Self-proclaimed Creator Of Bitcoin Can Proceed With Claim That Bitcoin Branch Networks Breach His Intellectual Property Rights

• Jurisdiction: United States,Federal
• Law Firm: Herbert Smith Freehills
• Subject Matter: Technology, Fin Tech
• Author: Mr Chris Bushell, Ajay Malhotra, Andrew Moir, Philip Lis, Charlie Morgan, Rafael Lawrence and Dan Huang
• Published date: 27 February 2023

Dr Craig Wright claims to be the inventor of Bitcoin and to have authored the Bitcoin White Paper in 2008, created the Bitcoin File Format and mined the inaugural block in the Bitcoin Blockchain - the 'Genesis Block'. Despite the Bitcoin White Paper having promoted de-centralisation, Dr Wright is now seeking to prevent others from using his alleged intellectual property.

A recent decision of the English High Court, Wright v BTC Core [2023] EWHC 222 (Ch), means that Dr Wright can continue his claims in relation to his alleged database rights over the Bitcoin blockchain and copyright in the Bitcoin White Paper and can serve proceedings on the defendants out of the jurisdiction. The court concluded that - assuming the facts are as alleged by Dr Wright - those two claims are arguable. However, it dismissed a claim for copyright in the Bitcoin File Format as unarguable.

It remains to be seen what the outcome of this case will be (including whether this decision will be appealed to the Court of Appeal) and what implications (if any) it will have for the continued operation of the Bitcoin branch networks, BTC and BCH.

In another claim brought by a company of Dr Wright's, Tulip Trading Ltd v van der Laan [2023] EWCA Civ 83, the Court of Appeal recently overturned a decision of the High Court that there was no arguable claim that developers of a blockchain network owe users a fiduciary duty. Our analysis of Tulip can be accessed here.

Background

Dr Wright brought proceedings before the English court seeking recognition of alleged copyrights over the Bitcoin White Paper and the Bitcoin File Format and database rights over the entire Bitcoin Blockchain resulting from his alleged intellectual creation.

Using these rights, Dr Wright seeks to prevent the further operation of two Bitcoin networks, BTC and BCH, which resulted from forks in the original network that Dr Wright alleges he has created. As the 26 entities and individuals alleged to be responsible for the BTC and BCH networks are located outside England & Wales, Dr Wright was required to obtain the court's permission to serve his claim out of the jurisdiction.

Following a review of the papers (ie without a hearing) the High Court was satisfied that it should permit service of the claims relating to copyright infringement regarding the Bitcoin White Paper and the alleged database rights over the Bitcoin Blockchain. It concluded that the Bitcoin White Paper is incorporated in the BTC and BCH chains, and there is...