Fixated but no fixation as High Court finds copyright does not subsist in Bitcoin file format

As the world continues to be fixated with cryptocurrencies like Bitcoin, the High Court has recently found that copyright does not subsist in the Bitcoin file format due to a lack of fixation.

Background

The first Claimant, Dr Wright, claims to be the creator of the Bitcoin system (under the pseudonym Satoshi Nakamoto) and the author of both the original Bitcoin code and a white paper entitled “Bitcoin: A Peer-to-Peer Electronic Cash System”. In 2017 and 2018, two “airdrops” occurred which created branches in the Bitcoin blockchain and resulted in the creation of two new networks – the BTC Network and the BCH Network – which run in parallel to the original Bitcoin blockchain. Unhappy with this situation, Dr Wright sought to rely on various IP rights he (or one of the claimants) claimed to own in order to prevent the further operation of those networks without his consent. The IP rights relied on included various database rights in the Bitcoin blockchain, copyright in the white paper and copyright in the Bitcoin file format.

As the majority of the defendants were located outside the UK, Dr Wright needed to obtain permission from the court to serve his claim out of the jurisdiction. For permission to be granted, Dr Wright had to satisfy the court that there was a serious issue to be tried and that each cause of action asserted in the claim had a real (as opposed to fanciful) prospect of success. The court was satisfied that this threshold was met for the database right claim and the claim for infringement of copyright in the white paper (which was included in a specific block of the blockchains on both the BTC and BCH networks), but the position was less clear for the claim related to infringement of copyright in the Bitcoin file format.

What is the Bitcoin file format?

Before we go any further, it’s worth touching briefly on what the Bitcoin file format actually is. In its most basic form, the judgment describes it as follows:

“The overall structure of a block comprises 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 court expressly stated that it had no doubts about what the Bitcoin file format is and so identifying the putative work wasn’t, in and of itself, a problem.

Requirement for fixation

The main issue related to whether the Bitcoin file format satisfied the statutory requirement for fixation. Section 3(2) of the Copyright, Designs and Patents Act 1988 states that copyright will not subsist in a literary work unless and until it is recorded, in writing or otherwise.

EU law adopts a slightly different test, focussing on a requirement of “sufficient identifiability”, but the court did not identify any differences between the two.

Decision

Ultimately, the court found that the fixation requirement was not met and that copyright did not subsist in the Bitcoin file format. Despite being given several opportunities, Dr Wright had failed to file any evidence showing that any block within the Bitcoin blockchain contained content indicating the structure of the file format, as opposed to simply reflecting it. For example, there are no flags or symbols to identify where the header starts or ends. The fact that when the software runs and the hashing problem is solved a block is created which conforms to the structure of the file format was not sufficient.

Whilst the court acknowledged that it’s not surprising that the relevant content could not be found in a block (being both unnecessary and an inefficient use of memory), it was nonetheless fatal to this part of Dr Wright’s claim.

Comment

The question of fixation doesn’t come up that often in practice, but this decision is a timely reminder that copyright won’t subsist in a work if the fixation requirements are not satisfied. It also highlights the importance of distinguishing between the putative work on the one hand and any fixation of it on the other.

What this decision is not saying, however, is that file formats in general are not protectable by copyright. Indeed, as the judgment highlights, the English courts have already established that the format of data files can be protected by literary copyright (with the classic example of a protectable file format being the XML file format). Whether or not a particular file format is protected will depend on the specific facts of the case.