UK Select Committee recommends legislation on AI including to establish and enforce rights of IP owners

The UK Science, Innovation and Technology Select Committee (which recently conducted an inquiry into the impact of AI on several sectors) has published The Governance of Artificial Intelligence: Interim Report  (pdf  here).  The report identifies 12 challenges of AI, including that for intellectual property, and recommends legislation during this parliament (ie before the general election due in 2024). The Select Committee expresses concerns that the UK will fall behind if there are delays, given the moves made by the EU and US to regulate AI already. On IP it recommends that where AI models and tools make use of other people’s content, policy must establish the rights of the originators of this content, and these rights must be enforced.

The need for regulation now and the establishment of an international forum on AI:  The report encourages the UK Government to go direct to legislation on AI regulation rather than to apply the approach set out in its white paper of March 2023. The white paper used five principles to frame regulatory activity, guide future development of AI models and tools, and their use – but these principles were not to be implemented via statute but were to be “interpreted and translated into action by individual sectoral regulators, with assistance from central support functions“.

The report recognises that although the UK has a long history of technological innovation and regulatory expertise, which “can help it forge a distinctive regulatory path on AI“, the AI white paper is only an initial effort to engage with AI regulation and it’s approach risks the UK falling behind given the pace of development of AI and especially in light of the efforts of other jurisdictions, principally the European Union and United States, to set international standards.

The report suggests “a tightly-focussed AI Bill in the next King’s Speech would help, not hinder, the Prime Minister’s ambition to position the UK as an AI governance leader. Without a serious, rapid and effective effort to establish the right governance frameworks—and to ensure a leading role in international initiatives—other jurisdictions will steal a march and the frameworks that they lay down may become the default even if they are less effective than what the UK can offer.

An international summit on AI safety is expected to held in the UK in November or December, will also be key and the report recommends invitations being extended to as wide a range of countries as possible to create a forum “for like-minded countries who share liberal, democratic values, to ensure mutual protection against those actors—state and otherwise—who are enemies of these values and would use AI to achieve their ends.”

12 essential challenges of AI identified: The report identifies the challenges of AI in general and twelve essential challenges that AI governance must address if public safety and confidence in AI are to be secured: – including IP at challenge 8:

  1. The Bias challenge. AI can introduce or perpetuate biases that society finds unacceptable.
  2. The Privacy challenge. AI can allow individuals to be identified and personal information about them to be used in ways beyond what the public wants.
  3. The Misrepresentation challenge. AI can allow the generation of material that deliberately misrepresents someone’s behaviour, opinions or character.
  4. The Access to Data challenge. The most powerful AI needs very large datasets, which are held by few organisations.
  5. The Access to Compute challenge. The development of powerful AI requires significant compute power, access to which is limited to a few organisations.
  6. The Black Box challenge. Some AI models and tools cannot explain why they produce a particular result, which is a challenge to transparency requirements.
  7. The Open-Source challenge. Requiring code to be openly available may promote transparency and innovation; allowing it to be proprietary may concentrate market power but allow more dependable regulation of harms.
  8. The Intellectual Property and Copyright Challenge. Some AI models and tools make use of other people’s content: policy must establish the rights of the originators of this content, and these rights must be enforced.
  9. The Liability challenge. If AI models and tools are used by third parties to do harm, policy must establish whether developers or providers of the technology bear any liability for harms done.
  10. The Employment challenge. AI will disrupt the jobs that people do and that are available to be done. Policy makers must anticipate and manage the disruption.
  11. The International Coordination challenge. AI is a global technology, and the development of governance frameworks to regulate its uses must be an international undertaking.
  12. The Existential challenge. Some people think that AI is a major threat to human life: if that is a possibility, governance needs to provide protections for national security

In relation to challenge 8 on Intellectual Property and Copyright – the report comments that “Some AI models and tools make use of other people’s content: policy must establish the rights of the originators of this content, and these rights must be enforced” and that whilst the use of AI models and tools have helped create revenue for the entertainment industry in areas such as video games and audience analytics, concerns have been raised about the ‘scraping’ of copyrighted content from online sources without permission.

The report refers to “ongoing legal cases” (unnamed but likely a reference to Getty v StabilityAI) which are likely to set precedents in this area, but also notes that the UK IPO has begun to develop a voluntary code of practice on copyright and AI, in consultation with the technology, creative and research sectors, which guidance should “… support AI firms to access copyrighted work as an input to their models, whilst ensuring there are protections (e.g. labelling) on generated output to support right holders of copyrighted work”. The report notes that the Government has said that if agreement is not reached or the code not adopted, it may legislate.

The withdrawal of the proposed text and database mining exception, following pressure from creative industries, is noted, but also that other parties have commented that this now “… prevents the UK from capitalising on the diverse, agile and creative benefits that AI can bring to the UK’s economy, its society and its competitive research environment”.

On the Liability challenge (9) the report considers that if AI models and tools are used by third parties to do harm, policy must establish whether developers or providers of the technology bear any liability for harms done.

For more on the IP in AI see our series of blog posts here.

Rachel Montagnon
Rachel Montagnon
Professional Support Consultant, UK
+44 20 7466 2217
Heather Newton
Heather Newton
Of Counsel, UK
+44 7809 200 246

The requirement for fixation in copyright – Self-proclaimed Bitcoin inventor succeeds in establishing serious issues to be tried on appeal

As we reported in February, Dr Craig Wright, who claims to be the inventor of Bitcoin, is asserting three Bitcoin-related copyright claims against a number of entities.  The earlier decision considered the question of whether or not Dr Wright could serve the proceedings on defendants out of the jurisdiction – which requires that there is a serious issue to be tried on the merits of the claim.  For the reasons set out there, Mr Justice Meade disagreed in relation to Dr Wright’s claims of copyright in the Bitcoin File Format (BFF).  Dr Wright appealed this decision to the Court of Appeal, and it unanimously allowed the appeal on 20 July 2023.  The decision on appeal contains some interesting commentary on the requirement for fixation in copyright claims, which we discuss further below.

The proceedings

As set out in our earlier report, Dr Wright claims to have authored the Bitcoin White Paper in 2008, created the Bitcoin File Format, and mined the inaugural block in the Bitcoin Blockchain – the so-called ‘Genesis Block’.  He has commenced proceedings alleging infringement of:

  • database rights in the Bitcoin blockchain;
  • copyright in the Bitcoin White Paper; and
  • copyright in the Bitcoin File Format (BFF).

Issues 1 and 2 will proceed to trial in January 2024.  The Court of Appeal’s decision in this case concerns whether or not copyright subsists in the BFF.

Mr Justice Meade had earlier found that there was no serious issue to be tried as to the subsistence of copyright in the BFF, in particular as there was no evidence to suggest that the BFF was ‘recorded’ in the Genesis Block, or any other block in the blockchain. In other words, it did not meet the requirement of “fixation” embodied in section 3(2) of the Copyright Designs and Patents Act 1988 (CDPA), and thus leave to serve out of the jurisdiction was denied.

Decision at first instance

At first instance, and as discussed in our earlier report, Meade J had that the claimants had no real prospect of establishing that copyright subsisted in the BFF because it had not been “recorded, in writing or otherwise” in accordance with section 3(2) of the CDPA.

The judge had not disputed that a literary work could be recorded in software, including a file format, but expressed his view that “Not all file formats are equal”.  Some file formats contain “sufficient content (and not just structure) to sustain a claim to literary copyright”, but others may not.  Meade J had found that the claimants had not filed any evidence to the effect that the Genesis Block (or any other block) contained content which defines the structure of the Bitcoin File Format, as opposed to “simply reflecting” it.  While each block conforms to the structure of the Bitcoin File Format, the structure of the Bitcoin File Format is not “fixed in a copyright sense in a material form in any of those blocks”.

Court of Appeal decision

In an elegant review of the law of copyright in relation to software, Lord Justice Arnold concluded that there were a number of flaws in Meade J’s reasoning, which led to the Court of Appeal allowing Dr Wright’s appeal.

  • Arnold LJ held that 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 relied on (the BFF) had 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.
  • It is not necessarily correct that, for fixation, there must be content which defines the structure of the BFF, finding that “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.”
  • Arnold LJ found that the judge had not applied the test laid down in the CJEU decision C-310/17 Levola Hengelo BV v Smilde Foods BV (2018), which asks whether the fixation relied upon by Dr Wright made the BFF identifiable with sufficient precision and objectivity.  Dr Wright had contended that the fixation upon which he relied satisfied this test and had provided evidence in support that third parties have been able to deduce the structure comprising the BFF from the blocks in the Bitcoin blockchain.
  • Arnold LJ said that 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“.

In light of these findings, the Court of Appeal concluded that Dr Wright had a real prospect of successfully establishing that the fixation requirement for copyright to subsist was satisfied and so allowed the appeal.

For the purposes of the proceeding, Dr Wright had prepared Schedule 2 of the Particulars of Claim, which describes the components of the Bitcoin File Format.  This was prepared in 2022, well after the alleged creation of the copyrighted work, and thus Meade J did not consider that it could be used to fulfil the requirements of fixation.  However, the Court of Appeal presumed that Dr Wright was not relying upon Schedule 2 as satisfying the fixation requirement.

The court did, however, note that the fixation of copyright can be ephemeral (giving the example of an author who extemporises an original literary work orally before an audience, which is recorded digitally but the recording is deleted).  The same, seemingly, could apply to the BFF.  So in finding in favour of Dr Wright, the court mused that “It is an interesting question whether Dr Wright could, in the absence of any earlier fixation, rely upon Schedule 2 as satisfying the fixation requirement for the purposes of subsequent infringement claims, but it is not necessary for present purposes to explore that question”.  It will be interesting to see how this plays out in the future.

Wright & Ors v BTC Core & Ors (Rev1) [2023] EWCA Civ 868 (20 July 2023) (bailii.org)

Authors

George McCubbin
George McCubbin
Senior Associate - London
+44 20 7466 2764
Rachel Montagnon
Rachel Montagnon
Professional Support Consultant - London
+44 20 7466 2217
Andrew Moir
Andrew Moir
Partner - London
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Charlie Morgan
Charlie Morgan
Partner - London
+44 20 7466 2733
Chris Bushell
Chris Bushell
Partner - London
+44 20 7466 2187
Ajay Malhotra
Ajay Malhotra
Partner - London
+44 20 7466 7605
Philip Lis
Philip Lis
Senior Associate - London
+44 20 7466 2286
Rafael Lawrence
Rafael Lawrence
Associate - London
+44 20 7466 3036
Dan Huang
Dan Huang
Trainee - London
+44 20 7466 2925

 

Self-proclaimed creator of Bitcoin can proceed with claim that Bitcoin branch networks breach his intellectual property rights

Dr Craig Wright claims to be the inventor of Bitcoin and to have authored the Bitcoin White Paper in 2008, created the Bitcoin File Format and mined the inaugural block in the Bitcoin Blockchain – the ‘Genesis Block’.  Despite the Bitcoin White Paper having promoted de-centralisation, Dr Wright is now seeking to prevent others from using his alleged intellectual property.

A recent decision of the English High Court, Wright v BTC Core [2023] EWHC 222 (Ch), means that Dr Wright can continue his claims in relation to his alleged database rights over the Bitcoin blockchain and copyright in the Bitcoin White Paper and can serve proceedings on the defendants out of the jurisdiction. The court concluded that – assuming the facts are as alleged by Dr Wright – those two claims are arguable. However, it dismissed a claim for copyright in the Bitcoin File Format as unarguable.

It remains to be seen what the outcome of this case will be (including whether this decision will be appealed to the Court of Appeal) and what implications (if any) it will have for the continued operation of the Bitcoin branch networks, BTC and BCH.

In another claim brought by a company of Dr Wright’s, Tulip Trading Ltd v van der Laan [2023] EWCA Civ 83, the Court of Appeal recently overturned a decision of the High Court that there was no arguable claim that developers of a blockchain network owe users a fiduciary duty. Our analysis of Tulip can be accessed here. Continue reading