The Court of Appeal has allowed Dr Craig Wright to press on with his copyright infringement claim in respect of the Bitcoin File Format (the “BFF”). Reversing the High Court’s recent ruling, the court found that Dr Wright does in fact have a real prospect of establishing that the fixation requirements have been met, and that copyright subsists in the BFF, ultimately granting Dr Wright permission to serve the claim out of the jurisdiction.
Background and decision at first instance
As readers of this blog will know, Dr Wright claims to be the creator of the Bitcoin system and author of the original Bitcoin code and white paper. He has been seeking to rely on his alleged IP rights in the Bitcoin system (including copyright in the BFF) to prevent the further operation of two parallel blockchain networks, known as the BTC and BCH networks (see our previous blog for further background).
Since most of the defendants are located outside of the UK, Dr Wright had sought permission to serve his claim out of the jurisdiction. For permission to be granted, the court must be satisfied that there is a serious issue to be tried and that the claim has a real (as opposed to fanciful) prospect of success. Whilst the High Court allowed certain aspects of Dr Wright’s claim to proceed on this basis, it refused to grant permission to serve out in respect of the claim for copyright infringement in the BFF. This was on the grounds that the ‘fixation’ requirement for copyright to subsist was not satisfied (see here). Unhappy with this decision, Dr Wright appealed, arguing that the court was wrong to hold that the claimants had no real prospect of success in establishing that the fixation requirement had been met.
The Court of Appeal ruling
The Court of Appeal agreed, finding a number of flaws in the first instance decision. First, the High Court had confused the requirement for there to be a ‘work’ with the requirement for there to be a ‘fixation’ of that work. The ‘work’ being relied on was clear – it was the BFF. How and when that work was fixed is a different question.
Secondly, the judgment had wrongly indicated that where the work in question is a structure there must be content defining that structure in order for the fixation requirement to be met. This was not necessarily correct. Whilst the structure itself must be fixed, content defining the structure was not necessary to fix it. According to the Court of Appeal, all that is required is that the structure is “completely and unambiguously recorded”.
Thirdly, the High Court hadn’t applied the second limb of the test laid down in Levola Hengelo v Smilde Foods of asking whether the fixation relied upon by Dr Wright made the BFF identifiable with sufficient precision and objectivity. Dr Wright argued this test was satisfied, relying on evidence that third parties had been able to determine the BFF structure from analysing the blocks of the Bitcoin blockchain, but the High Court concluded this didn’t assist him. The Court of Appeal disagreed.
Finally, the High Court hadn’t considered the rationale behind the fixation requirement – which is to evidence the existence of the work and to define the scope of protection. The Court of Appeal found that the first block in the chain served to satisfy both of these.
This case provides useful guidance on the criteria that need to be met in order to establish fixation and the rationale and purpose behind the requirement.
Whilst the Court of Appeal overturned the High Court decision, we need to be careful about what this decision does and does not say, bearing in mind the context in which it was given. The Court of Appeal did not find that copyright subsists in the BFF. It simply found that Dr Wright has a real prospect of successfully establishing that the fixation requirement is met and that Dr Wright may therefore proceed with serving his claim out of the jurisdiction.
Whether or not copyright does in fact subsist in the BFF is a question for another day. However, as the Court of Appeal notes in its judgment, fixation will not be the only hurdle that Dr Wright and the other claimants will need to overcome. Originality may also be a problem, with Arnold LJ expressing scepticism about whether the BFF is an intellectual creation or whether it is in fact only differentiated from other file formats by technical considerations. It will be interesting to see how that plays out.
But before we get to that, the court has to first decide whether Dr Wright is indeed Satoshi Nakamoto…