Claims of copyright subsistence in the Bitcoin file format founder at fixation

Background

Dr Craig Wright claims that he invented Bitcoin, created the BFF and wrote the Bitcoin white paper, which was published under the pseudonym “Satoshi Nakamoto”.  As such, he was seeking to enforce his claimed rights in those materials against others.  This claim is one of a series of actions proceeding through the courts relating to Dr Wright’s assertion that he is the previously anonymous inventor of Bitcoin.

In this case, the claimants were seeking permission to serve claims on the defendants outside England and Wales in relation to Bitcoin branch-networks BTC and BCH, which were created by the defendants from “Airdrops” from the original Bitcoin network.  The claims were uncontested, and the claimants had to satisfy the relatively low bar that there was a serious issue to be tried, meaning that the claim must have had a real, and not fanciful, prospect of success. [2] 

The High Court initially reviewed this matter on the papers and was satisfied that the claims in relation to database rights and infringement of copyright in the Bitcoin white paper raised a serious issue to be tried, and so permitted service of those claims outside the jurisdiction. 

The court heard further from the claimants on the issue of whether copyright could subsist in the BFF, noting that earlier case law has indicated that the format of data files is capable of being protected as a literary work, although it is a question of fact in each case whether an individual file format is protectible. [3]

Did copyright subsist in the BFF?

The High Court was satisfied on the papers that the claimant had expended the sufficient skill and judgment when purportedly developing the BFF to satisfy the originality/intellectual creativity requirement to underpin a claim of copyright subsistence.  But Mr Justice Mellor requested further evidence to address the question of fixation, i.e. when and in what form the alleged literary work in the BFF was first recorded, whether in writing or otherwise.

To try to satisfy the subsistence requirements of the Copyright, Designs and Patents Act 1988 (CDPA) relating to literary works [4] and fixation [5], the claimants argued that the BFF was a written work that was first recorded in the “Genesis Block” on 3 January 2009 (or earlier pre-release versions of the software).

The judge assumed, for the purpose of considering this issue, that the BFF was Dr Wright's own creation and could qualify as a literary work [6]. So the judgment focused on section 3(2) of the CDPA and whether the BFF was “fixed” such that it had sufficient identifiability.

The judge found that there was no fixation.  The claimants had failed to provide evidence that a Bitcoin block included content in the block itself (as opposed to separate software) that described or “fixed” the file structure.  In other words, the blocks reflected the structure, but did not record it.  Mellor J noted that “each block simply comprises a long list of hex characters”, adding that “the structure of the block header derives from what the software is instructed to read and process”, and that it is “not indicated in the block itself”.

When making this finding, the judge compared the BFF to the XML file structure, in which copyright does subsist, because it contains “content – not just structure”, in particular natural-language terminology in the definitions of the data and “unique logic elements of the XML Schema”, likened to code.  By contrast, the BFF did not contain “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”. [7]

As such, the block(s) claimed to be recording the BFF (including the Genesis Block) did not contain content indicating the structure of the format: they were just blocks that conformed to that structure. Accordingly, the structure of the BFF was not fixed in a copyright sense in a material form in those blocks.  Mellor J remarked that the claimants had had “ample opportunity to put forward any evidence which might support their case as to what the actual copyright work is and where and in what form it was first fixed in a material form”.

Decision

The judge granted the claimants permission to serve outside the jurisdiction in relation to Dr Wright’s claim to copyright in the White Paper and the various database rights, on the condition that the claims of and concerning infringement of copyright in the BFF were deleted.

The High Court refused permission to appeal, although the decision was still subject to any potential application by the claimants for permission to appeal from the Court of Appeal.

Comment

the law of copyright will continue to face challenges with new digital technologies

Mellor J concentrated on the issue of fixation, commenting that while he “accepted that the law of copyright will continue to face challenges with new digital technologies”, he did not see any prospect, under the law as currently stated and understood in the case law, of “allowing copyright protection of subject-matter which is not expressed or fixed anywhere”.  In doing so, the judge pointedly re-affirmed the requirement for fixation as fundamental to the question of subsistence of copyright, and not “a pure formality, imposed so that there can be no argument later as to what the copyright work is”, as submitted by the claimants’ counsel.

The case is a useful application of the test of subsistence of copyright for any literary work, and it also serves as a reminder of how the courts still rely on literal readings of laws passed in the 1980s to grapple with modern issues.  As such, it is important for developers to record their thought processes and systems throughout the development process (for example, via comments, flags or symbols in the relevant code).

Finally, it is important to remember that copyright in the BFF is only one of the rights on which the claimants are seeking to rely, and many of the substantive issues – and notably the “identity issue” of the true inventor of Bitcoin – have yet to be determined by the courts.

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Written for Entertainment Law Review.