Copyright - Wright v BTC Core
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| Author Satoshi Nakamoto Copyright released |
Court of Appeal (Lady Justice Asplin and Lord Justices Arnold and Warby) Wright and others v BTC Core and others (Rev1) [2023] EWCA Civ 868 (20 July 2023)
This was an appeal against Mr Justice Mellor's refusal in Wright and others v BTC Core and others [2023] EWHC 222 (Ch) (7 Feb 2023 to permit service outside England and Wales of claim forms alleging copyright infringement. The claimants were Craig Steven Wright who claims to have created Bitcoin and two of Dr Wright's companies. Bitcoin is a cryptocurrency that is attributed to one Satoshi Nakamoto. Dr Wright claims to be Mr Nakamoto. The defendants are companies and individuals from around the world who are accused of copying matter known as "the Bitcoin File Format." Dr Wright and his companies say that copyright subsists in the Bitcoin File Format and claim ownership on the basis that they wrote it. They complain that the defendants have infringed copyright by copying the Bitcoin File Format without Dr Wright's consent.
The Applications
CPR 6.36 requires the permission of the court to serve a claim form outside the jurisdiction in certain specified circumstances. Referring to para [71] of the Privy Council's judgment in Altimo Holdings and Investment Ltd v Kyrgyz Mobile Tel Ltd [2012] 1 All ER (Comm) 319, [2012] WLR 1804, [2011] 1 CLC 205, [2012] 1 WLR 1804, [2011] 4 All ER 1027, [2011] UKPC 7 and para [164] of the Supreme Court's judgment in VTB Capital Plc v Nutritek International Corp [2013] BCC 514, [2013] 1 CLC 153, [2013] 1 All ER (Comm) 1009, [2013] 1 BCLC 179, [2013] 1 All ER 1296, [2013] 1 Lloyd's Rep 466, [2013] 2 AC 337, [2013] 2 WLR 398, [2013] UKSC 5, [2013] WLR(D) 41, Mr Justice Mellor said that there was clear authority that, in order to grant a litigant permission to serve his claim on someone outside the jurisdiction, the court must be satisfied that there is a serious issue to be tried. The reason why the judge believed that there was no serious issue to be tried was that the Bitcoin File Format did not appear to have been "recorded, in writing or otherwise" in accordance with section 3 (2) of the Copyright, Designs and Patents Act 1988.
The Appeal
As Mr Justice Mellor refused permission to appeal it would appear that the claimants applied for, and were granted, leave to appeal to the Court of Appeal. Their appeal came on before Lady Justice Asplin and Lord Justices Arnold and Warby on 12 July 2023. The Court handed down its judgment on 20 July 2023. Lord Justice Arnold delivered the lead judgment with which Lady Justice Asplin and Lord Justice Warby agreed. By para [77] of his judgment in Wright and others BTC Core and others (Rev1) [2023] EWCA Civ 868 (20 July 2023), Lord Justice Arnold held that the claimants had a real prospect of success. Accordingly, the Court of Appeal allowed the appeal.
Subsistence of Copyright
At para [61] of his judgment, Lord Justice Arnold said:
"In order to establish that copyright subsists in the Bitcoin File Format, Dr Wright must show that the following requirements are satisfied:
i) the Bitcoin File Format is a work;
ii) it is a work that falls within one of the categories of protectable work specified in the 1988 Act;
iii) the work has been fixed;
iv) the work is original; and
v) the work qualifies for copyright protection under the 1988 Act."
If the Bitcoin File Formats was a "work" for the purpose of subparagraph (i) there was no doubt that it would be a literary work in the same way as the telegraphic code in D.P. Anderson & Co Ltd v The Lieber Code Co [1917] 2 KB 469. As the first claimant was an Australian citizen he was a "qualifying person" within the meaning of s.154 (2) of the Copyright Designs and Patents Act 1988. Any difficulties would lie in (i), (iii) and (iv).
The judge was satisfied that the claimants had a real prospect of success in establishing that the Bitcoin File Format was a "work". Lord Justice Arnold saw no reason to disagree with him. Though he was sceptical as to whether the Bitcoin File Format could be original Mr Justice Mellor had thought that it might be. Again, Lord Justice Arnold saw no reason to differ from the judge's conclusion.
That left the requirement in subparagraph (iii).
Fixation
Mr Justice Mellor was not satisfied that the Bitcoin File Format had been recorded for the reasons set out in the following paragraphs:
"[54] It remains the case that no relevant 'work' has been identified containing content which defines the structure of the Bitcoin File Format. Of course, Schedule 2 to the Particulars of Claim comprises content defining the structure of the Bitcoin File Format, but that is not a relevant 'work'. Schedule 2 was created for the purposes of this claim and cannot form part of the causative chain between what Dr Wright devised, an alleged copyright 'work' and the alleged infringements which were being created as from 1st August 2017.
[55] Second, the Claimants have now been given four opportunities to explain, in effect, what it is in the 'Bitcoin File Format', as expressed in each block, which comprises 'content and not just structure'.
[56] The Claimants were presented with a possible fifth opportunity during the hearing when I asked Counsel whether, in the light of the discussion which had taken place, the Claimants wished to file any further evidence. As mentioned above, Counsel offered extracts from textbooks which show that third parties have divined the structure of a block in the Bitcoin Blockchain. As also mentioned above, I have assumed that is the case, but it does not assist the Claimants on the key issue in any way.
[57] It is most revealing that, despite all these opportunities, the Claimants have not filed any evidence to the effect that a block contains content indicating the structure, as opposed to simply reflecting it. By 'content indicating the structure', I mean, by way of a crude example, a flag or symbol in the block which signals 'this is the start of the header' or 'this is the end of the header', or an equivalent of the sort of content which is found in an XML file format. Whilst I entirely accept that each block conforms to the structure described in Schedule 2 to the Particulars of Claim and is an instance or manifestation of that structure, the absence of such evidence confirms my initial view that, whether one considers the point at which the first, second or subsequent block(s) were written embodying the structure of the file format, nowhere was the structure of Bitcoin File Format fixed in a copyright sense in a material form in any of those blocks.
[58]. … I am driven to the conclusion there are no overt signs in a block which indicate the structure as described in Schedule 2 to the Particulars of Claim. Akin to the conclusion set out at the end of [128] in SAS No.3 [sic]: there is no evidence that the Bitcoin File Format is set out in any part of the software or early blocks written to the Bitcoin Blockchain, as opposed to the Bitcoin Software simply reading and writing files in that format."
Reasons for Allowing the Appeal
Lord Justice Arnold detected the following flaws in Mr Justice Mellor's reasoning.The first was the judge's statement in the first line of para [54] that "no relevant 'work' has been identified containing content which defines the structure of the Bitcoin File Format" confused the work and its fixation. The work had been identified as the Bitcoin File Format. What was less certain was whether, and if so how and when it was recorded. Dr Wright alleged that the work was recorded when the first block of the blockchain was written. That is to say, 3 Jan 2009.
The second flaw was to suppose that there had to be content to define the structure of the Bitcoin File Format. It was correct to say that the work, that is to say, the structure, had to be fixed in order for copyright to subsist. It did not follow that content defining, describing or indicating the structure was required for fixation. All that was required was for the structure to be completely and unambiguously recorded.
The third flaw was not to apply the test set by the Court of Justice of the European Union in Case C-310/17 Levola Hengelo BV v Smilde Foods BV [2018] WLR(D) 696, EU:C:2018:899, ECLI:EU:C:2018:899, [2018] EUECJ C-310/17, [2018] Bus LR 2442. That was to consider whether the fixation relied upon by the claimants made the Bitcoin File Format identifiable with sufficient precision and objectivity. The claimants contended that it did. They pointed to para [56] of Mr Justice Mellor's judgment which I have quoted above that third parties had been able to deduce the structure comprising the Bitcoin File Format from the blocks in the Bitcoin blockchain. The judge did not think that would assist the claimants but Lord Justice Arnold thought it did.
A related point was that fixation serves two purposes:- to evidence the existence of the work and
- to delimit the scope of its protection.
As for the judge's last point in para [58] of his judgment, the claimants do not rely upon Sched. 2 as fulfilling the requirement of fixation, but not for the reason that he stated.
For all those reasons, Lord Justice Arnold held that the fixation requirement had been satisfied.
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