Does Bitcoin Have Copyright? Craig Wright's Claims and Related Cases Under English Law
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Does Bitcoin Have Copyright? Craig Wright's Claims and Related Cases Under English Law
As cryptocurrencies gradually gain mainstream acceptance, the law is now beginning to grapple with how to use established legal concepts to protect and regulate this relatively new technology.
Navigating Web3 tides with focused insightsAuthor: Verity Ellis
Translation: TaxDAO
As cryptocurrency gains increasing mainstream acceptance, the law is now grappling with how to apply established legal concepts to protect and regulate this relatively new technology. Bitcoin is currently the subject of several cases before courts in the UK and elsewhere.
Previously, Dr Craig Wright, an Australian computer scientist, claimed that he authored the paper on Bitcoin under the pseudonym "Satoshi Nakamoto" and should therefore hold various intellectual property rights as the original author of Bitcoin's source code.
Four Interconnected Lawsuits
Based on Craig Wright’s claims, there are currently four intellectual property cases underway, all involving Wright and his assertions related to Bitcoin. In the UK, these cases involve issues of copyright, database rights, passing off, and also consider defamation matters.
Since early 2023, all four intellectual property cases have been assigned to Judge Mellor. It is positive to see the court taking such proactive case management measures, which, despite differing factual backgrounds and legal arguments, may lead to consistent outcomes across the claims and judgments. We have already seen parties from different cases applying for consolidated hearings and receiving rulings relating to multiple claims within Wright’s litigation portfolio or specific defendants/claimants.
Despite varying contexts and differing reliance on distinct intellectual property legal frameworks, these cases share some key common issues. Most critically is whether Wright is truly Satoshi Nakamoto (the so-called "identity issue"). On 25 July 2023, in Crypto Open Patent Alliance v Wright, the parties agreed that the issue of Wright’s identity would be addressed once during a trial in January 2024, and the other cases would be bound by the outcome of that trial.
Given the volume of litigation Wright is involved in, cost protections have been heightened in several cases. In the Coinbase and Kraken matters (discussed further below), Wright has been required to post substantial security for costs.
Intellectual Property Cases
As noted above, there are four active intellectual property-related cases.
The most advanced IP claim is known as the "COPA Claim," brought by the Crypto Open Patent Alliance ("COPA") against Wright. COPA’s primary claim seeks a declaration of non-infringement, specifically asserting three points: (1) Dr Wright is not the author of the 2008 paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System” (the “White Paper”); (2) Mr Wright is not the copyright owner of the White Paper; and (3) any use of the White Paper by COPA does not infringe any (potential) copyright held by Dr Wright.
In two other cases, Wright is attempting to assert ownership over his alleged intellectual property rights. The lawsuits against Coinbase and Kraken were filed by Wright on the same day. Both Coinbase and Kraken are online platforms facilitating the buying, selling, transferring, and storing of cryptocurrencies, including Bitcoin. Both cases involve claims based on Wright’s purported ownership of goodwill in Bitcoin, with Wright personally and his company Wright International Investments Ltd acting as co-claimants.
The final case, known as “BTC Core,” involves Wright’s claims to copyright and database rights in the Bitcoin format, seeking to prevent the operation of two parallel blockchain networks—the BTC and BCH networks—based on the White Paper. This case has 26 defendants, some of whom are outside the jurisdiction of the UK.
Defamation Claims
Wright is also involved in defamation proceedings before UK courts.
The most recent judgment from a UK court relates to an appeal concerning whether damages in a defamation case can be appropriately reduced to reflect a claimant’s fraudulent presentation of their claim (Wright v McCormack [2023] EWCA Civ 892).
The UK High Court had previously ruled that Wright’s reputation was damaged due to tweets questioning his claim to be Satoshi Nakamoto and the creator of Bitcoin, and calling him a fraudster, thereby rendering Twitter liable to compensate Wright (Wright v McCormack [2022] EWHC 2068 (QB)). However, despite winning the case, Wright was criticized for his conduct during litigation—specifically for deliberately exaggerating the severity of harm to deceive the court. As a result, the court awarded only nominal damages.
Wright appealed this decision, but the Court of Appeal upheld the prior ruling. Because defamation protects against dishonest attacks, Wright’s own dishonesty in the proceedings was deemed a relevant factor in determining appropriate damages.
Incidentally, some readers may wonder how the court could rule on a defamation claim while Wright’s identity remains in question. Mr McCormack abandoned his defense of truth (i.e., that Wright is not Nakamoto), arguing that proving it would require a lengthy trial he could not afford. Therefore, the identity issue was not one the court needed to determine—but it remains a central point for the COPA trial scheduled for January 2024.
Anonymous Defendant Case
The final case covered here involves Wright’s copyright infringement allegations, but the claim was never substantively considered because the defendant refused to disclose their identity.
In Wright v Persons Unknown [2022] EWHC 2982 (SCCO), Wright obtained a judgment against the website bitcoin.org for publishing a copy of the White Paper. Wright claimed this was done without his consent and thus infringed his copyright. With no acknowledgment of service filed by the defendant, Wright applied for default judgment. When it came to costs, the defendant continued to withhold their identity.
The court held that the defendant must identify themselves to properly participate in detailed cost assessment procedures. While authorities allow identifiable but unknown parties to defend claims, knowing the party’s name is required unless there is a clear and compelling reason to deviate from the principle of open justice.
In the words of Judge Smith in the appellate court, “the court cannot countenance this situation,” where the defendant wishes to remain anonymous to the public, the claimant, and the court. The judge found this raised significant concerns and would undermine the court’s ability to supervise and control proceedings fairly. Without identification, Wright was entitled to a judgment for costs in default.
Imminent Substantive Hearing on Bitcoin Copyright
While many procedural developments and decisions have rapidly emerged across these cases, two aspects are particularly noteworthy.
The first is the factual issue of identity discussed above. The COPA claim trial is scheduled for January 2024. If the court determines that Dr Wright is not Satoshi Nakamoto, then (subject to any appeal of that decision) the Coinbase, Kraken, and BTC Core lawsuits will effectively end at that point. Conversely, if the court finds Dr Wright is Nakamoto, all three claims will proceed fully.
Second, the BTC Core claim addresses a pivotal issue under copyright law. Under UK law, copyright requires that a work be “fixed.” In February 2023, the High Court held that Dr Wright had not sufficiently established that copyright exists in the Bitcoin file format (“BFF”), as it was not “recorded in writing or otherwise” under section 3(2) of the Copyright, Designs and Patents Act 1988 (“CDPA 1988”).
However, on 20 July 2023, the Court of Appeal overturned this earlier ruling (Wright v BTC Core [2023] EWCA Civ 868). Having reviewed the merits of the BTC Core claim, the Court of Appeal concluded that there is a serious issue to be tried and ruled that Wright may indeed hold copyright in the BFF. As a result, this aspect of the claim is now moving forward, and Wright has been permitted to serve defendants outside the jurisdiction.
Looking ahead, if copyright is found to exist in the BFF, this could have significant implications for the future use of Bitcoin and other cryptocurrencies.
Global Perspective
Wright is not only busy in UK courts. Numerous cases are also ongoing in other jurisdictions, including the United States and Norway. We will monitor consistency in decisions across jurisdictions and how interactions between different cases shape Wright’s litigation strategy.
What’s Next?
The next substantive development appears likely to be the trial in the COPA case in January 2024. Clarifying whether copyright exists in databases and computer programs is crucial for technology sector businesses seeking to protect their assets. This judgment will also impact the other three intellectual property cases, as the determination of Wright’s claim to be Nakamoto will significantly influence the trajectory of the remaining claims.
Regardless of the outcome, these cases will have far-reaching implications for the cryptocurrency industry and for the application of copyright and database rights to computer software.
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