In Wright and others v BTC Core and others  EWCA Civ 868, the Court of Appeal allowed an appeal against the High Court’s refusal to grant the claimants leave to bring a claim for breach of the right to author on the Bitcoin system file format outside the jurisdiction. Contrary to the High Court’s finding, the Court of Appeal found that there was a real chance that the fixation requirement would be satisfied in order to establish that copyright subsisted in the system’s file format Bitcoin.
This claim is one of four filed in the High Court of England and Wales involving the first claimant, Dr Wright, who claims not only to be the creator of the Bitcoin system and the person who wrote the source code original of Bitcoin, but also the author of a paper published in October 2008 entitled Bitcoin: A Peer-to-Peer Electronic Payment System (commonly known as the White Paper) under the pseudonym Satoshi Nakamoto. The second and third claimants are companies which have joined the proceedings in the event that they own some or all of the rights instead of Dr Wright who controls the companies.
In this action, Dr. Wright claims to own certain database rights which he claims subsist in three databases: the Bitcoin blockchain; the Bitcoin blockchain as it was on August 1, 2017 at 2:11 p.m. – up to and including block 478,558; and another part of the Bitcoin blockchain created during a particular period (the details of which do not matter for present purposes). Dr. Wright also claims that he (or one of the plaintiffs) owns the subsisting copyright in both the white paper and “the Bitcoin File Format” (the BFF).
Bitcoin implique une blockchain qui est un grand livre distribué dans lequel les transactions sont vérifiées par blocs. Chaque nouveau bloc est lié au bloc vérifié précédent via un processus appelé « exploitation minière » et doit être dans le format correct tel que mentionné dans les détails de la réclamation sous le nom de BFF.
Dr. Wright opposes two “Airdrops”, which took place on August 1, 2017 and November 15, 2018, the first resulting in the creation of the BTC blockchain and the second resulting in the creation of the BCH blockchain. Its argument is that the defendants violated the plaintiffs’ database rights and copyrights by creating and then operating the BTC and BCH blockchains.
Although some of the defendants are located within the jurisdiction, the majority are located outside the jurisdiction. As required by Civil Procedure Rule 6.37, Plaintiffs filed an application on December 15, 2022 for leave to serve the Claim Form on Defendants outside the jurisdiction (the Application).
To do this, the plaintiffs had to convince the judge that there was a serious question to be decided. The claim must have a real rather than fancied prospect of success, a requirement that is imposed on every cause of action related to the claim. The decisions in Wright & Ors v BTC & Ors  EWHC 222 (Ch) and Wright & Ors v BTC & Ors  EWCA Civ 868 (Ch) concern this procedural consideration and the concept of fixation.
The High Court
The application was initially heard on the record by Mr Justice Mellor. He was satisfied that the claims regarding database rights and copyright in the White Paper raised a serious issue which needed to be adjudicated and that service of those claims outside the jurisdiction was therefore permitted.
Justice Mellor was, however, less convinced that the plaintiffs’ copyright had been infringed in relation to the BFF and he therefore invited the plaintiffs to file further written submissions and/or evidence answering the following question: “When and in what form the purported literary novel work in Bitcoin file format was first recorded, in writing or otherwise.” In response to this, the plaintiffs filed a second witness statement from Dr. Wright.
Under section 3(2) of the Copyright, Designs and Patents Act 1988 (the CDPA), copyright will not subsist in a literary work unless and until whether “recorded, in writing or otherwise” – commonly referred to as “fixation”. requirement. Dr. Wright’s case was that the BFF was corrected, for copyright purposes, when the first block of the Bitcoin blockchain was written on January 3, 2009.
Justice Mellor disagreed.
In Technomed v Bluecrest  EWHC 2142 (Ch), Technomed’s “XML format” was found to be a copyrighted work because the code in that file format included content describing its structure. In contrast, Justice Mellor said in this case: “No relevant ‘work’ has been identified containing content defining the structure of the Bitcoin file format.” That is, the BFF files did not include code content recording their structure.
Justice Mellor found it insufficient to demonstrate that a particular block on the blockchain is created in the BFF when the Bitcoin system software runs. It was necessary to prove that a block contains content indicating structure, rather than simply reflecting it. Justice Mellor explained that a flag or symbol within a block marking the start and end points of certain sections or an equivalent of the type of content found in XML files would have helped meet this evidentiary requirement.
In light of this, Justice Mellor concluded that the BFF structure was not defined in any part of the software or blocks written into the Bitcoin blockchain and therefore had not been “recorded, in writing or otherwise” (i.e. fixed) pursuant to Section 3(2) of the CDPA.
As a result, Dr. Wright’s claim regarding copyright infringement in the BFF had no real chance of success. On this basis, Mr Justice Mellor asked Dr Wright to remove his claim of copyright infringement on the BFF from the brief before serving it on the foreign defendants.
Court of Appeal
The claimants sought leave to appeal Mr Justice Mellor’s decision and leave was granted. The main judgment allowing the appeal was delivered by Lord Justice Arnold on 20 July 2023, with which Lady Justice Asplin and Lord Justice Warby concurred unanimously.
Has the BFF been repaired?
The Court held that there were a number of flaws in Justice Mellor’s reasoning regarding the establishment of fixation, such that he was wrong to reach the affirmative conclusion.
Firstly, Lord Justice Arnold held that Justice Mellor’s statement that “no relevant ‘work’ has been identified containing content defining the structure of the Bitcoin file format” confused the work with the fixation. The work on which the claimants relied (i.e. the BFF) had been clearly identified. How and when this work was corrected is an entirely different question.
Secondly, Lord Justice Arnold noted that “it is quite true that the work, that is to say its structure, must be fixed for copyright to subsist in it; but it does not necessarily follow that content defining (or describing or indicating) the structure is necessary to fix it.” It is sufficient that the structure is recorded completely and unambiguously.
Thirdly, Lord Justice Arnold was unhappy that Justice Mellor did not apply the test established by the Court of Justice of the European Union in Case C-310/17 Levola Hengelo BV v Smilde Foods BV (2018) which asks whether the fixation invoked by the applicants made it possible to identify the BFF with sufficient precision and objectivity. While Justice Mellor said evidence that third parties were able to infer the structure of the BFF from blocks on the Bitcoin blockchain would not help the claimants, Lord Justice Arnold disagreed.
Fourth, Lord Justice Arnold said that Mr Justice Mellor had not considered the justification for the fixation requirement and explained that fixation served two purposes: to prove the existence of the work and to delineate the scope of protection . The claimants argued that the fixation on which they relied served these purposes and, having considered the evidence, Lord Justice Arnold agreed.
Finally, in 2022 (after the alleged breach) and for procedural purposes, the Claimants prepared Schedule 2 of the Particulars of Claim which described the components of the BFF. Lord Justice Arnold clarified that it was not necessary for the claimants to demonstrate that Schedule 2 was part of a causal change between the alleged copyrighted work and the alleged infringement.
Indeed, copyright in the literary work protects the work as an intangible abstraction, and not the tangible medium on which this work can be fixed. Thus, it is not necessary for the copyright owner to prove that the fixation claimed for subsistence purposes was copied, only that the work was copied. This distinction is made clear by Article 3(2) of the CDPA read in conjunction with Article 3(3).
Based on the flaws identified by the Court of Appeal in Justice Mellor’s reasoning, it held that the BFF had in fact been fixed and that the fixing requirement of section 3(2) of the CDPA was therefore filled.
Requirements for establishing copyright
- The BFF is a work. Lord Justice Arnold noted that it could be argued that the BFF was something which enabled the creation of a work rather than the work itself. He also noted, however, that Mr Justice Mellor clearly considered that the claimants had a real prospect of successfully arguing that the BFF was a work and considered that there was no reason to depart from that assessment.
- The BFF is a work that falls into one of the categories of protectable works specified in the CDPA. There was no difficulty in meeting this requirement. The BFF was clearly a literary work within the meaning of section 3(1) of the CDPA.
- The work has been fixed. The Court of Appeal held that the BFF was set, contrary to Justice Mellor’s decision, for the reasons set out above.
- The work is original. It was clear that Mr Justice Mellor recognized that the claimants’ work was original and that Lord Justice Arnold saw no reason to depart from that position. Based on the material available to him, Lord Justice Arnold said there appeared to be a strong argument that BFF was differentiated from other file formats on technical grounds.
- The work is eligible for copyright protection under the CDPA. There was no difficulty in meeting this requirement.
Since the above conditions were found to be met, it was decided that copyright certainly subsists within the BFF.
The Court of Appeal therefore allowed the plaintiffs’ appeal. It was decided that there was a real likelihood that the fixation requirement would be satisfied in order to establish that copyright subsisted within the BFF. On this basis, the Court of Appeal allowed the plaintiffs to serve the foreign defendants with the briefs, including the claim regarding infringement of the BFF’s copyright.
Justice Mellor is an eminent judge. The fact that its decision was overturned by the Court of Appeal highlights that the relationship between copyright law, cryptocurrency and software is still developing. The landscape remains uncertain as legal precedent continues to be established.
Lord Justice Arnold’s judgment also indicates that there is a serious issue to be decided: the claimants have a real chance of succeeding in establishing that copyright subsists in the BFF. However, the judgment does not confirm that copyright definitively subsists within the BFF. This is a question to be decided at trial. Interestingly, in his judgment, Lord Justice Arnold remarked that he was “skeptical as to whether the Bitcoin file format is an intellectual creation.” Although his skepticism was not sufficient to depart from Justice Mellor’s conclusion, the trial judge may decide that the BFF is not an intellectual creation and therefore is not an original work in which copyright may subsist.
In his decision, Lord Justice Arnold provided an interesting analysis of the relevant legislation and case law relating to fixation as it applies to file formats such as BFF. This will no doubt be useful in future cases dealing with similar subject matter to BFF and XML file types, providing important guidance as to what is required for fixation to be established in such cases.