Consequential Orders and Directions - COPA v Wright

Author Satoshi Nakamoto Source Wikimedia

 

Jane Lambert

Chancery Division (Mr Justice Mellor) Crypto Open Patent Alliance v Wright (Rev1) [2024] EWHC 1809 (Ch) (16 July 2024)

Immediately after hearing the evidence and arguments in a trial to determine whether Dr Craig Steven Wright was Satoshi Nakamoto, the originator of the Bitcoin cryptocurrency, Mr Justice Mellor announced on 14 March 2024 that Dr Wright was not Satoshi Nakamoto. The question of whether or not Dr Wright was Satoshi Nakamoto had been an issue in two actions:  first an action that the Crypto Open Patent Alliance ("COPA") had brought against Dr Wright and, secondly, an action that Dr Wright and two companies that he controlled had brought against BTC CORE and others,   The learned judge set out his reasons for finding that Dr Wright was not Satoshi Nakamoto in Crypto Open Patent Alliance v Wright [2024] EWHC 1198 (Ch) on 20 May 2024.  I discussed that judgment in Bitcoin - COPA v Wright on 11 June 2024.  After the judge's announcement, Dr Wright or companies controlled by him discontinued actions that they had brought against Coinbase Global Inc. and others, Payward Inc. and others and Bitcoin Association for BSV.  Mr Justice Mellor held a hearing on 7 and 14 June 2024 to resolve all outstanding issues resulting from the ending of those actions upon which his lordship delivered judgment on 16 July 2024 (see Crypto Open Patent Alliance v Wright (Rev1) [2024] EWHC 1809 (Ch) (16 July 2024)).

The Issues

Mr Juatice Mellor set out the issues that he had to resolve in para [4] of his judgment of 16 July 2024

"i) COPA's application for wide-ranging injunctive relief against Dr Wright and his companies.
ii) COPA's application for a dissemination order.
iii) COPA's application for its costs of the COPA and BTC Core Claims.
iv) COPA's application for a general permission to use the disclosed documents in other proceedings.
v) COPA's request that I should refer the papers to the CPS.
vi) The Developers supported those five applications by COPA and, in addition, they sought the dismissal of the BTC Core Claim.
vii) The Developers' application for their costs of the BTC Core and Tulip Trading Claims.
viii) The Developers also raised the issues of what should happen in the i and McCormack claims.
ix) The application for costs by Coinbase.
x) The application for costs by the Blockstream, Chaincode and Cash App Defendants (i.e. Defendants (Ds 16, 18, 19, 20 and 26) in the BTC Core Claim).
xi) The application for costs by D15 & D16 in the Tulip Trading Claim."

Dr Wright had objected to COPA's application for injunctions and dissemination orders at trial but he did not oppose an order restraining him from pursuing or threatening to pursue legal proceedings based on the assertion that he is Satoshi Nakamoto at the 7 June hearing because he said that neither he nor his companies had any intention of threatening or bringing such proceedings.  He maintained his objection to orders restricting his freedom of expression under art 10 of the European Convention on Human Rights.

Injunctions

COPA sought 

(a) an anti-suit injunction preventing Dr Wright or the other claimants in related claims from pursuing further proceedings in this or other jurisdictions to re-litigate his claim to be Satoshi; 

(b) a related order preventing him from threatening such proceedings; 

(c) an order preventing him from asserting legal rights as Satoshi; 

(d) an order of the kind often made following defamation trials, preventing him from re-publishing his fraudulent claim to be Satoshi; and 

(e) an order requiring him to delete published statements of that fraudulent claim.

In determining whether to grant the requested relief the judge noted the following principles at para [25]:

"i) The modern approach to injunctive relief.
ii) The expansion of the categories of injunction.
iii) The principles governing injunctions to protect IP rights.
iv) The underlying rationale for the protection of IP rights.
v) Injunctions following a finding of non-infringement.
vi) Freedom of expression and Article 10 case law.
vii) Anti-suit injunctions.
viii) Injunctions to prevent republication of dishonest statements.
ix) The importance of deterring frauds upon the Court."

Applying these principles to the facts of this case the judge had no doubt that the first two injunctions sought by COPA were necessary.   The operative part of the first injunction was:

"Subject to the provisions of [the qualifications paragraph], each of Dr Wright and any of his companies including Wright International Investments Limited ('WII'), Wright International Investments UK Limited ('WIIUK') and Tulip Trading Limited shall not commence or procure the commencement by any other person of any proceedings (whether by claim or counterclaim) in the Courts of England & Wales, the Courts of any foreign jurisdiction or in any arbitral tribunal (wherever seated) any proceedings of any of the following kinds ('Precluded Proceedings'):'  

The Precluded Proceedings were defined as:

"(a) 'Proceedings in which rights are claimed or asserted (whether legal or equitable, whether founded on common law, statute or other basis and whether or not the rights are known to English law) based wholly or partly on any one or more of the following grounds:

(i) that Dr Wright is the or an author of the Bitcoin White Paper (i.e. the paper entitled "Bitcoin: a Peer-to-Peer Electronic Cash System", which was released on or about 31 October 2008 under the name "Satoshi Nakamoto" and subsequently published in a revised version on or about 24 March 2009);
(ii) that Dr Wright, WII and/or WII UK is the or an owner of the copyright and/or moral rights in the Bitcoin White Paper (as defined above);
(iii) that Dr Wright is the person or one of the persons who adopted or operated under the pseudonym "Satoshi Nakamoto" in particular in the period 2008 to 2011;
(iv) that Dr Wright is the person or one of the persons who devised and/or created the Bitcoin System (i.e. the peer-to-peer electronic cash system implemented from around January 2009 which originated from the Bitcoin White Paper);
(v) that Dr Wright is the or an author of any of the versions of the Bitcoin software created or issued in the period up to 2011 (including the executable file and related source code issued under the name Satoshi Nakamoto on or about 8 January 2009);
(vi) that Dr Wright, WII and/or WII UK is the or an owner of database rights in the Bitcoin Blockchain (i.e. the blockchain which was made available for transmission between nodes from January 2009 and later extended by the addition of blocks up to the present day) or in any part of it;
(vii) that Dr Wright is the or an author of the Bitcoin File Format (i.e. the structure of blocks within the Bitcoin Blockchain (as defined above)) or the Bitcoin software referred to at (v) above;
(viii) that Dr Wright, WII and/or WII UK is the or an owner of copyright and/or moral rights in the Bitcoin File Format (as defined above) or the Bitcoin software referred to at (v) above;
(ix) that Dr Wright devised the name "Bitcoin";
(x) that Dr Wright, WII and/or WII UK owns goodwill and/or unregistered trade mark rights in the name "Bitcoin" and/or in the Bitcoin System (as defined above); and/or

(b) Proceedings in which it is otherwise asserted that Dr Wright is the person or one of the persons who adopted or operated under the pseudonym "Satoshi Nakamoto" or that Dr Wright is responsible for acts done by such person or persons.'

The operative part of the second injunction provided:

'Subject to the provisions of [the qualifications paragraph], each of Dr Wright and any of his companies including Wright International Investments Limited ('WII'), Wright International Investments UK Limited ('WIIUK') and Tulip Trading Limited shall not threaten (explicitly or implicitly) or procure any other person to threaten (explicitly or implicitly) that any Precluded Proceedings will be pursued against any person in the Courts of England & Wales, the Courts of any foreign jurisdiction or in any arbitral tribunal (wherever seated).'

The qualification paragraph for both injunctions was in the following terms:

'Notwithstanding the orders made above, it shall not in any event be a breach of any of those orders for the Defendant to take any of the following steps:

(a) to pursue any appeals process or processes in respect of orders made in the present proceedings;
(b) to defend any civil contempt application or civil contempt proceedings in connection with the subject-matter of the present proceedings;
(c) to defend any criminal prosecution which might be brought against him in connection with the subject matter of the present proceedings
(d) to pursue any appeals process or processes in the case of Ira Kleiman and W&K Info Defense Research LLC v Craig Wright (Case No. 18-CV-80176 - US District Court, Southern District of Florida); or
(e) to take any preparatory or ancillary action relating to the steps set out at (a) to (d) above (including, without limitation, seeking legal advice, litigation funding, evidence or other assistance in such matters).
(f) any step for which Dr Wright has obtained the prior permission of this Court in an Order following an application supported by evidence made with at least 14 days written notice to COPA and the represented parties.'

The judge refused the third and fourth injunctions sought by COPA but he allowed it permission to apply, for a period of 2 years, for any further injunctive relief should it consider it necessary to protect the interests of the corporate entities they represent as well as the individuals in the Bitcoin community who had suffered from Dr Wright's false claim to be Satoshi.

As for COPA's request for the fifth injunction, his lordship was in no doubt that an order in the terms sought or anything close to it would be disproportionate. It was simply unnecessary to erase all statements, let alone those made by Dr Wright or any of his associates. Anyone with an interest in Bitcoin will be aware of the COPA trial and know of the outcome.

Dissemination Notices

COPA sought an order that 

(1)  Dr Wright should display a notice with a particular wording for six months in the following channels:

(i) on the home page of his website at www.craigwright.net, so that it is immediately visible to all those visiting the website;

(ii) a pinned message at the top of all threads on all of his X accounts; and

(iii) in all Slack channels in which he is a participant; and

(2)  a half-page advertisement in The Times, a notice in prescribed form.

The judge rejected COPA's application for the half-page notice in The Times as unnecessarily vindictive  He did not consider a notice on Dr Wright's website sufficient as Dr Wright had communicated mainly through X.  The judge ordered an amended notice to appear for 3 months on the X and Slack accounts.

Dispensing with Personal Service

The judge granted COPA's application to dispense with personal service of his final order as Dr Wright appeared to have left the UK and his whereabouts were unknown.  His lordship held that it was enough to serve the order on Dr Wright's solicitors.

COPA's Application for Costs 

Dr Wright agreed to pay COPA's costs on an indemnity basis with interest but the parties disagreed on the rate of interest and the amount of the payment on account.  The judge fixed the rate of interest at 8% as requested by COPA,  He ordered Dr Wright to pay 85% of the costs which he assessed at £5.928 million in COPA's claim and £115.000 in the BTC claim.

COPA's Application for a General Permission to use the Disclosed Documents in other Proceedings

COPA requested permission to use documents that had not been read or referred to in future proceedings such as (a) enforcing any injunctions the court may grant; (b) for any civil contempt applications arising from the subject matter of these proceedings; (c) for any criminal investigation or prosecution arising from the subject-matter of these proceedings; (d) for any civil restraint order application in which reliance is placed on these proceedings; and (e) for any disciplinary or regulatory complaint.   The judge gave general permission to COPA  to review all disclosed documents for the collateral purpose of bringing any of the envisaged proceedings. That would enable COPA if they so choose, to apply for permission to use the documents in any of those proceedings.

COPA's Request to refer the Papers to the CPS

Mr Justice Mellor remarked that if this case did not warrant referral to the Crown Prosecution Service it was difficult to envisage a case that would.   In his previous judgment, he had found that Dr Wright had lied under oath repeatedly and forged documents.  He had no doubt that he should send the papers to the CPS to consider prosecutions for perjury and forgery.   He also referred Mr Stefam Matthews to the CPS as he had supported Dr Wright's mendacity but not Mr Robert Jenkins who had played only a small part  in the deception and was now in Australia,

Application for Dismissal of the BTC CORE Claim

The application was not opposed by Dr Wright.   His lordship certified that the actions that had been brought by Dr Wright and his defence to COPA's claim were without merit.

Application for Costs of the BTC CORE and Tulip Claims

Tulip Trading Co Ltd was one of Dr Wright's companies and the Tulip claim was an action by Tulup Trading Co Ltd against Bitcoin Association for BSV and 15 other defendants,

The judge noted that agreement had been reached on that issue and made no further comment,

What should happen in the COBRA and McCormack Claims?

These were cases in which Dr Wright had obtained judgment based on assertions that could no longer be supported in view of the judge's finding that Dr Wright was not Satoshi Nakamoto,  His lordship set aside a default judgment by HH Judge Hodge and other orders in the COBRA proceedings.  He made no order in the McCormack proceedings as these were ongoing in that Mr McCormack was seeking to recover the costs of a defamation claim against him,.

Disclosure of Dr Wright's Funding Arrangements

His lordship declined to make an order at this stage but allowed the parties seeking costs to renew their application if any remained unpaid after the due date.

Application for Costs by Coinbase

This was an application for the costs of obtaining a freezing injunction which Dr Wright claimed to be unnecessary because he had already offered security,  Coinbase persuaded the judge that the order was necessary because the offer of security would have been inadequate,  He ordered an assessment of their costs and payment of 85% on account.

The Application for Costs by D15 & D16 in the Tulip Trading Claim.

The judge awarded those defendants 90% of their claimed costs to be paid within 28 days and for interest to run at the annual rate of 8%.

Further Information

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