Why did the Court of Appeal reverse the Bitcoin copyright finding?
In February 2023, we reported a judgment of Mr Justice Mellor, which refused permission to serve a claim relating to copyright infringement of the Bitcoin File Format (BFF). The judge found that there was no real prospect of success because the BFF did not meet the fixation requirement as it had not been recorded (Can a Bitcoin file format be protected by copyright?).
The Court of Appeal has now allowed an appeal against that decision, finding in favour of Dr Craig Wright (who claims to be Satoshi Nakamoto, the inventor of Bitcoin).
The Court of Appeal’s main judgment, by Arnold LJ, discusses the fixation requirement. This is found in section 3(2) of the Copyright, Designs and Patents Act 1988, which states: “Copyright does not subsist in a literary, dramatic or musical work unless and until it is recorded, in writing or otherwise; and references in this Part to the time at which such a work is made are to the time at which it is so recorded.”
Fixation on Bitcoin
Arnold LJ identified five flaws in the first instance judgment.
First, the statement that no relevant work had been identified confused the work and the fixation: the BFF was clearly identified as the work and the question is how and when it was fixed.
Secondly, the judge’s statement presupposes that it is necessary for fixation for there to be content that defines the structure of the BFF, but this is not necessarily correct: all that is required is that the structure be completely and unambiguously recorded.
Thirdly, the judge did not apply the Levola test (arising from an attempt to obtain copyright protection for the taste of a dip containing cream cheese and fresh herbs), namely: was the BFF identifiable with sufficient precision and objectivity? Dr Wright’s evidence that third parties had been able to deduce the BFF structure was relevant here.
Fourthly, the judge did not consider the rationale for the requirement of fixation, which serves both to demonstrate the existence of the work and to delimit the scope of protection. Again, the evidence that third parties can deduce the structure supported Dr Wright’s case.
Fifthly, Arnold LJ said it is not necessary to show a causative chain between the alleged copyright work and the alleged infringements:
“Copyright in a literary work protects the work as an intangible abstraction, not the particular tangible medium in which that work may happen to have been fixed. It is not necessary for the copyright owner to prove that the fixation relied upon for the purposes of subsistence has been copied, only to prove that the work has been copied.”
What does this mean?
The judgment is good news for Dr Wright, whose copyright claim (one of four cases he has pending in the courts) can proceed against 26 defendants.
More generally, it analyses in depth the fixation requirement, including the relevant international treaties as well as UK and EU case law. Arnold LJ stressed that two conditions must be met: the subject-matter must be original in the sense that it is the author’s own intellectual creation and it must be expressed in a manner which makes it identifiable with sufficient precision and objectivity.
This analysis will be very useful for all parties in copyright cases, especially those involving cutting-edge technologies.