Does Bitcoin have copyright? Craig Wright's statements and his series of cases under UK law

Compilation | Author | Verity Ellis Date: November 29, 2023 Source: https://www.fieldfisher.com/en/services/intellectual-property/intellectual-property-blog/crypto-in-the-courts-the-bitcoin-cases As cryptocurrency gradually gains mainstream acceptance, the law is now beginning to grapple with how to use old legal concepts to protect and regulate this relatively new technology. Currently, Bitcoin is the subject of several cases being heard in UK courts and other jurisdictions. Previously, Australian computer scientist Dr. Craig Wright claimed that he authored a paper on Bitcoin under the pseudonym "Satoshi Nakamoto" and should be recognized as the owner of various intellectual property rights related to the original Bitcoin source code.

Four Interconnected Lawsuits
According to Craig Wright's statements, there are currently four intellectual property cases pending, all involving Wright and his claims related to Bitcoin. In the UK, these cases involve issues of copyright, database rights, and counterfeiting, while also considering defamation issues. Since the beginning of 2023, all four intellectual property cases have been submitted to Judge Mellor. It is positive to see the court taking such proactive case management measures; although the factual backgrounds and legal arguments differ, they may lead to consistent claims and judgments. We have seen parties from different cases applying for joint hearings and making rulings related to multiple claims or selected defendants/claimants in the Wright litigation bundle. Despite the differing backgrounds and reliance on different intellectual property legal frameworks, these cases share some common key issues. Most critically, whether Wright is indeed Satoshi Nakamoto (the so-called "identity issue"). On July 25, 2023, in the case of Crypto Open Patent Alliance v Wright, both parties agreed that the identity issue would be addressed in a trial in January 2024, and other cases would be bound by the outcome of that hearing. Given the number of lawsuits Wright is busy handling, the cost protections for several of these cases have been raised. In the Coinbase and Kraken cases (which will be discussed further below), Wright has been required to pay substantial security costs.

Intellectual Property Cases
As mentioned, there are four active intellectual property-related cases. The fastest-moving intellectual property claim is referred to as the "COPA claim," where the Crypto Open Patent Alliance ("COPA") has brought a claim against Wright. COPA's main demands are a declaration of non-infringement, which includes three aspects: (1) Dr. Wright is not the author of the 2008 paper titled "Bitcoin: A Peer-to-Peer Electronic Cash System" (i.e., the "white paper"); (2) Mr. Wright is not the copyright owner of the white paper; and (3) COPA's use of the white paper does not infringe any (potential) copyright owned by Dr. Wright. In the other two cases, Wright is attempting to maintain ownership of his so-called intellectual property. The Coinbase and Kraken lawsuits were filed by Wright on the same day. Both Coinbase and Kraken are online platforms for buying, selling, transferring, and storing cryptocurrencies (including Bitcoin). Both cases involve claims of ownership of Bitcoin goodwill based on Wright as an individual and his company Wright International Investments Ltd as co-claimants. The final case is referred to as "BTC Core," which involves Wright's claims of copyright and database rights over the Bitcoin format, as well as the white paper that prevents the operation of the BTC network and BCH network, two parallel blockchain networks. There are 26 defendants in this case, some of whom are outside the jurisdiction of the UK.

Defamation Claims
Wright is also embroiled in a defamation lawsuit in the UK courts. The latest ruling from the UK court involves an appeal regarding whether defamation damages can be appropriately reduced to reflect the claimant's fraudulent description of the claim (Wright v McCormack [2023] EWCA Civ 892). The UK High Court previously ruled that due to Twitter questioning Wright's self-identification as Satoshi Nakamoto and the creator of Bitcoin, and calling Wright a fraud, Wright's reputation was harmed, thus Twitter should be liable for damages to Wright (Wright v McCormack [2022] EWHC 2068 (QB)). However, despite winning the case, Wright was still criticized for his conduct in the litigation, specifically for deliberately exaggerating the severity of the harm to deceive the court. As a result, the court only awarded symbolic damages. Wright appealed this ruling, but the appellate court upheld the previous judgment. Because defamation protects against dishonest attacks, Wright's own dishonesty in this case was a relevant consideration in determining appropriate damages. By the way, some readers may wonder how the court ruled on the defamation case when Wright's identity remains in question. Mr. McCormack waived the defense of truth (i.e., that Wright is not Satoshi Nakamoto), arguing that the defense would lead to a lengthy trial, which he could not afford in legal fees. Therefore, the identity issue was not among the questions the court needed to determine, but it remains a key point in the January 2024 COPA trial.

Anonymous Accusation Case
The final case covered in this article involves Wright's copyright infringement allegations, but this accusation has never been considered due to the defendant's refusal to disclose their identity. In Wright v Persons Unknown [2022] EWHC 2982 (SCCO), Wright obtained a judgment against the website bitcoin.org, which published a copy of the white paper. Wright claimed this was done without his consent, thus infringing his copyright. Without any confirmation of service of the claim, Wright applied for a default judgment. When it came to costs, the defendant continued to refuse to disclose their identity. The judgment stated that the defendant was required to disclose their identity in order to properly participate in a detailed assessment process. Various authorities allow unknown but identifiable parties to defend claims, but unless there is a clear and legitimate reason to deviate from the principle of open justice, the names of the parties need to be known. In the words of Judge Smith in the appellate court, "the court cannot entertain this situation," as the defendant wished for the public, the plaintiff, and the court to remain unaware of their true identity. The judge found this raised many concerns and would hinder the court's power to supervise and control the litigation process and conduct fair trials. Without identification, Wright is entitled to proof of breach of contract costs.

The Court is About to Substantively Hear the Bitcoin Copyright Issue
While many positive issues and decisions have been rapidly disseminated across various cases, two points are particularly interesting. The first issue is the factual question raised by the aforementioned identity issue. The COPA claim trial is scheduled for January 2024. If the court finds that Dr. Wright is not Satoshi Nakamoto, then (subject to appeal of that decision) the Coinbase, Kraken, and BTC Core lawsuits will conclude at that time. In contrast, if the court determines that Dr. Wright is Satoshi Nakamoto, then 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, works need to be "fixed" in order to exist copyright. In February 2023, the High Court found that Dr. Wright had not truly established copyright in the Bitcoin file format ("BFF") because it was not "recorded in writing or otherwise" under Section 3(2) of the Copyright, Designs and Patents Act 1988 ("CDPA 1988"). However, on July 20, 2023, the appellate court overturned the earlier ruling (Wright v BTC Core [2023] EWCA Civ 868). After considering the facts of the BTC Core claim, the appellate court found that there was a serious issue to be tried and ruled that Wright may indeed have copyright in the BFF. Therefore, this element of the claim is now moving forward, and Wright has been allowed to serve the defendants outside the jurisdiction. Looking ahead, if copyright exists in the BFF, it could have serious implications for the future use of Bitcoin and other cryptocurrencies.

Global Perspective
Wright is not only busy in UK courts. There are also many cases in other jurisdictions such as the United States and Norway. We will track the consistency of decisions across different jurisdictions and how the interactions between different cases affect Wright's litigation strategy.

What’s Next?
The next substantive development seems likely to be the trial of the COPA case in January 2024. Clarifying whether copyright exists in databases and computer programs is crucial for businesses in the tech sector to protect their assets. This ruling will also impact the other three intellectual property cases, as Wright's claims of being Satoshi Nakamoto will be adjudicated, which will have significant implications for other claims. Regardless of the outcome, these cases will influence the cryptocurrency industry and the application of copyright and database rights in computer software.