Bitcoin Miners Sued Over Cryptography Patents in US Court Case
In a latest development in the ongoing battle over intellectual property rights, Malikie Innovations has filed a lawsuit against major Bitcoin mining firms Marathon Digital and Core Scientific. The case centers on alleged use of Elliptic Curve Cryptography (ECC) employed by the Bitcoin blockchain, which Malikie claims to own.
Malikie Innovations, a firm that acquired tens of thousands of patents from BlackBerry in 2023, has taken aim at the cryptocurrency industry's giants. The company claims that Marathon Digital and Core Scientific are using ECC-based cryptographic methods covered under the Malikie-held patents to support their Bitcoin mining operations.
The lawsuit seeks damages and royalties for alleged infringement on the patents, which could result in significant financial losses for the defendants. According to Aaron Brogan, founder and managing attorney at Brogan Law, winning the case would establish a favorable precedent for Malikie to use in pursuing cases against other miners in the United States.
"If they chose to pursue that strategy, it might undermine the security of the Bitcoin network," Brogan said. However, crypto lawyer Michael Bacina believes that Malikie's intention is not to test the validity of its claims in court but rather to extract a settlement.
Expert Analysis
Niko Demchuk, head of legal at cryptocurrency compliance and forensics firm AMLBot, stated that Malikie's claim appears weak if the asserted patents are expired or cover techniques that predate Bitcoin's ECC implementation. Even if some patents remain active, their scope is likely limited to specific implementation details, not the core ECC algorithms used in Bitcoin.
"It's unlikely that such lawsuits will hit most individual Bitcoin users, even if the patents are found to be valid," Brogan said. "Miners, on the other hand, are wealthy targets that are worthy of a lawsuit." Demchuk added that if infringement is shown, it still won't be over, as there will be another issue to address – whether the miners, by using open source, are in fact infringing at all.
This is not the first time that intellectual property-related lawsuits have targeted Bitcoin. The bitcoin.org website was able to reupload a copy of the Bitcoin white paper little over a year ago after it was taken down during Craig Wright's unsuccessful court attempt to prove he is Satoshi Nakamoto, the protocol's pseudonymous creator.
Consequences
If Malikie Innovations prevails in its lawsuit, it could have disastrous consequences for Bitcoin. The potential financial losses for Marathon Digital and Core Scientific could be significant, and the case might even lead to bankruptcy. However, crypto lawyer Michael Bacina believes that Malikie's intention is not to tank the entire industry but rather to extract a fee until the patents expire.
"So-called 'patent-trolls' typically do not intend to have claims tested in court," Bacina noted. Still, Brogan argued that Malikie's strategy could undermine the security of the Bitcoin network if pursued aggressively.