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Protecting the Bitcoin File Format

A decision of the UK Court of Appeal has found that copyright likely subsists in the Bitcoin File Format and provides a detailed summary of the concept of fixation in copyright law. Wright v. BTC Core [2023] EWCA Civ 868 (20 July 2023)


The Facts

The plaintiff, Dr Craig Wright, (the Plaintiff) claims to be the creator of the Bitcoin system, the person who wrote the original Bitcoin source code and the author of a document entitled Bitcoin: A Peer-to-Peer Electronic Cash System, which describes the Bitcoin system and is known as "the White Paper". He claims he made the White Paper available to the public on October 31, 2008, under the pseudonym Satoshi Nakamoto.


The Plaintiff claims he owns the copyrights in two original literary works: (a) the Bitcoin File Format; and (b) the White Paper. The Plaintiff objects to the creation of two new systems which have effectively created blockchain systems that run in parallel to the Bitcoin system, without his consent. The systems are alleged to infringe the Plaintiff’s copyright in the Bitcoin File Format and in the White Paper.


The Plaintiff applied to the court for leave to serve its claim on defendants outside the jurisdiction. To grant leave the court must be satisfied that there is a serious issue to be tried on the merits of the claim.


The Bitcoin File Format was defined in the Plaintiff’s claim as a work "consisting of the structure of each block of the Bitcoin Blockchain as described in Schedule 2" to the Particulars of Claim. The overall structure of a block consists of three parts: (1) a block header of 80 bytes; (2) the vtx number, of 1-9 bytes, which records the number of transactions in a variable VarInt; and (3) the transactions recorded in the block, of variable size.

The Plaintiff said he devised and created the Bitcoin File Format while writing the code for the Bitcoin System. When the software runs it creates blocks in the Bitcoin File Format which are added to the Bitcoin Blockchain file. The Format was recorded in electronic form on the Bitcoin Blockchain.


The Motion for Leave

The Judge refused to grant leave to serve the claim for infringement of copyright in the Bitcoin File Format. He was doubtful whether the Plaintiff had a real prospect of success in establishing that copyright subsisted in the Format.


The Judge said the Format had not been "recorded, in writing or otherwise” as required the U.K legislation. While each block conforms to the structure described in Schedule 2 to the Particulars of Claim and is a manifestation of that structure, no evidence showed that the structure of Bitcoin File Format was fixed in a copyright sense in a material form in those blocks.


The Appeal

The plaintiff appealed to the U.K Court of Appeal. The appeal was allowed as there were flaws in the Judges reasoning. First, the Bitcoin File Format was clearly identified. Second, it was unnecessary for there to be content that defines the structure of the Format or to fix it as it was a structure. Third, the Judge did not consider the rationale for the requirement of fixation. It serves two purposes: to evidence the existence of the work and to delimit the scope of protection. Both purposes were being served in this case. Finally, it was unnecessary for the Plaintiff to show that Schedule 2 formed part of a causative chain between the alleged copyright work and the alleged infringement. Copyright in a literary work protects the work as an intangible abstraction, not the tangible medium in which that work may have been fixed. It is not necessary for the copyright owner to prove that the fixation relied upon to show the subsistence of copyright had been copied, only to prove that the work has been copied.


The Canadian Position

For a literary work to be entitled to copyright it must be expressed in material form, capable of identification and having a character of reasonable substance or permanence. The requirement for fixation is generally assumed to be found in section 3(1) of the Copyright Act which provides that copyright means “the sole right to produce or reproduce the work … in any material form whatever”.


“Fixation” assists in distinguishing works capable of being copyrighted from general ideas that are the common intellectual “property” of everyone. Subject to requirement for originality, copyright comes into existence when the work is written down or otherwise recorded in some reasonably permanent form (“fixated”).


Comment

The decision of the U.K Court of Appeal is based on the same approach adopted under the Canadian Act and may be helpful precedent.


If you have questions, please contact me at mckeown@gsnh.com.


Goldman Sloan Nash & Haber LLP

480 University Avenue, Suite 1600

Toronto, Ontario M5G 1V2

Direct Line: (416) 597-3371

Fax: (416) 597-3370


These comments are of a general nature and not intended to provide legal advice as individual situations will differ and should be discussed with a lawyer.


A version of this article originally appeared in the Law360 Canada published by LexisNexis Canada Inc.

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