Dr Craig Steven Wright v BTC Core (A Partnership)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Arnold,Lord Justice Warby,Lady Justice Asplin |
| Judgment Date | 20 July 2023 |
| Neutral Citation | [2023] EWCA Civ 868 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: CA-2023-000404 |
[2023] EWCA Civ 868
Lady Justice Asplin
Lord Justice Arnold
and
Lord Justice Warby
Case No: CA-2023-000404
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE, BUSINESS AND PROPERTY
COURTS OF ENGLAND AND WALES, INTELLECTUAL PROPERTY LIST (ChD)
Mr Justice Mellor
Royal Courts of Justice
Strand, London, WC2A 2LL
Michael Hicks (instructed by Harcus Parker Ltd) for the Appellants
The Respondents did not appear and were not represented
Hearing date: 12 July 2023
Approved Judgment
Introduction
This is an appeal from an order of Mellor J dated 7 February 2023 which refused the Claimants permission to serve the claim form in this claim on those Defendants who are outside the jurisdiction of England and Wales in so far as the claim form advanced a claim for infringement of copyright in a work referred to as the Bitcoin File Format. The judge held for the reasons given in his judgment of the same date [2023] EWHC 222 (Ch) that the Claimants had no real prospect of establishing that copyright subsisted in the Bitcoin File Format because it had not been “recorded, in writing or otherwise” in accordance with section 3(2) of the Copyright, Designs and Patents Act 1988. This provision gives effect to what is known in international copyright law as the requirement of fixation.
Although compliance with the requirement of fixation is a discrete and narrow issue, in the factual context of the present case analysis is complicated by the need to disentangle it from three related issues: the requirement for a work that is capable of being protected by copyright; the requirement of originality; and the scope of protection conferred by copyright in computer programs.
Bitcoin
This case concerns the digital currency known as Bitcoin. It is not necessary for present purposes to explain in detail how Bitcoin works. The following summary will suffice. It involves a blockchain. A blockchain is a distributed ledger in which transactions are verified in blocks. Each new block is then linked to the previous verified block. Transactions are verified by a process called “mining”, which can be carried out by anyone with a sufficiently powerful computer, in exchange for a reward in Bitcoin. “Mining” is a form of “proof of work”, which essentially involves solving cryptographic puzzles, in order to achieve consensus (rather than depending upon validation by a central authority). Each new block must be in the correct format. This format is referred to as the Bitcoin File Format. (A better name might be “the Bitcoin Block Format”, but nothing turns on this.)
The Claimants' application
The First Claimant, Dr Craig Wright, 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 was the person who made the White Paper available to the public on 31 October 2008 under the pseudonym Satoshi Nakamoto.
This claim is one of four in the Business and Property Courts involving Dr Wright. There is a common issue in all four claims: what has been called “the identity issue”, namely, whether it was Dr Wright who adopted the pseudonym Satoshi Nakamoto when announcing the creation of the Bitcoin system. That issue will be determined at a trial fixed for hearing in January 2024.
In this claim, Dr Wright claims that he owns the copyrights in two original literary works: (a) the Bitcoin File Format; and (b) the White Paper. Dr Wright also claims to be the owner of database rights in three databases: (i) the Bitcoin blockchain; (ii) the Bitcoin blockchain as it stood on 1 August 2017 at 14.11 (up to and including block 478,558); and (iii) another part of the Bitcoin blockchain made in a particular period (the details of which do not matter for present purposes). The Second and Third Claimants are companies controlled by Dr Wright which appear to have joined in case they own some or all of the rights claimed rather than Dr Wright personally.
Dr Wright brings this claim because he objects to two “airdrops”, each of which effected what he terms “significant changes” to the Bitcoin system without his consent. The first airdrop occurred on 1 August 2017 and resulted in what Dr Wright calls the BTC Network. Nodes on the Bitcoin network continued to operate the existing Bitcoin system, but the airdrop effectively created a branch in the chain, so that from block 478,558, the Bitcoin blockchain continued adding blocks mined by its nodes thereby extending the Bitcoin blockchain, with the BTC blockchain running in parallel. The ticker “BTC” has been adopted for the digital cash system operated by the BTC Network.
The second airdrop occurred on 15 November 2018 and created another new peer-to-peer network (“the BCH Network”). So from that date another parallel blockchain emerged, called the BCH blockchain. The ticker “BCH” is used for the digital cash system operated by the BCH Network.
Although Dr Wright says he did not coin the ticker “BSV” (Bitcoin Satoshi Vision), it is now used to designate the system which he claims to be original Bitcoin digital cash system.
Dr Wright's case is that the copyrights and database rights which he or the other Claimants own provide a mechanism by which he can prevent the further operation of the BTC blockchain and the BCH blockchain without his consent.
Both the BTC blockchain and the BCH blockchain contain the Bitcoin blockchain up to and including block 478,558. Dr Wright's claim is that the operation of the BTC blockchain and the BCH blockchain results in the extraction and/or re-utilisation of all or substantial parts of the databases in which he owns database right.
The White Paper is included in block 230,009 of the Bitcoin blockchain. The consequence is that use of the BTC blockchain and the BCH blockchain entails reproduction of block 230,009 and reproduction of the entire White Paper. Dr Wright alleges that this amounts to an infringement of the copyrights in the Bitcoin File Format and in the White Paper respectively.
The Claimants issued the claim form on 1 August 2022. Some of the Defendants are in the jurisdiction, but the majority of the Defendants are outside the jurisdiction. On 15 December 2022 the Claimants made an application for permission to serve the claim form on those Defendants who are outside the jurisdiction. The application originally came before Mellor J on paper.
In order to grant a claimant permission to serve its claim on someone outside the jurisdiction, the court must be satisfied (among other things) that there is a serious issue to be tried on the merits of the claim. This means that the claim must have a real (as opposed to a fanciful) prospect of success: see Altimo Holdings and Investment Ltd v Kyrgyz Mobile Tel Ltd [2011] UKPC 7, [2012] 1 WLR 1804 at [71] (Lord Collins of Mapesbury). This requirement applies to each cause of action asserted in the claim.
Having considered the matter on paper, Mellor J was satisfied that it was appropriate to grant the Claimants permission to serve the claim form out of the jurisdiction in respect of all the causes of action relied upon except for the claim for infringement of copyright in the Bitcoin File Format. He was doubtful whether the Claimants had a real prospect of success in establishing that copyright subsisted in the Bitcoin File Format. He invited the Claimants to file further written submissions and/or evidence addressing the following question: “when and in what form the alleged literary work in the Bitcoin File Format was first recorded, in writing or otherwise”. In response to this question the Claimants filed a second witness statement of Dr Wright. The judge was not satisfied that this evidence established there was a serious issue to be tried, but he gave the Claimants the opportunity to persuade him otherwise at an oral hearing on 3 February 2023. Following the hearing, the judge remained unpersuaded for the reasons he explained in his judgment.
The Bitcoin File Format
The Bitcoin File Format is defined in Dr Wright's claim as the 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 block header consists of six fields:
i) nVersion, 4 bytes in length comprising a 32 bit unsigned integer stored in little endian (meaning that the least-significant byte is stored at the smallest address) representing the version of the block format;
ii) hashPrevBlock, 32 bytes in length, being a double hash (a mathematical representation) of the previous block header stored in little endian (essentially the link...
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