In a recent UK case, Wright & Ors v BTC Core & Ors [2023] EWHC 222 (Ch) (07 February 2023), Justice Mellor ruled that the Bitcoin file format could not be protected by copyright. He did so on the basis that the fixation requirement for copyright subsistence was not met.
In a blog post on the case, Bitcoin file format not protected by copyright: Wright v BTC Core, I wrote “the decision left me scratching my head” and argued, the case was wrongly decided.
The UK Court of Appeal in Wright & Ors v BTC Core & Ors (Rev1) [2023] EWCA Civ 868 (20 July 2023) just reversed the lower court agreeing with me that the plaintiff “has a real prospect of successfully establishing that the fixation requirement is satisfied”.
The decision of the Court of Appeal was rendered by Justice Arnold, a legendary UK intellectual property judge. His reasons canvass many copyright law principles. However, the substance of his reasons for reversing the decision of Justice Mellor were stated as follows:
Dr Wright contends that the judge was wrong to hold that Dr Wright has no real prospect of success in establishing that the requirement of fixation is satisfied. I agree with this.
With respect to the judge, in my opinion there are a number of flaws in his reasoning. First, the judge’s statement that “no relevant ‘work’ has been identified containing content which defines the structure of the Bitcoin File Format” confuses the work and the fixation. The work Dr Wright relies upon, the Bitcoin File Format, has been clearly identified. The question of how and when that work was fixed is a different one. Dr Wright’s case is that the work was fixed when the first block in the Bitcoin blockchain was written on 3 January 2009.
Secondly, even if the judge meant to say “fixation” rather than “work”, his statement presupposes that it is necessary for fixation for there to be content which defines the structure of the Bitcoin File Format. This is not necessarily correct. As the judge clearly appreciated, the work in which Dr Wright claims copyright is a structure. It is quite correct that the work, that is to say, the structure, must be fixed in order for copyright to subsist in it; but it does not necessarily follow that content defining (or describing or indicating) the structure is required in order to fix it. All that is required is that the structure be completely and unambiguously recorded…
Thirdly, the judge did not apply the test laid down in Levola, which post-dates SAS v WPL, of asking whether the fixation relied upon by Dr Wright made the Bitcoin File Format identifiable with sufficient precision and objectivity. Dr Wright contends that the fixation upon which he relies satisfies this test. In support of this contention Dr Wright relies upon evidence, which the judge said at [56] that he would assume was correct, that third parties have been able to deduce the structure comprising the Bitcoin File Format from the blocks in the Bitcoin blockchain. The judge said that this did not assist Dr Wright, but I disagree.
Fourthly, and a point closely related to the third point, the judge did not consider the rationale for the requirement of fixation. As I have explained, it serves two purposes: to evidence the existence of the work and to delimit the scope of protection. Dr Wright contends that the fixation upon which he relies serves both these purposes. The first block in the Bitcoin blockchain evidences the existence of the Bitcoin File Format and enables the scope of protection to be determined. Dr Wright again relies upon the evidence that third parties have been able to deduce the structure comprising the Bitcoin File Format as supporting this. I again consider that this evidence supports Dr Wright’s case.
The final point concerns the judge’s discussion of Schedule 2 to the Particulars of Claim. Dr Wright does not rely upon Schedule 2 as fulfilling the requirement of fixation, but not for the reason stated by the judge. It is not necessary for Dr Wright to show that Schedule 2 formed part of a causative chain between Dr Wright’s 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. This distinction is made clear by section 3(2) read together with section 3(3).
Suppose, for example, an author A who satisfies the qualification requirements extemporises an original literary work orally before an audience, and the work is digitally recorded by B (whether with or without A’s consent). Next suppose that C is also present in the audience and memorises the work, and that a week later C transcribes the work from memory and publishes it without A’s consent. On these facts A can rely upon the recording by B as satisfying the fixation requirement, and so copyright will subsist from that moment. Moreover, A has a good claim for infringement against C despite the absence of any causative link between B’s fixation and C’s infringement. I would add that it makes no difference if the digital recording is erased shortly after it is made, because fixations do not have to be permanent and may be destroyed either deliberately or accidentally. This shows that one should not place too much weight upon the evidential and definitional purposes served by fixation.
I thought the lower court decisions was “a head scratcher”. I’m delighted that Justice Arnold agrees.
