Is Bitcoin copyrighted? Craig Wright Statement and Cases under English Law

Author: Verity Ellis, Source: TaxDAO

As cryptocurrencies gain mainstream acceptance, the law is now grappling with how to use old legal concepts to protect and control this relatively new technology. Bitcoin is currently the subject of several cases before courts in the UK and elsewhere.

Previously, Australian computer scientist Dr. Craig Wright claimed that he wrote an article about Bitcoin under the pseudonym "Satoshi Nakamoto" and should be owned as the author of the original source code of Bitcoin. Various intellectual property rights.

Four interrelated litigation cases

According to Craig Wright’s statement, there are currently four intellectual property cases under trial, all involving Wright and his relationship with Bitcoin. currency-related claims. In the UK, these cases involve intellectual property issues such as copyright, database rights and passing off, while defamation issues are also considered.

Since the beginning of 2023, all four intellectual property cases have now been brought before Judge Mellor. It is positive to see the courts taking such proactive case management measures, which may result in claims and judgments being aligned despite different factual contexts and legal arguments. We have seen parties from different cases apply for joint hearings and judgments in relation to multiple claims or selected defendants/claimants within the Wright litigation portfolio.

Despite the different contexts and reliance on different intellectual property legal structures, these cases share some key issues. The most critical thing is whether Wright is really Satoshi Nakamoto (the so-called "identity issue"). On July 25, 2023, both parties agreed in the case of Crypto Open Patent Alliance v Wright that the issue of Wright’s identity would be dealt with once in a trial in January 2024, and that other cases would be subject to the outcome of that trial.

Given the volume of litigation that Wright is busy handling, several of the cases have had their fee protections increased. In the Coinbase and Kraken cases (discussed further below), Wright was ordered to pay substantial security fees.

Intellectual Property Cases

As mentioned above, there are four active IP-related cases.

The most advanced intellectual property claim is known as the "COPA claim", and the Cryptozoological Open Patent Alliance ("COPA") has filed a claim against Wright. The main claim of COPA is a declaration of non-infringement. The claim covers three aspects: (1) Dr. Wright is not the author of the 2008 article titled "Bitcoin: A Peer-to-Peer Electronic Cash System" (i.e., the "White Paper"); (2) Dr. Wright Mr. Wright is not the copyright owner of the White Paper; and (3) any use of the White Paper by COPA will not infringe any (potential) copyright owned by Dr. Wright.

In two other cases, Wright sought to maintain ownership of its alleged intellectual property. The Coinbase and Kraken lawsuits were filed by Wright on the same day. Coinbase and Kraken are both online platforms for buying, selling, transferring and storing cryptocurrencies, including Bitcoin. Both cases involve claims based on ownership of Bitcoin goodwill by Wright as an individual and his company Wright International Investments Ltd as co-claimants.

The final case, known as "BTC Core," involves Wright's assertion of copyright and database rights in the Bitcoin format, as well as a white paper that prevents the operation of two parallel blockchain networks, the BTC Network and the BCH Network. . There are 26 defendants in the case, some of whom are outside UK jurisdiction.

Defamation claims

Wright has also been involved in defamation proceedings in the UK courts.

The latest judgment from the English courts relates to an appeal concerning whether defamation damages could be appropriately reduced to reflect the claimant's fraudulent characterization of the claim (Wright v McCormack [2023] EWCA Civ 892) .

The British High Court previously ruled that because Twitter questioned Wright's claim to be Satoshi Nakamoto and the creator of Bitcoin, and called Wright a liar, Wright's reputation was damaged, and Twitter should be liable for compensation. (Wright v McCormack [2022] EWHC 2068 (QB)). However, despite winning the case, Wright has come under fire for his actions in the lawsuit, which included deliberately exaggerating the severity of the injuries to deceive the court. Therefore, the court awarded only nominal damages.

Wright appealed the decision, but the Court of Appeal upheld the earlier decision. Since defamation protects dishonest attacks, Wright's own dishonesty in this case was a relevant consideration in determining appropriate damages.

By the way, some readers may be wondering how the courts ruled on defamation cases when Wright's identity was still in question. Mr. McCormack dropped the truth defense (that Wright was not Satoshi Nakamoto), arguing that the defense would result in a lengthy trial and that he could not afford the legal fees. The issue of identity is therefore not among the issues for the court to determine, but it remains a key point in the COPA trial in January 2024.

Anonymous Allegation Case

The final case covered in this article involves allegations of copyright infringement by Wright, but the allegation was dropped because the defendant refused to identify himself. Not considered.

In the case of Wright v Persons Unknown [2022] EWHC 2982 (SCCO), Wright obtained judgment against the website bitcoin.org, which published a copy of the white paper. Wright claims this was done without his consent and therefore infringes his copyright. Without any confirmation of service of the claim, Wright applied for a default judgment. The defendants continue to refuse to identify themselves when it comes to fees.

The judgment held that it was necessary for the defendant to identify himself in order to be able to properly participate in the detailed assessment process. There are various authorities that allow unknown but identifiable parties to defend claims, but unless there are clear and justifiable reasons for departing from the principles of open justice, the names of the parties need to be known.

In the words of Justice Smith in the Court of Appeal, "the court cannot entertain this situation" because the defendant wants his true identity not to be known to the public, the plaintiff and the court. The judge held that this raised a number of concerns and would impede the court's power to monitor and control the proceedings and conduct them fairly. In the absence of proof of identity, Wright was entitled to proof of breach of contract fees.

The court is about to make a substantive hearing on the Bitcoin copyright issue

While there are many positive issues and decisions in various cases that are quickly disseminated, But two points are of particular interest.

The first issue is the factual issue raised by the identity issue above. The COPA claims trial is scheduled for January 2024. If the court determines that Dr. Wright is not Satoshi Nakamoto, then (subject to appeals of that decision) the Coinbase, Kraken, and BTC Core litigation will end at that time. In contrast, if the court determines that Dr. Wright is Satoshi Nakamoto, all three lawsuits will proceed in full.

Secondly, the BTC Core claim is about to resolve a key issue in copyright law. Under UK copyright law, a work requires "fixed" copyright in order to exist. In February 2023, the High Court held that Dr Wright had not genuinely established that copyright existed in the Bitcoin File Format ("BFF") because it was not established under section 3 of the Copyright, Designs and Patents Act 1988 ("CDPA 1988"). (2) "Recorded in writing or otherwise."

However, on July 20, 2023, the Court of Appeal overturned the earlier ruling (Wright v BTC Core [2023] EWCA Civ 868). After considering the merits of BTC Core’s claim, the Court of Appeal concluded that there was a serious issue to be heard and ruled that Wright may indeed have copyright subsisting in BFF. As a result, this element of the claim is now moving forward and Wright has been allowed to serve the defendants outside the jurisdiction.

Looking forward, if copyright exists in BFF, this could have serious consequences for the future use of Bitcoin and other cryptocurrencies.

Global Perspective

Wright is not only busy in the British courts. There are also numerous cases in other jurisdictions such as the United States and Norway. We will track the consistency of decision-making across jurisdictions and how the interaction between different cases affects Wright's litigation strategy.

What happens next?

The next substantial development seems likely to be the COPA trial in January 2024. Clarifying whether copyright exists in databases and computer programs is crucial for companies in the technology sector to protect their assets. The ruling will also impact three other intellectual property cases as Wright's claims against Satoshi Nakamoto are set to be decided, a ruling that will have important implications for other claims.

Whatever the outcome, these cases will have implications for the cryptocurrency industry and the application of copyright and database rights in computer software.