Dr Craig Steven Wright v Coinbase Global, Inc.
| Jurisdiction | England & Wales |
| Judge | Mr Justice Mellor |
| Judgment Date | 25 July 2023 |
| Neutral Citation | [2023] EWHC 1893 (Ch) |
| Court | Chancery Division |
| Docket Number | Claim No. IL-2022-000035 |
[2023] EWHC 1893 (Ch)
THE HON Mr Justice Mellor
Claim No. IL-2022-000035
Claim No. IL-2022-000036
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INTELLECTUAL PROPERTY LIST (ChD)
Rolls Building, Fetter Lane
London, EC4A 1NL
Michael Hicks and Racheal Muldoon (instructed by ONTIER LLP) for the Claimants
Kathryn Pickard (instructed by Allen & Overy LLP) for the Coinbase Defendants
Philip Roberts KC and Alaina Newnes (instructed by Reynolds Porter Chamberlain LLP) for the Kraken Defendants
Hearing dates: 25 th & 26 th May 2023
APPROVED JUDGMENT
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic. This judgment was handed down remotely by circulation to the parties' representatives by email. It will also be released for publication on the National Archives and other websites. The date and time for hand-down is deemed to be Tuesday 25 th July 2023 at 10.30am.
THE HON Mr Justice Mellor
INTRODUCTION
This is my judgment dealing with various issues which arose at the first and joint CMC in these two cases, although I have prepared the bulk of this judgment following a second CMC in all four of the actions which involve Dr Wright which took place on 15 th June 2023. It is convenient to refer to the two sets of Defendants and each action as the Coinbase and Kraken Defendants/Action or generally as the Ds. In both actions, the cause of action asserted by Dr Wright and his company is passing off.
The First Claimant, Dr Wright or C1, claims to be the creator of the Bitcoin System, the person who wrote the original Bitcoin code and the author of the White Paper, a document entitled Bitcoin: A Peer-to-Peer Electronic Cash System, which essentially describes the Bitcoin System. He claims he was the person who made the White Paper available to the public on 31 October 2008 under the pseudonym Satoshi Nakamoto. The Second Claimant (C2) is one of Dr Wright's companies. I will refer to the Claimants generally as the Cs.
There are two other actions in the Business & Property Courts involving Dr Wright (‘the COPA action’ and ‘the BTC Core action’ (see further below)) and there is a common issue in all four actions – what has been called ‘the identity issue’, namely, whether it was Dr Wright who adopted the pseudonym Satoshi Nakamoto when announcing his creation of the Bitcoin System or whether Dr Wright was or is Satoshi Nakamoto. In this judgment I use the expression ‘the identity issue’ at that rather general level. As I shall describe later, it is undoubtedly the case that other, more detailed issues, surround the identity issue in each of the four actions.
In the lead up to this first CMC, the issues presented for resolution were:
i) The Coinbase and Kraken Defendants' application to stay this action pending the judgment at first instance in an earlier action, the COPA action (see further below).
ii) The Coinbase and Kraken Defendants' application for security for costs.
iii) Cross-applications to strike out and amend certain paragraphs in the Defences — these raised a Hollington v Hewthorn point – plus a further proposed addition to paragraph 64(a) of the Defences. Save for these disputed paragraphs, the Cs consented to other proposed amendments to the Defences.
iv) The Coinbase Defendants' application for better responses to a number of requests for further information.
v) The issues raised in the DRD.
However, very shortly before Skeletons were due to be exchanged, the solicitors then acting for the Cs wrote on 17 th May 2023 to all of Dr Wright's opponents in all four actions suggesting that, since the identity issue arose in all four actions, it should be tried by way of preliminary issue. In more detail, the proposal was that four sub-issues collectively made up the Identity Issue(s), namely:
i) Whether Dr Wright is the author of the Bitcoin White Paper (the ‘Authorship Issue’).
ii) Whether Dr Wright is the author of the Bitcoin source code and the accompanying executable file released in January 2009 under the Satoshi Nakamoto pseudonym and thereafter authored and issued further releases of the Bitcoin Code until the last release under that pseudonym of version 0.3.19 on 13 December 2010 (‘the Code Issue’).
iii) Whether Dr Wright, using the pseudonym, is the person who made the public postings and sent emails to individuals (e.g. Wei Dai and Mike Hearn) regarding the White Paper, the Bitcoin Code and the Bitcoin System generally between August 2008 until the email from Satoshi Nakamoto to Gavin Andresen of 26 th April 2011 (‘the Communication Issue’).
iv) Whether Dr Wright is the person who mined the early blocks in the Bitcoin Blockchain which are generally considered to have been mined by the creator of the Bitcoin System (‘the Mining Issue’).
This was a belated but necessary realisation of the issue common to all four actions.
At the start of the CMC hearing, I announced my preliminary view that the identity issue should be tried once and once only and that should take place in the COPA action set to start in January 2024. This view was necessarily preliminary in several respects but primarily because those parties in the four actions not part of the passing off actions were not represented at the hearing of the CMC, although I suspect all those represented by solicitors were observing. My view was also preliminary because, as the authorities make clear, before a preliminary issue should be ordered, it is necessary for the Court to identify with suitable precision what is and what is not to be tried in the preliminary issue.
In an ideal world, this issue would have been raised and been the subject of discussion well in advance of this joint CMC, in sufficient time to have all four actions before the Court. Since that could not happen in time for the hearing of the first CMC, I gave directions which fortunately led to the second CMC being heard within a relatively short time. As will be seen below, a number of issues live at the first CMC had to be the subject of further consideration at the second, expanded CMC.
The four actions involving Dr Wright
As I informed the parties in January 2023, all four actions have been docketed to me.
The first action in time is IL-2021-000019 between Crypto Open Patent Alliance v Craig Steven Wright and I refer to it as the COPA action. The Claimant COPA, represented by Bird & Bird LLP, sues ‘ for itself and as Representative Claimant on behalf of Square, Inc., Payward Ventures, Inc. (DBA Kraken), Microstrategy, Inc., and Coinbase, Inc.’. The principal relief sought by COPA is declarations that Dr Wright is not the author of the Bitcoin White Paper, not the owner of copyright in the White Paper and that any use by COPA of the Bitcoin White Paper will not infringe any copyright owned by Dr Wright.
Directions down to trial were given in the COPA action by Master Clark back in September 2022 and the trial of 20 days duration, floating in a 5-day window, was listed to commence in late January 2024. For listing reasons, the commencement of that trial has been brought forward and will start soon after the start of the new term. As may be expected, the COPA proceedings are well advanced and the parties have devoted considerable time and money to complying with the directions down to trial. In those proceedings, Extended Disclosure was given in early March 2023 and certain directions relating to disclosure are currently being followed. At the time of the hearing, the next main event was exchange of witness statements by 7 th July 2023, subsequently extended to 28 th July 2023.
In the COPA action, Dr Wright has secured an order for security for his costs in a series of tranches which total £2.9m.
The Coinbase and Kraken Actions were issued on the same day. The claims are for passing off in relation to the digital asset Bitcoin. The Cs claim to own the goodwill in the term Bitcoin. The Cs say that the Bitcoin electronic cash system has certain important and essential defining characteristics including those which are designated as the “Bitcoin Characteristics”. These are listed in paragraph 17 of the PoC and are said to found causes of action in passing off sufficient to prevent third parties from using that term in relation to digital assets with tickers BTC and BCH. For the purposes of these proceedings, the Coinbase Defendants accept they are a group of companies operating different aspects of an online exchange which is used by consumers in the UK and elsewhere, and one aspect of that exchange involves services relating to trading in digital assets, including BTC and BCH. Similarly, the Kraken Defendants comprise a group of companies headquartered in the USA operating an online exchange for trading in digital assets (including BTC and BCH) which is used by consumers in the UK and elsewhere.
The fourth action is IL-2022-000069 between Dr Wright (and two companies) and 26 Defendants ( Wright v BTC Core), which I refer to as ‘the BTC Core action’. In this action, Dr Wright claims to be the owner of certain database rights which he says subsist in three databases, namely (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...
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