The requirement for fixation in copyright – Self-proclaimed Bitcoin inventor succeeds in establishing serious issues to be tried on appeal

As we reported in February, Dr Craig Wright, who claims to be the inventor of Bitcoin, is asserting three Bitcoin-related copyright claims against a number of entities.  The earlier decision considered the question of whether or not Dr Wright could serve the proceedings on defendants out of the jurisdiction – which requires that there is a serious issue to be tried on the merits of the claim.  For the reasons set out there, Mr Justice Meade disagreed in relation to Dr Wright's claims of copyright in the Bitcoin File Format (BFF).  Dr Wright appealed this decision to the Court of Appeal, and it unanimously allowed the appeal on 20 July 2023.  The decision on appeal contains some interesting commentary on the requirement for fixation in copyright claims, which we discuss further below.

The proceedings

As set out in our earlier report, Dr Wright claims to have authored the Bitcoin White Paper in 2008, created the Bitcoin File Format, and mined the inaugural block in the Bitcoin Blockchain – the so-called ‘Genesis Block’.  He has commenced proceedings alleging infringement of:

• database rights in the Bitcoin blockchain;
• copyright in the Bitcoin White Paper; and
• copyright in the Bitcoin File Format (BFF).

Issues 1 and 2 will proceed to trial in January 2024.  The Court of Appeal's decision in this case concerns whether or not copyright subsists in the BFF.

Mr Justice Meade had earlier found that there was no serious issue to be tried as to the subsistence of copyright in the BFF, in particular as there was no evidence to suggest that the BFF was ‘recorded’ in the Genesis Block, or any other block in the blockchain. In other words, it did not meet the requirement of “fixation” embodied in section 3(2) of the Copyright Designs and Patents Act 1988 (CDPA), and thus leave to serve out of the jurisdiction was denied.

Decision at first instance

At first instance, and as discussed in our earlier report, Meade J had that the claimants had no real prospect of establishing that copyright subsisted in the BFF because it had not been "recorded, in writing or otherwise" in accordance with section 3(2) of the CDPA.

The judge had not disputed that a literary work could be recorded in software, including a file format, but expressed his view that “Not all file formats are equal”.  Some file formats contain “sufficient content (and not just structure) to sustain a claim to literary copyright”, but others may not.  Meade J had found that the claimants had not filed any evidence to the effect that the Genesis Block (or any other block) contained content which defines the structure of the Bitcoin File Format, as opposed to “simply reflecting” it.  While each block conforms to the structure of the Bitcoin File Format, the structure of the Bitcoin File Format is not “fixed in a copyright sense in a material form in any of those blocks”.

Court of Appeal decision

In an elegant review of the law of copyright in relation to software, Lord Justice Arnold concluded that there were a number of flaws in Meade J's reasoning, which led to the Court of Appeal allowing Dr Wright's appeal.

• Arnold LJ held that the judge's statement that "no relevant 'work' has been identified containing content which defines the structure of the Bitcoin File Format" confuses the work and the fixation – the work Dr Wright relied on (the BFF) had been clearly identified.  The question of how and when that work was fixed is a different one.  Dr Wright's case is that the work was fixed when the first block in the Bitcoin blockchain was written on 3 January 2009.
• It is not necessarily correct that, for fixation, there must be content which defines the structure of the BFF, finding that "As the judge clearly appreciated, the work in which Dr Wright claims copyright is a structure.  It is quite correct that the work, that is to say, the structure, must be fixed in order for copyright to subsist in it; but it does not necessarily follow that content defining (or describing or indicating) the structure is required in order to fix it.  All that is required is that the structure be completely and unambiguously recorded."
• Arnold LJ found that the judge had not applied the test laid down in the CJEU decision C-310/17 Levola Hengelo BV v Smilde Foods BV (2018), which asks whether the fixation relied upon by Dr Wright made the BFF identifiable with sufficient precision and objectivity.  Dr Wright had contended that the fixation upon which he relied satisfied this test and had provided evidence in support that third parties have been able to deduce the structure comprising the BFF from the blocks in the Bitcoin blockchain.
• Arnold LJ said that the judge did not consider the rationale for the requirement of fixation:  "As I have explained, it serves two purposes: to evidence the existence of the work and to delimit the scope of protection.  Dr Wright contends that the fixation upon which he relies serves both these purposes.  The first block in the Bitcoin blockchain evidences the existence of the Bitcoin File Format and enables the scope of protection to be determined.  Dr Wright again relies upon the evidence that third parties have been able to deduce the structure comprising the Bitcoin File Format as supporting this.  I again consider that this evidence supports Dr Wright's case".

In light of these findings, the Court of Appeal concluded that Dr Wright had a real prospect of successfully establishing that the fixation requirement for copyright to subsist was satisfied and so allowed the appeal.

For the purposes of the proceeding, Dr Wright had prepared Schedule 2 of the Particulars of Claim, which describes the components of the Bitcoin File Format.  This was prepared in 2022, well after the alleged creation of the copyrighted work, and thus Meade J did not consider that it could be used to fulfil the requirements of fixation.  However, the Court of Appeal presumed that Dr Wright was not relying upon Schedule 2 as satisfying the fixation requirement.

The court did, however, note that the fixation of copyright can be ephemeral (giving the example of an author who extemporises an original literary work orally before an audience, which is recorded digitally but the recording is deleted).  The same, seemingly, could apply to the BFF.  So in finding in favour of Dr Wright, the court mused that "It is an interesting question whether Dr Wright could, in the absence of any earlier fixation, rely upon Schedule 2 as satisfying the fixation requirement for the purposes of subsequent infringement claims, but it is not necessary for present purposes to explore that question".  It will be interesting to see how this plays out in the future.

Wright & Ors v BTC Core & Ors (Rev1) [2023] EWCA Civ 868 (20 July 2023) (bailii.org)

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