Self-proclaimed creator of Bitcoin can proceed with claim that Bitcoin branch networks breach his intellectual property rights

Dr Craig Wright claims to be the inventor of Bitcoin and to have authored the Bitcoin White Paper in 2008, created the Bitcoin File Format and mined the inaugural block in the Bitcoin Blockchain - the 'Genesis Block'.  Despite the Bitcoin White Paper having promoted de-centralisation, Dr Wright is now seeking to prevent others from using his alleged intellectual property.

A recent decision of the English High Court, Wright v BTC Core [2023] EWHC 222 (Ch), means that Dr Wright can continue his claims in relation to his alleged database rights over the Bitcoin blockchain and copyright in the Bitcoin White Paper and can serve proceedings on the defendants out of the jurisdiction. The court concluded that – assuming the facts are as alleged by Dr Wright – those two claims are arguable. However, it dismissed a claim for copyright in the Bitcoin File Format as unarguable. [EDIT: Dr Wright successfully appealed this aspect of the decision - see the Court of Appeal's decision of 23 July 2023, outlined on our Intellectual Property Notes blog.]

It remains to be seen what the outcome of this case will be (including whether this decision will be appealed to the Court of Appeal) and what implications (if any) it will have for the continued operation of the Bitcoin branch networks, BTC and BCH.

In another claim brought by a company of Dr Wright's, Tulip Trading Ltd v van der Laan [2023] EWCA Civ 83, the Court of Appeal recently overturned a decision of the High Court that there was no arguable claim that developers of a blockchain network owe users a fiduciary duty. Our analysis of Tulip can be accessed here.

Background

Dr Wright brought proceedings before the English court seeking recognition of alleged copyrights over the Bitcoin White Paper and the Bitcoin File Format and database rights over the entire Bitcoin Blockchain resulting from his alleged intellectual creation.

Using these rights, Dr Wright seeks to prevent the further operation of two Bitcoin networks, BTC and BCH, which resulted from forks in the original network that Dr Wright alleges he has created. As the 26 entities and individuals alleged to be responsible for the BTC and BCH networks are located outside England & Wales, Dr Wright was required to obtain the court's permission to serve his claim out of the jurisdiction.

Following a review of the papers (ie without a hearing) the High Court was satisfied that it should permit service of the claims relating to copyright infringement regarding the Bitcoin White Paper and the alleged database rights over the Bitcoin Blockchain. It concluded that the Bitcoin White Paper is incorporated in the BTC and BCH chains, and there is a serious issue to be tried that operation of those chains result in a re-utilisation of the database Dr Wright claims to have originally created as well as a reproduction of the White Paper. The judgment in Wright v BTC Core confirms that decision, and also addresses the question whether Dr Wright's copyright claim in respect of the Bitcoin File Format is arguable (which had not been decided on the papers). The court concluded that it is not.

The Bitcoin File Format describes the structure of each block in the Bitcoin blockchain, ie the data-fields and their sequencing, to be parsed by the Bitcoin software.  Dr Wright sought to establish copyright over this Bitcoin File Format, arguing that it is: (i) a 'literary work'; which was (ii) first recorded in the Genesis Block in 2009.  These reflect the requirements contained in, respectively, ss. 3(1) and 3(2) of the Copyright Designs and Patents Act 1988 (the "Act").

Decision

The High Court (Mellor J) found that there was no serious issue to be tried as to the subsistence of copyright in the Bitcoin File Format, in particular as there was no evidence to suggest that the Bitcoin File Format 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 s.3(2) of the Act.

The judge found that no relevant "work" had been identified containing content which "defines the structure of the Bitcoin File Format". He noted that Schedule 2 of the Particulars of Claim comprised content defining that structure, but that was not a relevant "work".

Mellor J did not dispute that a literary work could be recorded in software, including a file format, but commented, "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. In the present case, the judge 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". This contrasts with XML file formats, which not only contain set data-fields but natural language terminology within the files defining the data to be included and can therefore be the subject of a copyright claim.

Comment

Dr Wright is now expected to serve the 26 foreign entities and individuals with a claim for breach of his alleged database rights and copyright in the Bitcoin White Paper. The High Court has concluded that Dr Wright's claims are arguable (a fairly low bar), and they will now proceed to a full examination (of facts and law) at a merits hearing in due course (subject to any appeal of this decision). The questions to be determined will include whether Dr Wright invented Bitcoin.

The case continues the debate on whether 'file formats' are capable of constituting literary works under s.3(1) of the Act, and how such file formats must be recorded to meet the requirement of fixation under s.3(2) of the Act. This decision confirms that the issue of fixation cannot be treated as a formality.

Note: Appeal allowed on 20 July 2023.