Faketoshi Patent Oppositions - The Story So Far

For the past few years, in my spare time I have been working on oppositions against three European patents granted to nChain Licensing AG, each of which originated from GB priority applications filed in April 2016. Each patent named Craig Wright and fellow Australian Stephane Savanah as co-inventors. For those few people who may still be unaware, Wright has since 2015 been falsely and fraudulently claiming to be the person behind the pseudonym Satoshi Nakamoto, the creator of Bitcoin. Wright's implausible, and easily disprovable, claims were disputed in late 2015 almost as soon as they became public through engineered leaks to the press. It was, however, only after several lengthy, and extremely costly, legal battles involving many others (including myself), that his claims were finally and comprehensively demolished by Mr Justice Mellor in a mammoth judgment handed down on 20 May 2024 (Crypto Open Patent Alliance v Craig Steven Wright [2024] EWHC 1198). The judgment was appealed by Wright, but permission was denied by Lord Justice Arnold in, for him, an unusually brief 3 page judgment issued on 29 November 2024. There are further strands to the Craig Wright story, including a contempt of court finding, alleged tax fraud in both the UK and his native Australia and a likely upcoming criminal prosecution for perjury, but here is not the place to go into them.  

Going back to the beginning, the company nChain was set up in 2016 by Wright and his business partner Stefan Matthews, with help from Canadian businessman Robert MacGregor, and enabled by substantial financial backing from Antiguan-based Canadian online gambling tycoon Calvin Ayre. The stated business aim of the company was to patent and commercialise inventions arising from Wright's alleged extensive knowledge of Bitcoin and related technology by virtue of his being Satoshi. As explained in the 2016 article by Andrew O'Hagan, "The Satoshi Affair":

They would complete the work on his inventions and patent applications – he appeared to have hundreds of them – and the whole lot would be sold as the work of Satoshi Nakamoto, who would be unmasked as part of the project. Once packaged, Matthews and MacGregor planned to sell the intellectual property for upwards of a billion dollars. MacGregor later told me he was speaking to Google and Uber, as well as to a number of Swiss banks. ‘The plan was to package it all up and sell it,’ Matthews told me. ‘The plan was never to operate it.’

The infamous "1Feex..." paper wallet.

Even at that time, it was evident to anyone who took the time to look into the matter that Wright was clearly not Satoshi but was a rather inept forger with a particular talent for bare-faced lies. Some, however, apparently remained persuaded (or perhaps were willing to go along with the lies for their own reasons), including Mr Ayre who continued to fund Wright's Satoshi project on the promise of a big payout in the future, not only in respect of the supposedly valuable patentable Satoshi inventions but also on some very large stashes of Bitcoin that Wright claimed to own and which were apparently used as collateral.  

nChain GB filings 2016-2024

So, after having conveniently departed Australia in October 2015 following a raid by the Australian Tax Office, Wright began working as Chief Scientist for nChain in his new base in London to get his  supposed inventions patented. Wright was also incentivised by getting a substantial share in the company. The patent filings started flowing in to the UK IPO, the first one being filed on 23 February 2016 in the name of EITC Holdings Limited (later assigned to nChain). 76 applications in total were filed in 2016 and applications continued to be filed at a similar rate each year right up to the end of 2023, at which point they appear to have come to an abrupt and almost complete halt. 

Wright and friend (not a patent attorney)

Wright, of course, did not do this all by himself but was assisted by people who supposedly knew what they were doing with preparing and prosecuting patent applications. We would normally term these people patent attorneys but I am reluctant to do so in this case because, as it turns out, the main person involved in preparing and filing Wright's applications, at least in the early days, was not actually a patent attorney. She was instead a fairly recently graduated computer scientist PhD with a few years' experience working with patents but had not yet passed the UK examinations. Wright, however, got on very well with her and continued to employ her services right up until at least last year, even though she has still not passed the UK exams. Although the inventions themselves may not have been of the highest quality given their provenance, it certainly did not help that they were turned into patent applications that, at least to some extent, were somewhat handicapped by fairly poor drafting. As it turns out, one of the cases was also not helped during prosecution by some poor handling by others leading up to it being granted. 

I started looking into Wright's patenting activities in around 2020 and first wrote about them here in February 2021, noting that nChain had already built up a substantial patent portfolio with over 300 priority filings, which then resulted in other filings that were prosecuted more widely in other jurisdictions, including at the European Patent Office. At the time I wondered about their technical relevance, given that Wright's relevant knowledge was clearly not going to be important or relevant for any developments in Bitcoin or related technologies. Nevertheless, nChain was already demonstrating that whatever strategy was being used was starting to bear fruit, with patents being granted by the EPO. Many of these patents appeared to me, based on a limited review, to be examples of what I termed 'cargo cult patenting', as they appeared to contain overly technical-sounding, and sometimes lengthy, claims that were able to get through the examination process but which were highly unlikely to be infringed by anyone. It appeared, however, to be mainly a numbers game at that point, where the number of patents being granted was the main aim and not whether the patents covered anything actually useful. The reasoning may well have been that, if a sufficiently large patent portfolio could be built up, it would almost inevitably be considered worth a lot of money to someone and would then be bought up by a big player in the field who wanted to get a position in this up and coming blockchain technology area. It almost didn't matter what the patents covered, as long as they sounded sufficiently technical and their importance could be puffed up by Wright with his brash salesman bravado. After all, Theranos managed to do something similar, at least for a while. 

As a result of the technical obfuscation technique used to get many of their patents through the system, the prospects of finding any of the patents that might be a good enough target for opposing seemed to me unlikely. A particular group of applications, however, came to my attention that were an example of one of Wright's nonsense ideas, which was that Bitcoin could be made "Turing complete". How this was possible when the language used to run Bitcoin transaction scripts did not allow for loops was at the time unclear to anyone actually knowledgeable in the field, but Wright continued (and still continues) to insist that Bitcoin could be made Turing complete by using transactions as logic gates and doing loops off the blockchain. What the point of all this was is still not clear, but nChain's patent attorneys (real ones this time) managed to get 3 patent applications through the EPO's normally rigorous examination system, resulting in EP3449450 granted in June 2022, EP3449451 granted in July 2022 and EP3449452 granted in June 2022. I wrote about the first one of these patents, and the issues around Turing completeness, in November 2022, shortly after an opposition was filed by Arthur van Pelt with my assistance and with financial help from various generous Bitcoin supporters. 

Craig Wright's opinion of the first opposition. 

The first opposition, which was labelled "Faketoshi01" for ease of reference, was all about added matter. For the full details, see the post mentioned above. In short, the problem with the patent was that claim 1 had been amended during prosecution in a way that added matter (not allowed under Article 123(2) EPC). This was not noticed by either the patent attorney who did the amending or by another attorney who signed it off, nor was it noticed by the 3 member examining division at the EPO, who allowed the application. Once granted, the patent was fatally flawed because the only way to correct the added matter issue would have been to remove it. Unfortunately for the patentee, this was also not allowed (under Article 123(3) EPC) because this would inevitably broaden the scope of the patent. The patent was therefore stuck in an added matter trap that was impossible to get out of. Once the opposition was filed, it was inevitable that the only outcome could be revocation. Nonetheless, nChain's patent attorneys tried anyway and ended up making things worse. In the end, shortly before oral proceedings were due to be held to decide the matter, nChain switched patent attorneys and their new representatives clearly saw that the problem was insurmountable. Instead of fighting a battle they knew they could not win, they threw in the towel and asked for the patent to be revoked. The patent was then revoked in May 2024 without any fight. This decision was final and no appeal was filed. 

The second opposition (Faketoshi02) was filed in March 2023 against EP3449452. This time, the issues were not about added matter but about novelty and inventive step. Claim 1 of the patent defined a method that would cover a process carried out by a conventional Bitcoin node that was well known before the 2016 priority date. In the opposition, the primary source of prior art was the 2014 book "Mastering Bitcoin" by Andreas Antonopoulos. This is such an important and useful piece of prior art because it goes into technical detail of how Bitcoin was known to work at the time, including details of the various opcodes used in Bitcoin transactions. Although it had already been cited during prosecution by the EPO examiner, nChain's representative had somehow managed to convince the examiner that there was some kind of difference in what was claimed compared to what was disclosed in the book. As argued in the opposition, this turned out not to be correct.

This time the proprietor fought back. An initial, rather inept, response was first filed by the representatives who got the patent granted, which again ended up causing more trouble than it was worth because it left nothing on file that was even admissible, let alone allowable. As with the first case, the attorneys then got switched and the new attorneys got to work by filing 15 sets of amendments to the claims in response to a preliminary opinion that was very much against them. At oral proceedings held on 26 September 2024, there was quite a fight over the first 7 of these sets of amendments but at this point the representatives decided to give up and throw in the towel, presumably realising they had nothing left. The EPO opposition division then decided to revoke the patent. A written decision issued on 4 November 2024.

The third opposition (Faketoshi03) was filed in April 2023 against EP3449451, again based on novelty and inventive step grounds. The proprietor's representatives, which were again switched after a failed first attempt, filed even more sets of amendments. At the oral proceedings on 24 September 2024, the Opposition Division surprisingly came up with added matter as a new ground of opposition. The proprietor's attorneys, being justifiably surprised at this (as was I), got the proceedings rescheduled to give them time to think a bit more. At the rescheduled proceedings held on 10 December 2024, the new added matter ground was upheld and the patent was revoked after only about 30 minutes of argument. Unfortunately for the patentee in this case, the added matter problem was the same for all their numerous requests so, once the first request fell all the others followed for the same reason. The written decision revoking the patent then issued on 23 December 2024. 

A hit rate of 3 out of 3 is not bad going, but for two of these we are not yet at the end of the story. For the second and third cases, the patentee decided to file appeals against the revocation decisions. I was slightly surprised at this because they had taken the precaution of filing divisional applications on each of them, all of which are currently still pending at the EPO, meaning that they could have another go at getting a patent without the limitations of post-grant amendments. However, given that appeals have been filed there is still the possibility, however remote, that they could rescue something and perhaps save face. So far, grounds of appeal have been filed on Faketoshi02, which have already been responded to, and grounds on Faketoshi03 are due in the next few days (Update 29 April 2025: grounds have now been filed and responded to). So far, the arguments from the proprietor/appellant do not look very impressive but we will probably have to wait at least another couple of years before we find out what the Board of Appeal thinks of them, given the large backlog of cases they have to deal with. More excitement is therefore yet to come. I shall, of course, keep you posted. 

UPDATE 17 September 2026: The appeal process for Faketoshi02&03 has now come to a final end. Oral proceedings before the EPO Board of Appeal were held today for both cases. I attended, representing the opponent Arthur van Pelt, while nChain was represented by their patent attorney from Gill, Jennings & Every. Arthur was also present as an observer. Faketoshi03 was dealt with first, as this was all about novelty and inventive step. The Board was thorough in dealing each of the 15 requests on file, which took about 5 hours in total to go through. In each case, following some extensive arguments from both sides, the Board found the requests not to be allowable for lack of inventive step (a slight change from the opposition decision, which found some to lack novelty instead). The Board then went straight on to dealing with Faketoshi02. I was expecting this to be short, given that the added matter problem appeared to be unsurmountable. The Board, however, had other ideas and, given that they had already discussed novelty and inventive step on the other case and since the inventions claimed in each case were very similar, they decided to look at novelty and inventive step first to avoid the possibility of the case being remitted to the opposition division (a sensible choice, as doing so might have dragged things out for another few years). The appellant picked out what was thought to be their best shot, which turned out to be auxiliary request 16 out of 17, and we had a little argument about whether this was novel and inventive. The Board found it not to be inventive because the distinction over the prior art in that case was just an arbitrary selection of an XOR gate, which was considered by the Board to be obvious to the skilled person. Following that, the process went very quickly, with the Board running through their reasons for finding all the other requests to lack inventive step, which the appellant did not have any further comments on. Once this was done, the added matter issue was in effect pointless, which all parties agreed with, and the Board then concluded that none of the requests was allowable. The Board finished with concluding that none of the requests on each patent was allowable, dismissing both appeals and upholding the decisions of the opposition division. The official written decision will follow later, probably in a couple of months. In summary, this was a complete success for the opponent and a rather embarrassing failure for nChain (although I must say their attorney did a valiant job in defending what turned out to be the indefensible). The whole process, which has taken nearly four years is now over.

Bitcoin File Format

Does copyright subsist in the 'Bitcoin File Format'? This was the question in Wright & Ors v BTC Core & Ors [2023] EWHC 222 (Ch), where Mellor J found earlier this year that it did not because the subject-matter was "not expressed or fixed anywhere" (paragraph 62). On appeal ([2023] EWCA Civ 868), Arnold LJ decided that all that was required was that "the structure be completely and unambiguously recorded" (para 69). The claimants did therefore have a "real prospect of successfully establishing the fixation requirement is satisfied" and the appeal was allowed. Do the claimants now therefore have a prospect, real or otherwise, of establishing that this fixation requirement is satisfied?

Firstly, for those who may be unfamiliar with the term (which is possibly understandable since it appears to have been invented for the legal proceedings), what is the "Bitcoin File Format"? According to the claimants, it is "the original work consisting of the structure of each block of the Bitcoin Blockchain" (referring to a Schedule which is unfortunately not publicly available, but which was written in 2022). The Bitcoin File Format (BFF) is therefore the way that data is arranged in each Bitcoin block. The basics of this are explained on the Bitcoin Wiki page for the Genesis Block, which in raw hexadecimal form looks like this:

Genesis Block (annotated)

My annotations indicate the various parts of the block, which have a particular meaning when read by the Bitcoin software. There is therefore a clear format to the block, which is the same for every subsequent block, but importantly the format is not clear from the block itself. There is in fact no information in the block itself about what each section means. Instead, the meaning has to be inferred from software that knows what to look for. This makes the fixation of the format different to that in, for example, an XML template where the template contains a structure (in <brackets>) that indicates what the content is about. This allows an XML reader to extract information from a file created using that template and order it accordingly. Previous cases have found that copyright can subsist in XML templates, i.e. an XML file with just the placeholders and no content.

An example XML template (from here)

This was the difficulty that Mellor J had when assessing whether the claimants had established that there was a serious issue to be tried. If the claimants could not establish how the format itself (not simply the data output, which was inevitably different every time) was fixed, the fixation issue was not met and there was no serious issue to be tried. The judge attempted to get the claimants to file evidence showing how the fixation requirement was met. The claimants filed various explanations from themselves and third parties that showed how the structure of each block was defined, but none of this was found to be relevant because they were not relevant works identifying the structure, only things that were provided after the event. As Mellor J stated:

"It is most revealing that, despite all these opportunities, the Claimants have not filed any evidence to the effect that a block contains content indicating the structure, as opposed to simply reflecting it. By 'content indicating the structure', I mean, by way of a crude example, a flag or symbol in the block which signals 'this is the start of the header' or 'this is the end of the header', or an equivalent of the sort of content which is found in an XML file format. Whilst I entirely accept that each block conforms to the structure described in Schedule 2 to the Particulars of Claim and is an instance or manifestation of that structure, the absence of such evidence confirms my initial view that, whether one considers the point at which the first, second or subsequent block(s) were written embodying the structure of the file format, nowhere was the structure of Bitcoin File Format fixed in a copyright sense in a material form in any of those blocks" (paragraph 57).

This is the key point on which the judgment was overturned on appeal. It is indeed clear that the format of the block is not evident from the block itself, unless you know what you are looking for, but Arnold LJ considered that this did not actually matter. The block did have a format, but the fixation of this format did not need to be in the same place. He summarised the requirements that the claimant would need to meet in order to establish that copyright subsisted in the BFF, which were set out (in paragraph 61) that: 

i) the Bitcoin File Format is a work; 

ii) it is a work that falls within one of the categories of protectable work specified in the 1988 Act; 

iii) the work has been fixed; 

iv) the work is original; and 

v) the work qualifies for copyright protection under the 1988 Act.

The only point in contention was iii), which Mellor J found was not met. Arnold LJ considered that, while it was correct that the work, that is to say the structure, must be fixed in order for copyright to subsist in it, it did not necessarily follow that content defining the structure was required in order to fix it. All that is required is that the structure be completely and unambiguously recorded. The claimants did therefore have a real prospect of successfully establishing that the fixation requirement was satisfied, provided they were able to provide evidence of the structure being recorded from the right time, i.e. from before the alleged infringements. 

An odd feature of this case is that, in the original Particulars of Claim (PoC), the claimants alleged infringement of: i) Database Right in the Bitcoin Blockchain (discussed by me here); ii) Copyright in the Bitcoin File Format; and iii) Copyright in the Bitcoin White Paper. There was no mention of the Bitcoin software itself, which as it turns out is actually where the Bitcoin File Format is fixed. The structure of the Genesis Block, for example, is in fact completely defined in the original Bitcoin software. It therefore strikes me as strange that the claimants chose not to refer to this as providing the fixation requirement, particularly as Mr Wright claims to have written the software himself and would therefore presumably know where to look. Given that Arnold LJ has decided that the work and the fixation requirements can be met by different things, perhaps this will be what the claimants come up with next in their attempts to enforce copyright in the Bitcoin File Format. 

 

Satoshi or Not - Does it Matter?

Apparently as part of the build-up to the COPA v Wright hearing at the High Court early next year, an article appeared last month in Forbes (paywalled unfortunately, but easy to work around if you know how HTML works) with the title "Satoshi or Not, Here He Comes". The article is largely about Craig Wright, who is described rather charitably by the writer as an "Australian computer scientist". As an aside, if that definition applies then perhaps I should describe myself as a British computer scientist, based on my extensive experience of programming in BASIC on a ZX Spectrum in the 1980s. 

The writer of the article interviewed Mr Wright himself as well as a few others including me (in my human persona). The main thrust of the article is that, as the title suggests, it may not matter whether Wright is proven to be the person behind the pseudonymous inventor of Bitcoin, Satoshi Nakamoto. This is because the company he has been working for over the past several years now has an enormous patent portfolio that could soon be a threat to many. As the writer states: "if he can wield his trove of 800 granted and 3,000 pending patents in 46 jurisdictions the way he wants to, he could soon start charging for the right to build a wide variety of blockchain applications. That would affect everything from the $1 trillion cryptocurrency market to corporate implementations built by some of the largest companies in the world". That is quite a big "if", which seems to assume that Wright will still be around to wield anything after losing his court case as well as there being some value in the patent portfolio if he is. So, let's imagine what might happen if (as seems practically certain to anyone who is not being paid to say otherwise) Wright fails to prove to the High Court next year that he is Satoshi. This would primarily mean that it will become clear to everybody, if they were not previously aware, that Wright does not have, nor has he ever had, any special knowledge about Bitcoin. The patent portfolio should not therefore have any special status anymore, if it ever did have. Another consequence of this would be that, if Wright has been advancing a deliberately false case (which he has been known to do), this would cast serious doubts on the quality and provenance of any claimed inventions in the portfolio. Another point worth getting into is that Wright's so-called "Satoshi Vision" version of Bitcoin, BSV, is the basis of pretty much everything his company nChain has been working to build on since 2016. Most of the patent applications that have been filed since 2016, which now exceed 500 (based only on the number of GB priority filings) are based on the principles on which BSV is based, which are in important ways fundamentally different to those of the original Bitcoin. A substantial part of the patent portfolio's value would therefore be dependent on the principles of operation of the BSV network itself being valuable and something that others would want to use (for example for CBDCs, cattle tracking or  duplicate pictures of cute dogs, among other things). Unfortunately for BSV, this is evidently currently not the case, at least based on the current market value of BSV.

Going back to the article, an impression that it may have given (which I am sure was intended) is that, since nChain are being granted patents, the patents must be valuable. I was even contacted by someone very senior in the Bitcoin space who asked me directly why I seemed to be saying that the patents had value when, in his view, the portfolio was virtually valueless. I was indeed accurately quoted in the article as saying "A lot of these patents are, for better or worse, valid". This did not of course mean that I thought they were valuable. My view is, in fact, quite the opposite based on my own research on the European part of the portfolio, which at the time of writing amounts to 77 granted patents and 376 pending applications. To anyone familiar with how the patent system works, with a sufficiently technical-sounding specification and enough time and money, almost anything can be forced through the patent system so that it turns into a granted patent. This does not mean that the resulting patent has any value. If the claims are amended so that they cover a narrow technical implementation to work around prior art cited by a competent examiner, even if they cover what the applicant actually does in practice, the resulting patent is inevitably easier to work around and infringement can be avoided, making licensing tricky. For the few applications that do cover something broader and somehow work their way past an examiner (which has happened in a few cases), the resulting patents are more likely to be vulnerable to attacks in post-grant proceedings. What is left is effectively a lottery where an invention might be hidden amongst the trove that, by chance, turns out to be useful and valuable, but this would need a lot of persistence, focus and money to find. Given the enormous cost of prosecuting and maintaining a portfolio of hundreds of applications and patents in just one jurisdiction, it would need to take a world-beating invention worth at least hundreds of millions to justify the expense. It might, of course, be in there somewhere but I wouldn't bet on it.

Bitcoin & Database Right

Database right came into being in Europe (specifically the European Union) with the arrival in 1996 of EU Directive 96/9/EC on the legal protection of databases (the "Database Directive"). This was put into effect the following year in the UK by way of the Copyright and Rights in Databases Regulations 1997 (the "Database Regulations"), which is still in effect in the UK with a few post-Brexit amendments. 

Database right was an entirely new ('sui generis', i.e. of its own kind) thing, similar to copyright but intended to cover things that copyright could not cover directly, in particular pure information rather than literary works. In simple terms, database right was intended to protect a database owner's investment in creating and maintaining their database from being appropriated by others using information from the database without their permission. 

An early case in the UK relating to database right was British Horseracing Board v William Hill which, after a referral to the ECJ, ended up at the UK Court of Appeal in 2001. BHB's database right in racing data was found to be infringed by William Hill's unauthorised extraction and reuse in their online betting service. The case established that database right was potentially quite powerful for preventing others from using information that would not itself qualify for copyright protection. 

More recently, in November 2022 a claim was made by Craig Wright against various Bitcoin developers and companies, claiming infringement of copyright in the Bitcoin software, White Paper and 'Bitcoin File Format', along with infringement of database right in the Bitcoin blockchain. The copyright claim is fairly straightforward, in that Mr Wright claims to have written the White Paper and Bitcoin software and therefore anyone using or copying either will be infringing his copyright. This is, of course, disputed and the outcome will depend on whether Mr Wright can prove his claim. This will proceed to trial, although with the exception for the time being of the copyright claim to the Bitcoin File Format, which was struck out last week as having no prospect of success. The claim to database right, which will also be the subject of the trial, is a bit more complicated and, to me at least, is an interesting one to pick apart. So, in a change to my usual commentary on patent matters, I will carry out a brief review of database right, how this might be applied to Bitcoin and whether Mr Wright has any plausible claim. 

Firstly, what is a database? According to Section 6 of the Database Regulations a database is "a collection of independent works, data or other materials which - (a) are arranged in a systematic or methodical way, and (b) are individually accessible by electronic or other means". This broad definition appears to cover the Bitcoin blockchain. This is a series of data blocks that started to be created on 3 January 2009 and continues to be created with a new block arriving on average every ten minutes. Each block is generated by 'mining', which is a process of collating all transactions transmitted to the Bitcoin network that can be fit into a single (size limited) block, the block being created by the miner that finds a hash value for the block that meets a particular target difficulty. Once created, all other nodes on the network validate the block as correct and it becomes the next one in an unbroken chain, with each block referring to its immediately preceding block. The Bitcoin blockchain, which is accessible to anyone with an internet connection, therefore should qualify as a database, with the blocks being independent works in the database that are arranged in a systematic way and accessible by electronic means. 

Secondly, it is crucial to define who the maker of the database is. According to Section 14 of the Database Regulations, the maker is "the person who takes the initiative in obtaining, verifying or presenting the contents of a database and assumes the risk of investing in that obtaining, verification or presentation". The important part of this definition is the need for investment, which goes to the heart of why database right was created in the first place. The person who takes the initiative and assumes the risk of investing in creating a Bitcoin block is the miner. Mining is an energy-intensive process, requiring a large number of calculations to be made to find a correct hash value to mine a block. To do this requires substantial investment in equipment and energy. The maker of any Bitcoin block must therefore be the miner. In practice, this would be the person or company responsible for running a particular mining operation that created a block. 

There are in reality lots of miners, all independently trying to create new blocks in a competitive process that over time drives up the cost of creating blocks. The Bitcoin blockchain will therefore have many different makers. This is accounted for by Section 14(6), which states that "a database is made jointly if two or more persons acting together in collaboration take the initiative in obtaining, verifying or presenting the contents of the database and assume the risk of investing in that obtaining, verification or presentation". So, the Bitcoin blockchain is a database with many different makers. The miners can be considered to collaborate, given that each block is, once mined, transmitted to all other miners who then use it as the basis for subsequent blocks.

Thirdly, we need to define who actually owns the database. Section 15 simply states that "The maker of a database is the first owner of database rights in it". The Bitcoin blockchain is therefore a database that has many joint owners, all of which are miners. 

There is, however, a catch. Database right was originally defined by Section 18 as a right that would only apply to individuals and bodies national or resident within the European Economic Area (the EU plus a few extras). Following Brexit, this was redefined in the UK to be individuals or bodies national or resident within the UK (plus the Isle of Man). The Bitcoin blockchain would therefore only qualify for database right if blocks were made within the EEA or, as from 31 December 2020, within the UK. A further qualification to this is that the making has to have been at a "material time", which is defined as "the time when the database was made, or if the making extended over a period, a substantial part of that period". This would appear to allow for some part of a database to be made outside of the EEA or UK, provided a substantial part of it was made within the EEA or UK. It is evident that some blocks will inevitably have been made within the EEA since the creation of Bitcoin, but does this amount to a "substantial part"? 

Where does this leave Mr Wright? In his Particulars of Claim (PoC), he defines the Bitcoin blockchain as a database within the meaning of the Regulations, defining it in particular as the part from blocks 0 to 478,558 on 1 August 2017 and further in the period from October 2015 to 1 August 2017. Mr Wright, from his claim to have invented Bitcoin, also claims to be the owner of the database right in the blockchain. Mr Wright is, however, an Australian national and was, until around October 2015, resident in Australia. On this basis alone therefore, his claim does not appear to establish that there is any database right in the Bitcoin blockchain. To establish that there is, he would need to show that he was a joint maker in collaboration with others who would qualify as EEA/UK nationals or residents. This seems to be a difficult hurdle to overcome. At best, Mr Wright could claim to be a joint owner of database right in the Bitcoin blockchain, but only if other joint owners within the EEA or UK collaborated with him. 

But what about the period from October 2015 to 1 August 2017? If Mr Wright was in the UK during that period, wouldn't that establish a claim to database right? Perhaps, but only if he can prove that he created some blocks during that period. Mr Wright may then be able to claim to be a joint owner of database right without needing others to join him. There is, however, unfortunately no evidence provided to this effect. 

Another puzzle is, if database right is found to subsist in the Bitcoin blockchain, whether one out of many joint owners of the database is permitted to bring an infringement action without the permission  or involvement of the other joint owners. The Database Regulations do not say how action can be taken for a jointly owned database, but for other IP rights such as copyright and patents the other joint owners would need to be involved and at least made parties to the proceedings. This would clearly be a difficult process for the Bitcoin blockchain, involving possibly many thousands of parties, many if not most of which will be unidentifiable. 

As a final point, even if Mr Wright were to somehow overcome all of the above hurdles, he would still need to prove that he actually created some of the blocks of the blockchain. To anyone familiar with how Bitcoin works, this would be very simple. All that would be needed is to provide a signature verifying ownership of coins in the relevant coinbase addresses. Mr Wright has failed to do this for any addresses, so the possibility of this coming about seems remote. 

In summary, although the possibility of the Bitcoin blockchain qualifying for database right appears at least theoretically possible, the chances of Mr Wright establishing that he is an owner, let alone the sole owner, of the database right appear to be very small. I look forward to finding out how the trial turns out, but I suspect we will be waiting for quite some time. 

Postscript (20 Feb 2023): Although the database right question can most likely be resolved without needing to look at whether anyone is infringing Mr Wright's IP, if we consider that database right does subsist in the Bitcoin blockchain, can any owner claim infringement? This can be resolved simply by looking at the wording of Section 16, which states that "a person infringes database right in a database if, without the consent of the owner of the right, he extracts or re-utilises all or a substantial part of the contents of the database" (emphasis added). What happens once a block is mined? The miner immediately transmits the mined block to all others on the network so that they can verify it and add it to the blockchain. Otherwise, the miner will not be able to claim their coinbase and transaction fees for mining the block. A condition of mining is therefore that the miner consents that all other nodes on the network can copy and verify the block. Therefore, even if the miner is determined to be the owner, they automatically consent to the block being extracted or re-utilised by the act of transmitting it to other nodes on the network. There can therefore be no infringement of any database right in a Bitcoin block. 

EP3449450 (nChain Holdings) - A lesson in added matter

In a change to my usual practice, this post is aimed more at people who do not necessarily have a detailed knowledge of how the patent system works in Europe, specifically at the European Patent Office (EPO). It might, however, be of interest to those that do because it provides a useful lesson in what not to do when amending an application. First though, some background on why I am interested in this particular patent.

In February 2021 I started looking in detail at patents that were being granted by the EPO at an increasing rate to nChain Holdings Limited, and wrote a post about it here. For those not familiar with the company, it is a part of Craig "Faketoshi" Wright's attempts to claim that he is Satoshi Nakamoto, the pseudonymous creator of Bitcoin. As Chief Scientist at nChain, Mr Wright plays a key role in their patenting activity, and is listed as inventor on most of the applications they have filed over the past 6 years or so. I am not privy to nChain's business model, but it appears to involve getting as many patents as possible and presumably at some point licensing them to others for lots of money. As I mentioned on the Dr Bitcoin podcast earlier this month, their business model actually seems to me more like cargo cult patenting, but I admit that there may be some useful  and valuable inventions somewhere in among the 364 European applications filed so far, it's just that I haven't found any yet. Perhaps tracking cattle will be the killer application that will earn nChain billions, but who knows.

I have been keeping a tally of European patents nChain have been getting granted. At the time of writing it is up to 57, which is quite a lot for a small company, and there are many more in the pipeline. Some may be of passing interest to those working in the general field of blockchain applications, but many appear to be obscure variations on themes already well established in the prior art, if not actually lacking in novelty. Mr Wright has nevertheless made vague threats about various people infringing his patents, for example claiming coverage of the Lightning protocol or NFTs on Ethereum. So far, none of the patents have to my knowledge been raised in infringement proceedings. Surprisingly (to me at least), none of them have been challenged on validity grounds, at least not until I had a go at one of them last year by requesting a UK patent office opinion on one of them, unfortunately without success. 

The general theme of the patents, which turns out to make them quite difficult to attack, is that they tend to claim a collection of features that together is probably novel and include a distinction over the prior art that is arbitrary but plausible to argue on inventive step grounds. If all you were interested in was to get as many patents as possible, nChain's strategy so far would appear to fit the bill perfectly (hence my suspicion of cargo cult patenting). This is actually good news for anyone who might be worried about being sued for infringement, because they would either be very unlikely to infringe any of the patents or, if they were possibly infringing, would be able to easily work around any potentially threatening patent. To put it simply, one patent that nobody can avoid infringing is going to be a lot more valuable than a hundred patents that nobody infringes.

Given the limited resources available at the moment (i.e. my spare time and other people's generosity), a full-scale attack on nChain's patents is impractical and, given the above, arguably pointless anyway. This does not, however, mean that it is not possible to attack them at all. With so many patent applications being prosecuted at once, someone is bound to make a mistake at some point, whether this is the EPO examiner or nChain's attorneys. It just so happens that both of these happened in the case of EP3449450. This application is one of a handful that relate to Turing completeness, which Mr Wright has had a thing about since 2015, claiming that the Bitcoin protocol is Turing complete. I recommend watching this video of an "All-Star Panel" in which Mr Wright confuses all present on the subject, including Nick Szabo. 

In essence, what the applications (EP3449450, EP3449451 and EP3449452, all of which were filed on 28 April 2017) try to do is claim that Bitcoin can be made Turing complete by using locking and unlocking transactions to perform logical operations together with other operations off chain. Mr Wright wrote a paper afterwards about this, titled "A Proof of Turing Completeness in Bitcoin Script", although this has been dissected here and shown to be largely a work of plagiarism. 

The application in question started off, as usual for many European applications, as an international application, publishing in November 2017 as WO 2017/187398 A1. Claim 1 of the application as-published (i.e. not examined yet) reads as follows:

1. A computer-implemented control method comprising the steps of: 

    providing a locking script in a first blockchain transaction, the locking script comprising at least one instruction arranged to:

    process at least one Boolean input; and

    implement the functionality of a logic gate.

The international examiner raised objections that the claimed invention was not new over what was described in Andreas Antonopolous' book "Mastering Bitcoin", first published in 2014, given that locking scripts could involve logical operations such as checking for multiple signatures. 

After the application entered the European regional phase in 2018, nChain's attorney responded to the examiner's objections by filing some amendments and arguments, following which there was a round of examination and some further amendments to the claims. This resulted in the following amended version of claim 1 (where the underlined parts are the attorney's additions):

1. A computer-implemented control method comprising the steps of: 

    providing a locking script in a first blockchain transaction, the locking script comprising at least one instruction arranged to:

    monitoring and searching the blockchain or blockchain network to determine the presence or absence of a further transaction;

    process at least one Boolean input from a further blockchain transaction, the Boolean input provided to execute the locking script of the first transaction; and 

implement the functionality of a logic gate, wherein the logic gate is an XOR gate,

    the method further comprising: providing the further blockchain transaction having an unlocking script;

    processing at least one input signal to provide the at least one Boolean input;

    using the at least one Boolean input to execute the locking and unlocking scripts of the first and further blockchain transactions, providing a computing resource arranged to influence the behaviour of a device or process based upon:

    detection of the further transaction within the blockchain or blockchain network; and/or

    the validity of the further transaction.

In essence what the applicant appeared to be trying to do was to claim that a blockchain transaction could be used to implement an XOR logic gate and control some process as a result of an unlocking transaction being found (think perhaps Ethereum-controlled bike locks). To those familiar with the Bitcoin protocol, all this will appear to be lacking in novelty, given that the original Bitcoin scripting language included various logical functions, including XOR (which was subsequently disabled), and the process of locking and unlocking transactions was the way to interact with the blockchain. As for "influencing the behaviour of a device or process", this could cover all kinds of things that could for example relate to a Bitcoin node checking a received transaction and forwarding it to other nodes or including it in a block to be mined. The invention as a whole therefore appears to be lacking in novelty over what was known well before 2016. 

A lack of novelty, however, is not the main problem with the above claim. If we look more closely at the order of the steps, it is clear from the way claim 1 is now presented that the locking script is the part that contains instructions to "monitoring [sic] and searching [sic] the blockchain or blockchain network to determine the presence or absence of a further transaction". This is not what is disclosed elsewhere in the application, where the monitoring and searching is described as being done by an agent running in parallel to the blockchain network. It should also be evident to anyone familiar with Bitcoin script that this kind of thing is not even possible. As a result, nChain's attorney has (presumably inadvertently) described the invention in a way that was literally not disclosed in the original application, as well as being impossible. Not only that, but the EPO examiner did not spot this error and allowed the application to proceed to grant with this, as well as another error the examiner made, intact. This is not, by the way, up to the proper standard we should expect from the EPO. 

European patent law states that a patent “may not be amended in such a way that it contains subject-matter which extends beyond the content of the application as filed” (Article 123(2) EPC). The feature of monitoring and searching being part of the instructions performed by the locking script was not disclosed in the application as filed, so this adds matter contrary to Article 123(2) EPC. 

Another feature of European patent law is that, once a patent has been granted, its scope cannot be broadened. In the words of Article 123(3) EPC, the patent “may not be amended in such a way as to extend the protection it confers”. Therefore, if the patent has been amended to include a feature that adds subject matter contrary to Article 123(2) EPC, it cannot be removed after grant because this would extend the patent’s protection. 

The result is that the patent is now in an impossible position because the amendment needed that would solve the added matter problem would inevitably extend its scope and cannot therefore be made. Claim 1 of the patent, together with any claims dependent on it, therefore appears to be irretrievably invalid. This, of course, makes the patent incapable of being a real threat to anyone. It will, however, remain on the patent register for as long as the proprietor keeps it alive or, if someone takes action against it, for as long as it survives. 

It happens that someone who has been taking a very active interest in Craig Wright's activities over the past few years, Arthur van Pelt, was keen to have a go at attacking the patent. Arthur has recently, with my help, filed an opposition at the EPO (documents available here and here). Thanks to the generosity of various Bitcoiners, the 840 Euro opposition fee has been paid, with some left over for later. The process is unfortunately not quick and it will take until probably the middle of 2023 before we get any further news and some time in 2024 before a decision is made. The outcome, however, appears in my view to be fairly certain, which is that the patent will very likely be revoked. If nChain manage to rescue anything from it, I will be very surprised. In the meantime, there are other targets we can aim at. If anyone wishes to help, please do get in touch.

Craig Wright and nChain's European patents

Craig Wright is, to put it mildly, a controversial character. I will not go into the details why, as others have done this in much more detail (see for example Arthur van Pelt's website). It is sufficient to say here that Mr Wright has claimed, and continues to claim, to be Satoshi Nakamoto, the pseudonymous creator of Bitcoin. His claims are at best dubious and are very much contested. For what it is worth, in my opinion it is abundantly clear that he is definitely not Satoshi Nakamoto. The consequences of this, which are many, have yet to be fully worked out.

Despite not being able to prove that he is who he says he is, Mr Wright has over the past few years managed to build up, via the company nChain Holdings Limited in which he plays a key role, what is now a very substantial portfolio of patent applications. On 1 February 2017, nChain started filing GB patent applications. The total number of GB applications filed in the name of nChain now stands at 290, the latest being filed on 23 December 2020. There are also a further 73 applications, all filed in 2016 in the name of EITC Holdings Limited, which have since been assigned to nChain. These applications, which invariably do not progress beyond the first 12 months in the UK, have been used as priority claims for subsequent PCT, EP, US, CN and other applications. The current state of the patent portfolio is consequently now absolutely massive and clearly represents an investment amounting to many millions of whatever fiat currency you choose to use. For a small company based in London (but registered in Antigua), this is an enormous effort, making it very much an outlier in the patent world.

To summarise the entire portfolio would be a task that is far beyond my limited abilities and available time, let alone my readers' attention span. Instead, I will just concentrate on what nChain has managed to achieve so far at the European Patent Office, which Mr Wright has acknowledged is the toughest one to get applications past. It is still relatively early days, given that we are only a few years from the earliest filing dates, but there have already been some successes. None of the patents has been opposed. An interesting point to note is that all of them are very much computer-implemented and presumably rely on the EPO's established view that applications of cryptography are very much within the allowable area of patentability. 

Given the controversy around nChain and Mr Wright (see here), the fact that their patents have so far attracted no serious attention seems surprising to me. From my limited research so far, there is certainly the possibility that some (see for example here) may be invalid, although it is also possible that the technical relevance of nChain's patents is simply too low to be significant. However, given the huge investment so far, it would be surprising if nChain did not intend to use their patents in some way, otherwise it would be an awful lot of money to spend on what many would consider to be a narcissistic and possibly fraudulent vanity project. It would be interesting to see what others think of it, in particular if there is any relevant prior art on the granted patents that the EPO have not considered.

Update 6-10 Feb 2021: In light of the comments received so far by devoted followers of Mr Wright, I would like to add that it is very easy to verify ownership of any particular bitcoin address. Here's an example:

I, Tufty Sylvestris, confirm that I am the owner of the following address.

bc1quklwszfchvfzpxa7wk8pge7ykczcg0pv54wc8a

IA0TdtltWrzK62rDVw/WkZ36hNOGshhw8UFXySK7VFY9Nv5mQWr6B3aXpDpFH15gPH7uUJsPzlLB/T+eKkXjMWo=

Anyone can verify this unambiguously, for example by plugging the text, address and signature into a bitcoin wallet verification tool (e.g. Electrum, which I use). Craig Wright has not been able to do this for any address containing coins owned by Satoshi Nakamoto (e.g. the single address mentioned in block 0, which was definitely owned by Satoshi, who should therefore have the corresponding private key enabling the address to be signed). Therefore Craig Wright's claims to be Satoshi Nakamoto can be discounted. Hitchen's razor applies.