Mr Justice Mellor has rejected a claim that literary copyright subsists in a file format used in the Bitcoin system. This case from February 2023 is Wright & Ors v BTC Core & Ors [2023] EWHC 222.
The question arose as part of the extensive litigation brought by Dr Craig Wright, who claims to be Satoshi Nakamoto, the inventor of Bitcoin. The veracity of Dr Wright's claim was not the subject of this trial.
Instead, the judge had to rule on whether Dr Wright’s copyright claim was a “a serious issue to be tried on the merits”, justifying permission to serve the claim out of the jurisdiction. The claim is against 26 cryptocurrency companies and related individuals.
Fixation
Dr Wright claimed that he owned certain database rights as well as copyright in the Bitcoin White Paper of 2008 and the Bitcoin File Format. The judge was satisfied that the database and White Paper claims raise serious issues and service should be permitted.
However, he queried when and in what form the alleged literary work in the Bitcoin File Format was first recorded.
Section 3(2) of the Copyright Designs and Patents Act 1988 provides that copyright does not subsist in a literary work unless and until it is recorded, in writing or otherwise (the concept of fixation).
The judge discussed three previous UK cases addressing whether copyright can subsist in a file format: SAS Institute, Technomed Ltd and Software Solutions Ltd. He concluded that for copyright to subsist a file format must contain content as well as structure.
Copyright in Bitcoin File Format
The judge accepted that Wright had expended substantial judgment in creating the Bitcoin File Format, that he devised and created it in the course of writing the Bitcoin code and that there was no reason why two works could not be created in parallel in the same creative process.
However, he said it was “plainly incorrect” to say that the creation of a block in the Bitcoin File Format was sufficient to meet the fixation/sufficient identifiability requirements for two main reasons:
No relevant “work” had been identified containing content which defines the structure of the Bitcoin File Format.
Dr Wright had not presented any evidence explaining what is in the Bitcoin File Format that comprises “content and not just structure” such as “a flag or symbol in the block which signals 'this is the start of the header' or 'this is the end of the header', or an equivalent of the sort of content which is found in an XML file format”.
Mellor J explained:
“I am driven to the conclusion there are no overt signs in a block which indicate the structure … there is no evidence that the Bitcoin File Format is set out in any part of the software or early blocks written to the Bitcoin Blockchain, as opposed to the Bitcoin Software simply reading and writing files in that format.”
He added that: “Whilst I accept that the law of copyright will continue to face challenges with new digital technologies, I do not see any prospect of the law as currently stated and understood in the case law allowing copyright protection of subject-matter which is not expressed or fixed anywhere.”
Mellor therefore gave permission to serve out on the condition that the copyright claims were deleted. He also refused permission to appeal.
Content and structure
Mellor J made it clear that copyright subsistence required both content and structure, or at least content indicating the structure. Despite being given several opportunities, Dr Wright did not present any evidence of that – and, the judge noted, it was not surprising that a block did not contain content which indicated the structure: “Not only would they be unnecessary, their inclusion would also be a very inefficient use of memory.”
Having grasped this particular nettle, he rejected the “easy” option of allowing the claim to proceed, given the potential burden on defendants and the possibility of judgment in default.
The judgment affirms the importance of the issue of fixation of literary works, and provides useful guidance on how it is to be assessed.
To find out more about the issues raised in this blog contact Rosie Burbidge, Intellectual Property Partner at Gunnercooke LLP in London - rosie.burbidge@gunnercooke.com