Challenging the Bitcoin Copyrights
After representing that he is Satoshi Nakamoto, Craig Wright now holds two approved Bitcoin copyright registrations. Does a practical path to challenging their authorship even exist?
It would be difficult to name a more divisive figure in any community at the moment than Craig Steven Wright. A denizen of the UK, avid Bitcoin SV supporter, and nChain chief scientist, Wright has claimed on be the individual, or a member of an alleged group of individuals, behind Satoshi Nakamoto — the pseudonym used by the creator of Bitcoin. Wright’s history in the Bitcoin community is rife with controversy — with battle lines being drawn between those who believe his claims and those who consider him anathema. Truly, the only point on which Bitcoin maximalists and BSV acolytes can agree is that there is simply no middle ground in this war.
For the past few years, in a personal capacity and via his role at nChain, Wright has filed for IP rights over a trove of technology in the Bitcoin and wider blockchain space. Though tallying IP application numbers is notoriously difficult to benchmark at any given time, the chairman of nChain’s strategic advisory board penned an editorial in early March of 2019 claiming that the company had, at that time, over 665 pending patent applications worldwide. And if recent news is any indicator, he doesn’t appear to be slowing down any time soon.
Late last month, in the latest chapter of the Wright IP saga, the U.S. Copyright Office approved two Bitcoin-related copyright registration applications submitted by Wright:
1. Bitcoin: A Peer-to-Peer Electronic Cash System (Text, Reg. No. TXu002136996)
The first copyright covers the Bitcoin Whitepaper, officially titled Bitcoin: A Peer-to-Peer Electronic Cash System. Notably, as with the second copyright below, we see Craig Steven Wright representing to the U.S. Government that he alone is Satoshi Nakamoto.
2. Bitcoin (Computer File, Reg. No. TX0008708058)
This second copyright ostensibly covers the original Bitcoin code that was used to create the genesis block on January 3, 2009.
On the day the registrations hit the wire, we witnessed widespread disbelief, confusion, and anger on social media. Cryptotwitter memed. Normies didn’t notice, much less care. In other words, it was a typical weekday. But now, after a few weeks have passed, what does the Bitcoin copyright fiasco mean in the long run, and could the registrations eventually lead to a determination regarding the validity of Wright’s copyright registrations and the related authorship claims? This article will discuss the relevant law and Copyright Office procedures as they relate to Wright’s registrations and will attempt to determine whether the U.S. system of copyright registration and enforcement is even set up to determine whether a name listed as author of a pseudonymous work is the true author.
Before we get into the meat of the analysis and explore some hypotheticals, let me get a couple of things out of the way about my credentials to be speaking on this matter. First, I understand Bitcoin at a granular level. I am the founder of IdeaBlock, a software startup in the legal tech space. Like some other software offerings in the wider blockchain world, we leverage the immutability of the Bitcoin blockchain to prove time. I personally wrote every line of code that defines how our software interfaces with Bitcoin and know the protocol down to the bare metal.
But I have not always been a developer or entrepreneur by trade. Before becoming a startup founder, I spent over a decade as an IP professional. First, as a patent examiner at the U.S. Patent and Trademark Office, then as a law student, the editor-in-chief of a widely distributed IP law journal, a judicial clerk at the federal trial court and appeals court levels, and lastly as a practicing IP attorney at a large K Street law firm, a large international law firm in the Midwest, and a couple of boutique patent firms. I know IP law much better than I know Bitcoin.
Also, any hypothetical discussed should be read and interpreted accordingly — as an academic exploration of the effects of a potential real-world scenario to existing law to test the veracity of a suggested idea or theory. By no means are such hypotheticals meant to explicitly or implicitly suggest that individuals take a course of action, such as, for example, filing a pseudonymous registration to materials published by Satoshi Nakamoto years ago to affect some official fact-finding as to the veracity of a previous copyright registration application. Nothing in the present article constitutes legal advice and should not be taken as such.
Copyright Law and Bitcoin Authorship: Toward an Answer
Let’s start with some basics. First, what is a copyright, exactly? The U.S. Copyright Office defines a copyright as “a form of protection grounded in the U.S. Constitution and granted by law for original works of authorship fixed in a tangible medium of expression.” It should be noted that there is a difference between the underlying copyright itself- which is created when a work is fixed into a tangible medium — and the registration of this underlying copyright — which is necessary to register a work with the U.S. Copyright Office, a prerequisite to bringing an infringement action. As explained by the court in Pasttime LLC v. Schreiber (2017):
Although “copyright” and “registration” are sometimes treated as synonyms in common parlance, it is important to distinguish these two legal concepts. A copyright “exists automatically upon the creation and fixation of an original work of authorship in a tangible medium of expression.” . . . . A registration, in contrast, is granted by the Copyright Office, and the Copyright Act conditions certain statutory benefits — most notably, the right to sue for infringement — on registration. . . . In other words, copyrights exist by virtue of the author’s creation, while copyright registrations exist by grant of the Copyright Office.
Our inquiry in the present case of the Bitcoin copyrights involves the underlying copyrights as a foundational layer involving proper authorship- but presents itself to us in the context of the U.S. Copyright Office procedures for registering the work. As it turns out, because the Bitcoin Whitepaper and original source code were authored under a pseudonym and (hypothetically) the person or persons behind the pseudonym have yet to be definitively identified (despite past attempts by some), we have a very interesting situation on our hands — and one that exposes a possible flaw in the U.S. copyright apparatus.
Copyright Office Procedure: Form Over Fact-Finding
The rules and policies of the U.S. Copyright Office (“the Office”) are laid out in The Compendium of U.S. Copyright Practices (“the Compendium”), which includes detailed information regarding almost all aspects of copyright registration procedure in the United States. Contrary to what many might believe regarding its responsibilities within the greater federal government apparatus, unlike the U.S. Patent and Trademark Office, the Copyright Office does not conduct fact-finding to determine the veracity of authorship claims contained in copyright registration applications:
The author or co-authors listed in the application are presumed to be the sole authors or joint authors of the expression claimed therein. Although the U.S. Copyright Office does not investigate the truth of the claims asserted in the application, it does verify that the asserted authorship facts are consistent with the facts contained in the deposit copy(ies) or elsewhere in the registration materials. Compendium § 503.2 (3d ed., 2017).
Many are puzzled by this rather noninvasive handling of applications for copyright registration- especially in view of the comparative full-cavity search given to patent applicants by the U.S. Patent and Trademark Office (“USPTO”). But unlike the USPTO, an executive branch agency tucked within the bureaucratic monolith officially known as the U.S. Department of Commerce, the U.S. Copyright Office is not an executive agency. Instead, it is a service unit of the Library of Congress, and as such, is a body of the legislative branch. In that role, it not only records claims to copyright ownership day-to-day, but is charged with high-level policy responsibilities — such as defining the role of United States in furthering democratic principles of property ownership on the international stage and advising Congress regarding the particulars of domestic copyright policy. As such, unlike the USPTO or the federal judiciary, its primary role is not rooted in enforcement or adjudication, but recordation and consultation.
Unfortunately, the head-scratching does not stop at the agency level. Exacerbating public confusion regarding its role, the Copyright Office not only accepts authorship details presented for named authors without factual inquiry, it also precludes any inquiry into truth of authorship for works by pseudonymous authors — those written by authors using a pen name. Said differently, where an author of a pseudonymous work does not register the work with the Office, anyone claiming to be the true author behind the pseudonym can submit a registration application to that work without any inquiry as to the veracity of the authorship claim.
If this whole thing seems “off” to you, don’t fret — you are not alone. In fact, this same confusion was so widespread in the wake of Wright’s registrations that the Office took the relatively rare step of issuing a pair of public responses on the matter to clear the air, even tweeting about the issue from its official account:
In its responses, the Office explained some general points regarding official Copyright Office policy on the registration of pseudonymous works, stating:
As a general rule, when the Copyright Office receives an application for registration, the claimant certifies as to the truth of the statements made in the submitted materials. The Copyright Office does not investigate the truth of any statement made….In a case in which a work is registered under a pseudonym, the Copyright Office does not investigate whether there is a provable connection between the claimant and the pseudonymous author.
Despite this general policy, however, the Copyright Office apparently “went the extra mile” with respect to the Bitcoin-related registration applications, asking him to simply confirm that he was the author:
In the case of the two registrations issued to Mr. Wright, during the examination process, the Office took note of the well-known pseudonym “Satoshi Nakamoto,” and asked the applicant to confirm that Craig Steven Wright was the author and claimant of the works being registered. Mr. Wright made that confirmation. This correspondence is part of the public registration record.
Sarcasm aside, this added confirmation volley will surely fail to settle the matter for those who view Wright’s claims as dubious. Common sense tells us that if an applicant is willing to improperly claim authorship in the original application (hypothetically), would a subsequent request for confirmation of such an authorship claim reveal anything new? And would that answer change in the opposite case, where a proper claimant sought to obtain a copyright registration? Doubtful.
So taking stock of the situation at hand, we have two copyrights registered to an applicant who claims to have authored both the Bitcoin Whitepaper and the original Bitcoin source code. But at no time was the applicant pressed for any proof of authorship other than doubling down on his own word. But what if someone — say, hypothetically, a group of individuals who can prove that he is not the true author, or anyone at all for that matter — decided to sue Wright for a judicial declaration regarding the proper authorship or filed a competing application for registration of the same exact works? This is where things get interesting.
Challenging Authorship of a Pseudonymous Work — Let’s Get Hypothetical
Suppose we strain our imaginations here and hypothesize that Mr. Wright is not the true author of the Bitcoin Whitepaper or original source code. I’ll give you a minute to fight through the mental gymnastics required to imagine such a warped alternate reality — but please also imagine that you are the true author of these works ( i.e., assume, again hypothetically, that Craig Wright lied on his application and fraudulently attested to his authorship of the works). Is our system equipped to establish true authorship absent an initial enforcement action by an improper author or claimant?
A Hypothetical Judicial Path
As a first academic exercise, we will examine the options afforded a true author when a copyright is registered to another claimant based on improper authorship. In addition to the hypothetical improper authorship claim by Craig Wright, let us further assume that the true group of authors have approached me (a hypothetical me, of course) to advise them regarding how they might leverage the federal courts to correct the improper rights granted to Wright via the improper registrations.
In such a hypothetical, I would first look for an affirmative civil cause of action that has been recognized by the courts that would allow them to bring such a corrective action. In most cases, absent a particularly strong set of facts, an equitable cause of action seeking declaratory relief (such as if Mr. Wright began widespread and aggressive enforcement campaign) is unlikely to prove fruitful for anyone but the lawyers. If, however, the true author is able to decisively prove authorship against all other existing claims ( e.g., by signing a message using one or more private keys known to belong to Satoshi), it is within the realm of possibility that a court could entertain the suit based on a strong set of facts in the complaint. In most other scenarios, such a cause of action have historically proven impractical (though such cases are rarely filed).
Recent caselaw, however, offers some optimism for those who might want to have the authorship question answered directly by the federal courts in a civil action¹. As a first option, there is recent precedent for federal courts entertaining requests for declaratory judgement of authorship. Specifically, one of the remedies requested by the plaintiff in Leonard v. Nike (S.D. Cal. 2019) is a declaratory judgement of sole authorship, and one of the remedies granted in Sprengel v. Mohr (C.D. Cal. 2013) was a declaratory judgment of sole authorship². However, neither the Leonard complaint nor the Mohr opinion identify any authority — mandatory, persuasive, or otherwise — for requesting or granting such a declaration. Indeed, applicable case law is sparse.
In most other cases, the issue of authorship is examined in the context of an infringement action — namely, in the form of an affirmative defense raised by an accused infringer. In other words, returning to our purely hypothetical scenario, if Wright brought an infringement action against one or more Bitcoin users based on his Bitcoin-based copyright registrations, the allegedly infringing party (infringement defendant) could assert that the copyrights at issue are invalid due to knowingly improper authorship. The U.S. circuit courts, however, have set an increasingly high factual bar for defendants to meet with such an affirmative defense of copyright invalidity due to improper authorship. There is one scenario, however, that would again likely meet such a high bar: a different Satoshi Nakamoto comes forward to sign a message using at least one verifiable private key (assuming that, of course for merely academic reasons in this limited hypothetical scenario where Craig Wright is not in fact Satoshi Nakamoto).
It appears, therefore, that federal court litigation may offer a couple of options for adjudicating the truth regarding proper attribution for the Bitcoin Whitepaper and source code: (a) someone filing a federal suit requesting the court to issue a declaratory judgment regarding authorship or (b) Craig Wright suing someone for copyright infringement. Neither of these options are likely to see the light of day, let alone result in a definitive answer from a federal court on the matter. That said, the likelihood of success in either case would be significantly higher if you happen to be an individual that possesses one or more private keys known to be in the possession of Satoshi Nakamoto (or you happen to be an attorney that might have been approached by one or more of these individuals and these one or more individuals may be preparing to deploy this information in a judicial forum to set the authorship record straight once and for all — hypothetically).
Adverse Claims: A Hypothetical Copyright Office Path
Next, let us explore any procedural avenues that may be available via the Copyright Office for a (hypothetically) true author of a previously registered but improperly claimed work. As explained above, the Copyright Office does not as a matter of course delve into the veracity of authorship claims. But at over 1,150 pages in length, the Compendium must speak to the possibility of an applicant (hypothetically) improperly claiming authorship in a registration application, right? Well, yes. The Compendium contemplates such a hypothetical scenario and even outlines a procedure for a third party ( e.g., the true author or authors) to challenge the validity: the adverse claim.
An adverse claim occurs in a situation where:
- The Office receives two or more consecutive or simultaneous applications by different applicants to register the exact same work, and each application contains conflicting statements regarding the authorship and/or ownership of the work; or
- One party asserts that another party’s claim to copyright is unauthorized or invalid and submits an application for a new basic registration on behalf of the appropriate party.
For instance, let us consider the hypothetical situation introduced briefly above, where an attorney is contacted by one or more individuals that are in possession of private keys known to be used by Satoshi, and these one or more individuals indicate that they would like to become clients and set the Bitcoin authorship record straight once and for all (or hypothetically, vis-a-vis Craig Wright). In this situation, the clients could file an adverse claim by filing an application to register the Bitcoin Whitepaper and/or the initial Bitcoin code as a copyright. In addition, per chapter 1800 of the Compendium, our hypothetical clients “should provide a brief statement in the Note to Copyright Office field or in a cover letter indicating that the exact same work has been registered by another party.” Ultimately, an adverse claim is presented in the form of a typical copyright registration application that includes a statement indicating the same work has already been registered by someone else.
Even if such an adverse claim was filed directly challenging the validity of one or both of Wright’s copyrights, chapter 1800 of the Compendium is clear that the adversarial nature of the claim will not change the role of the Copyright Office when it comes to registering a copyright to the work at issue. Specifically, § 1808 explains:
In most cases, the Office will issue a separate registration to each party and will create a separate public record for each registration. The Office will not cancel the other registration or the registration number that has been assigned to that registration, it will not change the information set forth in the other registration or the public record for that registration, and it will not crossreference those records with the records for the new registration. Instead, each registration will coexist with each other in the public record.
Though the Office is clear that it will simply register multiple applications to the same work, the Compendium states that the Office will conduct a further function in the case of an adverse claim: inform the other party. So, back to our hypothetical, should another individual or group of individuals wish to file an adverse claim against one or both of the copyrights registered to Wright, he will be made aware. But it is clear that the official Office policy is again that it will not dig into the veracity of statements made by the applicant in an adverse claim.
A Blind Spot in the System?
Having examined the judicial and Copyright Office options for challenging the Wright registrations, we are left without a straightforward way for challengers to obtain a determination from a governmental entity regarding authorship. Specifically, any potential litigation path to such a determination is unlikely given that:
- Wright will likely not enforce the registered Bitcoin copyrights against another applicant (or anyone at all) because a suit could potentially open him up to authorship challenges, and
- The question of whether a challenging party can even file a suit in federal court for a declaratory judgment to authorship is far from settled, and as a result, the option of initiating litigation against Wright as to authorship would likely be far too risky and expensive for anyone except the most wealthy and driven plaintiffs.
And as to any path to such an authorship determination within the Copyright Office, as with other instances where fact-finding may be required, the Office punts in the context of receiving an adverse claim to an already-registered copyrights — leaving the competing applicants to duke it out in the appropriate court. But in view of the dead-end prospects of the litigation path outlined above, this path is likewise a non-starter.
As a result, the present system offers no discernible direct path to recourse for a true pseudonymous author whose work has hypothetically been registered by a non-author.
This constitutes a glaring systemic weakness that could easily result in situations that violate bedrock principles of American intellectual property law and private property ownership, and even the greater concepts of fairness and equity that undergird American society and tradition as a whole.
As the Wright case demonstrates, if the system is left unaltered, a non-author could simply claim to be the author of a pseudonymous work in any instance. And then they could simply wait — as long as they do not sue anyone to enforce the copyright, they can avoid a direct challenge to their authorship claim, at least one that has any teeth. They captain the boat in this situation, and if they simply keep it between the buoys, they can collect any residual benefits associated with copyright authorship — social distinction, leverage for product marketing and sales, increased employment potential, a meme shitcoin fork price — in perpetuity, without the threat of proving their authorship claim is genuine. This residual benefit comes at a real cost to the actual author and to the community that supports ideals furthered by such an actual author.
In the vast majority of copyright registrations, the author of the underlying work is known and goes unchallenged. But the application of a seemingly blanket rule against factual inquiry by the Copyright Office — even in instances where true authorship of a pseudonymous work is unknown and is the subject of clear public concern — looks a lot like the rigid and unapproachable brand of government that our country was founded to prevent. This could be quickly and easily fixed by Congress without requiring any additional public resources of consequence, but I won’t hold my breath.
Hypothetical: What Bitcoin Users Can Do
The controversy surrounding the Bitcoin copyrights shows the passion of the Bitcoin community and its commitment to the credo “don’t trust, verify” — even when it comes to Satoshi. But as the vast majority of these Bitcoin users are non-authors of Bitcoin source code and the Bitcoin Whitepaper, outside of tweeting and risking their financial security, they feel powerless as it applies to the registered Bitcoin copyrights.
Now, hypothetically, there could be a way for Bitcoin users to highlight their point to the Copyright Office, which could hypothetically force action on their part — though this should not be taken as advice or any call to action whatsoever. Hypothetically, the community of users could each take up their pen and fill out a copyright application — say, to the Bitcoin Whitepaper, for example. As a copyright application can be filed by anyone in the case of a pseudonymous work by simply using the pen name on the underlying work as the applicant’s name, these users could effectively flood the Office with adverse claims to the same Bitcoin material registered my Mr. Wright. Of course, these users would risk a maximum fine of $2,500.00 just like any non-author that attempts to claim they are the author of a work, so this would have to be hypothetically taken into account by any of these Bitcoin users, regardless of the likely minuscule likelihood that they would be prosecuted to collect the fine. In fact, a competing claim to the Bitcoin Whitepaper has already been filed and registered to a Wei Liu of China since its previous registration to Craig Wright:
It has been said by some Bitcoin users that “We are all Bitcoin.” For those users who share this sentiment, this credo could provide justification for such a hypothetical mass-filing. But of course, that is up to the community. Hypothetically.
[1] The Copyright Act creates a criminal right of action whereby “[a]ny person who knowingly makes a false representation of material fact in the application for copyright registration…or in any statement filed in connection with the application, shall be fined not more than $2,500,” and statements in the application regarding originality and authorship are considered material facts. This right of action, however, requires federal criminal prosecution — as section §506(e) explicitly states that there is no corollary private right of action for false representation or fraud on the Copyright Office during the application process. See 17 U.S.C. § 506(e). Theoretically, however, this does not foreclose a slightly different private right of action requesting a declaratory judgment of authorship.
[2] Complaint at 8, Leonard v. Nike (S.D. Cal. 2019) (No. ’19CV1035BASBGS); Sprengel v. Mohr, 2013 WL 645532 (C.D. Cal. 2013).
Eli Sheets is the founder and CEO of IdeaBlock and an IP attorney — he can be reached on Twitter at @sheets173 or by email at eli@ideablock.io.
