further decentralization of control over the trademark. As long as we remain the sole stewards of the trademark, we will use it to protect the community’s decision in this governance process.

There is disagreement about this strategy. We posted about this topic in the two links mentioned above, plus I replied with a comment on this forum thread in which there was the incorrect statement that the Zfnd could use the trademark to veto a proposal. Josh Cincinatti’s reply to my post is an eloquent summary of his disagreement about this strategy. In short, if I understand it correctly, he thinks the risks of inaction and deadlock (which are greater in a 2-of-2 double-veto structure) are less important than the risks of abuse (which are greater in a 1-of-1 unilateral control structure). But read his reply yourself because he thinks clearly and expresses himself clearly.

The bottom line is that the previous plan to lock the trademark into a 2-of-2, double-veto governance structure with the Zfnd has not (at least not yet) been implemented, and the trademark currently remains under the unilateral control of ECC. We’ve publicly committed that during the current decision process we’ll use the trademark to honor the community’s decision.

What to do with it long-term is an interesting strategic issue, and now that the sunsetting of the Founders Reward has stimulated such vigorous community engagement, I think the time has come for the community itself to start taking more power over the trademark. How exactly to do that—I’m open to ideas. One strawman idea: whatever governance process the community comes up with for managing future funds, if any, ECC could potentially assign the trademark to be controlled by the same governance process as the funds. If you have other ideas, please let me know, publicly or privately! Thanks.

[Matthewdgreen]

Zooko,
This is really disappointing news. I have been a part of the Zcash project from the start and watched the growth of the Foundation from an idea into a real, functioning part of the community. Throughout that time, it has always been understood that ECC would keep it’s long-announced promise to share control of the trademark with the Foundation, to make sure that no party could abuse it. This promise was made on ECC’s website, and on stage at Zcon1. And the Foundation has spent a great deal of time and resources negotiating this.

Now, at a critical time when the community is debating the future direction for Zcash, that promise is being abandoned. And the timing could not be worse. The stated justification may be that the company wants to use an alternative governance model, but there’s a problem with this: that governance model doesn’t yet exist. It may not exist for some time. And in the interim, the company is proposing to break its longstanding promise to share control with the only other entity that does currently exist (i.e. Foundation), in exchange for a nebulous promise to share control with “some future hypothetical entity that may or may not come into being”. And that promise may turn out to be worthless as well.

I would urge you to reconsider this decision. Right now ECC is in a negotiation with the community, and a huge part of the question we are asking is: can ECC keep its promises? This decision tells us that the answer is: no. I think that’s a poor face to show to the people who have worked hard to make this project succeed.

ETA: Unfortunately, the immediate implication of this decision is that ECC will retain sole control of the trademark during a time when the company is asking the community to give it a substantial dev fund. The legal hammer this gives ECC really makes it much harder to have an open debate about how to construct such a fund, and frankly, makes me much more pessimistic on the idea of a dev fund in the first place.

[daira]

(This post gives my personal opinion only, not speaking for ECC, as do my other posts in this topic.)

@zooko

The inherent problem with double-veto is that it is prone to inaction or deadlock.

I had been under the impression that, for protocol changes at least, the bias toward maintaining the status quo in case of disagreement was a quite intentional feature of the 2-of-2 agreement.

It seems entirely reasonable to me that if there are substantial, irreconcilable differences between the ECC and Foundation over whether a particular protocol change is beneficial to the network and its users, then that change should not go ahead.

In other words, I am in full agreement with Josh Cincinnati when he says:

@acityinohio

As for why 2-of-2 is still strictly better than 1-of-1: in the case of cryptocurrency governance, I believe that inaction in the case of disagreement is a better outcome than one party unilaterally exercising power.

Matt’s response also brings up many valid points. I urge Zooko to reconsider.

[tromer]

Skipping 2-out-of-2, and going straight for an even better decentralized governance structure, would have made sense, had we had such a structure today.

But we’re very far from having such a structure. Despite the vigorous community discussions in the context of the Dev Fund, real progress has been very slow. Looking at the current Dev Fund proposals involving 3 or more parties, they all seem to suffer from critical issues and/or or wishful thinking about magically trustworthy third parties and committees springing into existence, where none currently exist.

Recall that the Zcash Foundation, as a nonprofit with a highly-regarded Board of Directors to steer its execution and its use of funds, took years to establish. Likewise, ECC’s Board of Directors took years to populate. If we want to create something even better, how long will it take?

So yes, the Dev Fund process may eventually converge to a solution that creates an overarching decentralized governance structure. It may also converge to other solutions. And in either case, it will take a long time to converge.

Now, if a fully decentralized governance mechanism is eventually found, and moreover is blessed by the community for control of the Dev Fund, then both ECC and Zfnd can be expected to transfer of control of the trademark to that mechanism. This can be mandated by the Dev Fund ZIP, as a condition for ECC and Zfnd receiving the funding. The risk of no-action seems very remote.

Conversely, if no such fully decenttralized governance mechanism is found and blessed by the community, then the hurdle of 2-out-of-2 is a feature, not a bug, and it is far better than any single party exercising unilateral control.

In the meanwhile, having ECC holding on to unilateral power over the trademark reflects badly on the power dynamics of the Dev Fund discussion. Moreover, ECC reneging on its promise for 2-out-of-2 control of the trademark reflects badly on its trustworthiness, and by extension, on Dev Fund approaches that entrust ECC with power or resources.

I urge ECC to complete the trademark-sharing process, perhaps augmenting it with a clause saying that both parties will respect the trademark mandates (if any) in ZIPs that establish a Dev Fund that will fund them.

[joshs]

A few points of fact for the benefit of the community, not to be taken as an argument:

There is no such thing as a shared trademark agreement. One entity owns it. Certain rights and obligations can be granted to another entity.

Managing and enforcing (against scammers) the marks is painful, expensive and time consuming. I would love nothing more than to not have to do that job.

The Zcash Foundation does have a trademark licensing agreement in place with ECC with the right to use but not enforce the mark(s).

To my knowledge, Zooko’s statement no bearing on the current ZIP process which is shared by both ECC and Zfnd.

[Anton1]

What will happen if trademark negotiations drag on for another 1 year?
If the fund wants to hire another organization, then in fact it will not have such an opportunity, it does not own the trademark, which means there is no control over the coin, we can certainly say that ECC will not interfere with it, but this is impossible because the fund is not protected from this, t .е in the dry residue we have:

1. The fund is financed from the award of the founders
2. The Fund is not entitled to a trademark
3. The community through the fund is in talks to continue funding
4. The Fund has its own opinion, but as ECC says, it will be so (you can say for a long time that negotiations are ongoing but when they just go somewhere and do not come to an end it is nothing more than persuasion)
5. How can the community be sure that what is happening is fair, only believing the ECC honest word.
   That’s the whole layout, any decision made is dictated, because the fund is not independent in its decisions, yes it has them, but the community cannot know what decisions it implements.
   I have already said that the protracted negotiations on the trademark are an indicative moment of the lack of independence and interest, or there are fears that the fund cannot dispose of it as it is necessary for the project, then why should there be any negotiations at all, it was possible to come to some kind of agreement during this time, maybe not ideal but working for a while to see the results.

[daira]

@joshs

There is no such thing as a shared trademark agreement. One entity owns it. Certain rights and obligations can be granted to another entity.

Surely, an agreement in which the trademark holder agrees not to use the trademark in a certain way without consent of another specified party, is for all intents and purposes a “shared trademark agreement”.

Edit: in any case, legal enforceability is mostly a distraction given that Zooko seems to be questioning the whole idea of 2-of-2 governance, even socially enforced.

[acityinohio]

@daira, @tromer, and @Matthewdgreen have done a much better job articulating the potential deficiencies of jumping straight to 2-of-3 than my response to another topic up thread, so I won’t add my voice to the choir there except to say that I wholeheartedly agree.

Instead I’d like to draw attention to something @Matthewdgreen said here:

@Matthewdgreen

And the Foundation has spent a great deal of time and resources negotiating this.

That we have, and I cannot tell you how disappointed I am to see this posted here @zooko after months of good-faith negotiation and what I thought was an agreement in spirit just waiting to be ironed out by lawyers of both parties. There is a gulf of a difference between saying “hey wouldn’t 2-of-3 be great” and “we are entirely reneging on the agreement we had in spirit.” This sets a terrible precedent. To speak plainly: if the ECC is steadfast in its abandonment of 2-of-2 ownership of the trademark with the Foundation I’d be fundamentally disinclined to having the Foundation be any party in a future trademark agreement, and would recommend so to the board. I’m asking you: don’t make it come to that. Please reconsider this position.

[joshs]

As far as I understand, not strictly. Legally, there is a single owner. There are rights that the owner might choose to grant along with certain obligations of both parties. An alternative is a new co-owned org where the mark is assigned, but that option is currently not relevant here.

[secparam]

@acityinohio Lets not tap dance around this. It is not just you who “thought we had an agreement in spirit.” In Zooko’s own words, on stage at Zcon1, we had “an agreement in principle” to a 2 of 2 multisig. Saying ECC will control the trademark until some distant point in the future when a bunch of as of yet hypothetical entities exist is incompatible with that statement.

And this is not about legal technicalities. Even if ECC can be the only legal entity controlling the trademark, they can (and indeed arguably did at zcon1) make a socially binding agreement to only use the trademark in agreement with ZFND. Instead, ECC is now saying they will retain sole control for the foreseeable future but they promise only to use it in ways ECC thinks are what the community wants. We have replaced the judgement of two entities with the judgement of one.

[joshs]

Hi Josh C.,

@acityinohio

And the Foundation has spent a great deal of time and resources negotiating this.

This doesn’t sit well.

ECC has spent in excess of $300k in direct costs to establish and protect the marks. I have spent considerable time both on these activities and developing a donation agreement that, to my knowledge, has not been previously envisioned anywhere else. The foundation didn’t do that - that was all conceived and funded by us. The foundation has asked for ECC to donate the mark, conceive the model, and continue to incur ongoing related expenses and obligations without any recoup of costs from the foundation.

Your governance perspective is fine (though I don’t personally agree), and I have huge respect for you and your time. But I don’t think that particular statement is balanced.

[daira]

Please let’s focus on whether ECC intends to honour the (informal, but clearly stated) agreement outlined at Zcon1.

[somedude]

this is spectacular. zooko. do you think, that to stand firmly on any supposed sunk costs regarding the trademark could be worth it? now? if current governance process will go off rails and zcash will eventually land in a stage of complete decline (until …?) this trademark will be… worthless.) no, srsly, its hard to believe that such decision can be done by a reasonable person.

[joshs]

I introduced the costs, not Zooko. His rationale was unrelated.

[sonya]

No Zcash trademark > Zcash trademark unilaterally controlled by one entity. The status quo has been acceptable only because it wasn’t intended to remain the status quo.

This is functionally a power grab, regardless of the decision-makers’ intentions.

@zooko

As long as we remain the sole stewards of the trademark, we will use it to protect the community’s decision in this governance process.

With respect, Zooko, such a promise would carry more weight if you had asked the community about this decision — the one that you just announced — rather than simply making a declaration.

[somedude]

oh. i see, sry, i just stumbled upon this topic and was quite shocked, that one more fight escalated to top up already not easy situation. i just want to point out one thing: guys of all involved parts, be reasonable. zcash has only one vector of future: survive current market phase, continue development and adoption incentives and outlive majority of currently well promoted/marketed speculative projects/products. pls, realise that some more not careful decisions and escalations and there may be nothing to divide.)) not for ecc, not for zfnd, not for holders, not for miners, and will be no z2z for future generation of users.) so please, try remain reasonable and not to focus on some short-term bargains.

p.s.: maybe its obvious for everyone who are present in this topic, but in case it’s not, i want to add: at declining or stagnating cryptocurrency market the main factor that holds value for currency is confidence. confidence in its future. not tech advantage, promises, roadmap, marketcap, hashrate, number of nodes, number of markets it’s listed at, applications that support it etc. lose (remnants) of confidence - game over. gain more confidence - outlive many rivals.) i think it’s in best interest for all non/for profit entities that are involved.

[Autotunafish]

I’m pretty burned out from the governance proposals so I’m not super well informed on this topic and I can’t say who’s right or who’s wrong
But the key to all of this up into this point has been flexibility (who eventually ends up with the butterscotch Z emblem doesn’t really feel like an infringement on the core values) so regardless of whose arguement is meritorious I suggest we stay flexible and not get bent out of shape

[sonya]

@Autotunafish

who eventually ends up with the butterscotch Z emblem doesn’t really feel like an infringement on the core values

The logo is not important. But a legal monopoly on the right to dictate what “Zcash” means, and how the word can be used, is quite important.

[boxalex]

I had a feeling this is coming somehow and i mentioned 2 or 3 times in the past in various posts when the trademark 2-2 multisig was praised as it happened allready:

Nothing is done as long as it’s not done.

One of the reasons i advocated that the dev fund decision/discussion should just and only begin after the trademark 2-2 multisig agreement is settled.

Just some thoughts regarding this issue now and maybe others from the community/forum have the same impressions or feelings:

• you guys/girls from ECC/ZF can’t handle a single 2-2 multisig what’s left getting to a 2-3 or 3-5 later on trademark or dev funds?

• It again and clearly shows how centralized Zcash is.

• Another decision, like many lately, mentioning the community without asking the community.

• Another promise broken, which one is next?

• Are these the “high ideals” and “integrity” the community should believe in?

Seriously, the trademark question was a perfect one to include into the advisory panel as a question IF the intention was to ask the community. As this has not be done someone can just feel like a statist in a bad film.

[Autotunafish]

When I wake up I don’t recommit myself to the owner or whomever has rights to a word and an emblem
I agree it’s important especially with Zcash becoming more established everyday but it’s not tantamount