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A recent court action involving Dr Craig Wright, who asserts that he authored the White Paper “Bitcoin: A Peer-to-Peer Electronic Cash System” under the pseudonym Satoshi Nakamoto, has led to an interesting judgment on the copyright protection of file formats.
The decision by Justice Mellor in Wright & Ors v BTC & Ors [2023] EWHC 222 (Ch) arose in connection with the procedural question of whether Dr Wright may serve a claim on a number of defendants outside the UK. For this, Dr Wright needed to show that he had a serious issue to be tried. In the main proceedings, Dr Wright claims to be the owner of certain database rights in the Bitcoin Blockchain, and the copyright in the Bitcoin White Paper and what he called the “Bitcoin File Format”. According to Dr Wright, the defendants have infringed his rights by operating the so-called BTC and BCH Blockchains, which are variations of the original Bitcoin Blockchain (now generally known as BSV).
Justice Mellor readily agreed that the allegations in respect of the database rights and the White Paper raised serious issues for trial, but he was less convinced about the infringement case regarding the Bitcoin File Format.
Section 3(2) of the CDPA 1988 states that copyright will not subsist in a literary work unless and until it is recorded in some way (commonly known as the “fixation” requirement). The key question for Justice Mellor was: when and in what form was the alleged literary work in the Bitcoin File Format first recorded? Without the actual structure of the Bitcoin File Format being defined in a material form, there would be no recorded work for copyright purposes.
Justice Mellor reviewed three previous cases regarding the protection of file formats: SAS Institute v WPL, Technomed v Bluecrest and Software Solutions v 365 Health and Wellbeing. Of these, Technomed may be most noteworthy. In that case, the claimant succeeded in arguing that it should own copyright in a data format written in the so-called XML language.[1] As explained in that judgment: “XML is a standard computer language for defining and representing structured data in a way which is partly self-describing using natural language terminology”. The XML formats in question contained “content – not just structure” and were therefore capable of being a protected work for copyright purposes. The “content” consisted of the terminology used in the definitions of the data which were to be included in the XML files.
Justice Mellor accepted that Dr Wright may have expended substantial skill and judgment in creating the Bitcoin File Format. He also accepted that there was no doubt as to what the Bitcoin File Format actually is because it had been clearly described in the particulars of claim.
However, he disagreed that Dr Wright’s counsel had identified what exactly made up the relevant “work” which defined the Bitcoin File Format and which was said to be infringed. It is not sufficient to show that when the software of the Bitcoin system runs, a particular block on the blockchain is created in the Bitcoin File Format. Instead, evidence is required that a block contains content indicating that structure, as opposed to simply reflecting it. Justice Mellor explained that a flag or symbol in a block which signals start and end points of certain sections, or an equivalent of the sort of content found in XML files, would have helped to meet that requirement.
Justice Mellor therefore concluded that the Bitcoin File Format was not set out in any part of the software or blocks written to the Bitcoin Blockchain, and hence it was not fixed in a copyright sense. On this basis, he required Dr Wright to delete his claim concerning infringement of copyright in the Bitcoin File Format before serving his statement of case on the foreign defendants. He refused permission to appeal his conclusions.
Since SAS Institute, it has been known that data file formats are generally not protected as part of an underlying computer program. But this did not mean that the format of data files themselves were not eligible for protection. The subsequent cases of Technomed and Software Solutions made clear that at least certain XML files may attract copyright if they contain original content rather than just structure.
A key takeaway from the present case is that, to cite Justice Mellor, “not all file formats are equal”.
A claimant will need to show not only that the format is an original expression of thought, but also that the format contains actual content that records that thought. Without such content, there is no recorded work for copyright purposes. It is not sufficient that the file format materialises only when the computer program runs and happens to create a file in the relevant format. As put by Justice Mellor, relying on SAS Institute: “The fact that one can identify a fixation is a necessary, but not a sufficient, condition for the subsistence of copyright.”
In most cases, the infringement of file formats will be ancillary to a more general claim for infringement of software or other related works which may be more easily identified. Yet the issue is not simply academic. The claims in Software Solutions, for instance, related entirely to XML files, and with the growth of AI-generated files and formats and other technological developments we can expect to see this sort of issue re-emerge in other guises over the next years.
[1] Similarly, XML files were accepted to be literary works protected by copyright in Software Solutions v 365 Health and Wellbeing Ltd.
28 February 2023
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