Lightning Labs and Tari Labs agree to halt Taro protocol development

In March 2021, Bitcoin software firm Lightning Labs and blockchain startup Tari Labs agreed to halt the development of Lightning's Taro protocol, after a temporary restraining order was converted into a preliminary injunction by the courts. The decision was made after Tari Labs claimed that the name Taro infringed on its trademark rights, as it was too similar to its own protocol named Tari, which is a registered trademark in the United States.

The temporary restraining order was initially issued on March 13, 2021, by California District Court Judge William Orrick, and prevented Lightning Labs from making any updates or announcements regarding the Taro protocol. The court's decision to convert the order into a preliminary injunction now means that the development of the protocol will be halted until a court decision is reached.

As part of the agreement, Lightning Labs cannot make any updates to the Taro protocol or merge internal updates with the protocol's public-facing open-source code. It is also not allowed to announce or launch any milestones of the protocol. However, Lightning Labs is permitted to respond to communications from non-Lightning developers and users, as long as it does not use those communications to further Taro's development.

Lightning Labs can still reference Taro as the "prior name of the protocol" for announcements pertaining to changing the protocol's name, as long as it is not "confusingly similar" to Taro or Tari. Tari Labs had first filed a complaint for trademark infringement against Lightning Labs in December 2020, alleging that both firms "compete in the same digital blockchain ecosystem" and provide similar, "in some cases identical," services.

The Taro protocol is an ambitious project that was announced by Lightning Labs on April 5, 2021, amid a $70 million funding round. It aims to build upon Bitcoin's Taproot upgrade and allow stablecoins to be transferred via the Lightning Network, a Layer 2 solution for the Bitcoin blockchain that enables faster and cheaper transactions than those executed on the base layer.

The news of the temporary restraining order being converted to a preliminary injunction prompted a backlash on Twitter, with Tari Labs co-founder Riccardo Spagni defending the lawsuit, arguing that the letters "I" and "O" are close enough together on a computer keyboard to cause confusion. He also mentioned that Tari had offered to fund Taro's rebrand a year ago. Tari co-founder Naveen Jain also defended the lawsuit, suggesting that it is "hard to call something 'frivolous' when a judge issues a temporary restraining order in your favor."