Introduction to the Lawsuit
An organization called Malikie Innovations has sued two major Bitcoin mining firms, Marathon Digital and Core Scientific, for using a form of cryptography called Elliptic Curve Cryptography (ECC) of their Bitcoin mining operations. Malikie Innovations claims to own the patents for one of these cryptography, which is utilized by the Bitcoin blockchain.
Background on the Patents
Malikie Innovations acquired 32,000 patents from BlackBerry in 2023, including the patents for ECC. The company claims that the designers of Bitcoin recognized and chosen the ECC innovations, which at the moment are getting used by Bitcoin mining firms without permission.
The Lawsuit and Its Implications
The lawsuit 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. If the plaintiffs prevail, they may find a way to get better as much as six years of lost royalties, which could possibly be a big sum. This could cause the defendants to enter bankruptcy.
Are Bitcoin Users in Danger?
It is unlikely that individual Bitcoin users might be affected by this lawsuit, even when the patents are found to be valid. However, miners are wealthy targets which might be worthy of a lawsuit. Aaron Brogan, founder and managing attorney at Brogan Law, stated that "pursuing individuals is trickier because they are sometimes ‘judgment-proof,’ which is lawyer jargon for broke." Miners, then again, have money, making them more attractive targets for lawsuits.
Large-Scale Consequences
If Malikie Innovations wins the case, it could establish a positive precedent for the corporate to pursue cases against other miners within the United States. This could have disastrous consequences for Bitcoin, potentially undermining the safety of the Bitcoin network. However, crypto lawyer Michael Bacina noted that "so-called ‘patent-trolls’ typically don’t intend to have claims tested in court, but relatively seek to extract a settlement."
Expert Opinions
Niko Demchuk, head of legal at cryptocurrency compliance and forensics firm AMLBot, stated that Malikie’s claim appears to not be strong if the asserted patents are expired or cover techniques that predate Bitcoin’s ECC implementation. Even if some patents remain energetic, their scope is probably going limited to specific implementation details, not the core ECC algorithms utilized in Bitcoin. Bacina also highlighted that if infringement is shown, it still won’t be over, as a second issue will arise regarding whether the miners are infringing through the use of open-source software.
Conclusion
The lawsuit against Marathon Digital and Core Scientific has significant implications for the Bitcoin mining industry. While individual Bitcoin users are unlikely to be affected, miners could face large-scale consequences if Malikie Innovations wins the case. The consequence depends upon the small print of the particular patents asserted and the court’s interpretation of their scope. As the case unfolds, it’s going to be essential to observe its progress and potential impact on the Bitcoin network.
