To understand the current threat of NFT and ENS squatting, we need to first understand the original playbook of domain squatters.
In the early days of the internet, opportunists were watching closely for the announcement of new brands, products, and ventures. The moment a name became public, whether through a media release, trade mark filing, investor announcement or marketing campaign, it became a target. Savvy speculators would rush to register the corresponding domain names, not because they intended to use them, but because they recognised their future value to the rightful brand owner.
A domain name remains more than a web address. It can be a digital storefront, customer touchpoint, and brand asset. By securing a domain before the brand owner, squatters could effectively control a critical piece of online real estate and could demand a premium to hand it over.
The saving grace for brand owners against domain name squatting is centralisation. The Domain Name Commission in New Zealand and ICANN globally provided a central authority. With a registered trade mark and evidence of bad faith, you could initiate proceedings and claw the domain back. There was a referee to appeal to. That referee no longer exists in Web3.
China’s first-to-file state strategy
For decades, Western FMCG companies faced trade mark squatting on a systemic scale. Because China operates on a strict first-to-file basis, local speculators registered thousands of Western brand names before those companies had even considered entering the Chinese market.
Even in this complex landscape, there was a central arbiter: the China National Intellectual Property Administration (CNIPA). Over time, legislative reform introduced bad faith provisions and intent-to-use requirements, giving brand owners tools to reclaim their identity.
The consistent lesson across both eras is this: as long as there is a central government or a central registry, a brand owner has a target for their legal team. In the Web3 world, that target has disappeared entirely.
What is Web3 squatting?
Today we are seeing a resurgence of these tactics, but with a technological architecture that makes traditional enforcement nearly impossible. The two primary vehicles are ENS (Ethereum Name Service) and NFTs.
- ENS squatting: Instead of registering yourbrand.co.nz, a squatter registers yourbrand.eth. This is not just a website address, it is a payment gateway and a digital identity used across the entire Ethereum ecosystem.
- NFT brand jacking: A squatter mints an NFT collection using a brand’s logo or trade dress. For example, an unauthorised collection using the visual identity of a well-known consumer brand.
The decentralisation paradox: Unlike a domain name, an ENS record is an entry on a blockchain. There is no customer service department for the Ethereum network. There is no UDRP process for a smart contract. If a squatter owns yourbrand.eth, no New Zealand court order can technically compel a decentralised protocol to reassign that entry without the squatter’s private key.
Why does an NFT matter to a non-crypto business?
Many New Zealand businesses may ask: if we don’t sell digital art, why does it matter if someone mints an NFT using our brand? For most businesses, the damage is not about lost NFT revenue. It is about brand dilution, consumer confusion, and the cost of reclamation.
- Phishing and scams: A squatter holding a brand-aligned ENS name can deploy fake loyalty programmes or digital coupons, directing your customers to malicious sites.
- Marketplace dominance: On platforms like OpenSea, a search for your brand may find the squatter’s collection first. If that collection features offensive or low-quality content, the reputational damage to your real-world brand is immediate.
- The ransom cost: When your business eventually decides to launch a legitimate Web3 initiative - as Starbucks and Nike have done - you may find the digital entry point costs $50,000 to buy back from a squatter who spent $20 to register it.
Practical strategy: The stealth launch protocol
The most effective defence against Web3 squatting is pre-emption. In the traditional world, you might file a trade mark and wait for confirmation of acceptance. In the Web3 world, the moment your brand strategy is disclosed - through a public trade mark filing, a media release, or a product announcement - bots are already scanning for those keywords and registering corresponding blockchain assets.
For New Zealand businesses planning a new brand launch, the digital registration sequence must be inverted from conventional practice:
- Secure ENS .eth names and major social handles using a private, non-branded digital wallet, before any public disclosure.
- Secure top-level blockchain domains (.sol, .nft, and equivalents) across major protocols.
- Only then proceed with the public trade mark filings and media releases.
Leveraging IPONZ in a borderless world
Can your New Zealand trade mark registration help? Yes, but primarily at what might be called the on-ramp level.
While you cannot sue the blockchain, you can pursue the centralised platforms that provide consumer access to it. Most major NFT marketplaces (OpenSea, Rarible) are headquartered in centralised jurisdictions and maintain IP infringement policies. If you hold a registered New Zealand trade mark, you can:
- Issue takedowns: Force marketplaces to delist infringing NFTs. The NFT still exists on-chain but becomes invisible to the vast majority of consumers.
- Use the Madrid Protocol system: Extend your New Zealand registration internationally, giving your cease and desist correspondence genuine weight with global platforms.
- Class 9 and 42 filings: Ensure trade mark applications include Class 9 (downloadable digital assets authenticated by NFTs) and Class 42 (providing online non-downloadable virtual goods).
Conclusion: The new standard of care for brand owners
The era of reactive brand protection is over. For any New Zealand organisation - whether an FMCG company, a sporting body, or a professional services firm - a brand is no longer simply a physical label or a .co.nz domain. It is a multi-dimensional digital asset that exists simultaneously across centralised and decentralised environments.
The message for New Zealand businesses is clear: register defensively, register early, and register before you announce. Sequence your disclosure so that your digital assets are secured before your trade mark filings become public. The blockchain does not adjudicate legitimacy, it only records who arrived first.
