Legal Research

[sunnankar]

If a judge is willing to allow that

Bitcoins are nothing more than copied data that is processed by individuals collectively making their own contributions of data.

First, perhaps you should learn a little bit about how judging is done. Judges don't just 'allow' and 'disallow' stuff; well, at least that is not what they are supposed to be doing and the appeals system, essential for due process, is pretty good at correcting those who do that. Justice Cardozo wrote a great short book about it: The Nature Of The Judicial Process.

Second, 'Bitcoin', and resulting 'bitcoins', are really just a math equation and results of that equation. Obviously, neither the equation '2+2=4' nor '4' are not copyrightable. However, if you use a particular font, color, etc. and fix it in a medium then you may be able to have a copyright attach to that particular work. Copyright is a very abstract area of law in that sense. Consequently, copyrighting the math equation that is Bitcoin is, almost without a doubt, going to fail just like you would fail with trying to copyright the general formula '2+2=4'.

Likewise, with the other responses I do not think the contract theory is going to work either. However, one may be able to pin a property ownership theory after receiving it via contract; although I think this may be slim. Basically, receiving via contract bitcoins would be like receiving via contract the fox from Pierson. But even this analogy would be pretty weak and likely fail.

[sunnankar]

Under what authority does Congress derive power to create law that empowers them to make Federal Reserve Notes legal tender?

Knox v. Lee, 79 U.S. 457 (1871).  See also 31 USC § 5103.

Why do you completely fail to correctly answer the question posed? Here, I bolded the key words. If you passed Con Law I then perhaps you should ask for a refund.

[dentldir]

First, perhaps you should learn a little bit about how judging is done. Judges don't just 'allow' and 'disallow' stuff; well, at least that is not what they are supposed to be doing and the appeals system, essential for due process, is pretty good at correcting those who do that. Justice Cardozo wrote a great short book about it: The Nature Of The Judicial Process.

My experience would say otherwise.  I've spent plenty of time in both federal and state court.  I've spent years in a trial, been a foreman on a jury, been an expert witness, and I've done my time in 30b6 depositions.  

The entire discovery process is about what is allowed and what is not allowed during trial.  The judge determines the rules of the game way before in court proceedings begin.  I'm still willing to learn more and will try make time for the reading you suggest.

Second, 'Bitcoin', and resulting 'bitcoins', are really just a math equation and results of that equation. Obviously, neither the equation '2+2=4' nor '4' are not copyrightable. However, if you use a particular font, color, etc. and fix it in a medium then you may be able to have a copyright attach to that particular work. Copyright is a very abstract area of law in that sense. Consequently, copyrighting the math equation that is Bitcoin is, almost without a doubt, going to fail just like you would fail with trying to copyright the general formula '2+2=4'.

I'm sure I could beat a summary judgement motion that Bitcoins are just math during discovery. And I'm not even a lawyer.  Think MP3 compression or RSA public key encryption.  Both are tools that allow for expression.

Copyright is interesting to me exactly because it's abstract.  Using an intellectual property argument gets Bitcoins a fast track to being a general intangible under the Uniform Commercial Code.  

[Korbman]

Alright, so I just finished reading through this thread, and I must say I'm a bit confused....what exactly are we talking about here? Is the primary topic focused on 'property and Bitcoin' or are we just spit-balling various legal issues for LegalEagle to research for his paper?

[dentldir]

Alright, so I just finished reading through this thread, and I must say I'm a bit confused....what exactly are we talking about here? Is the primary topic focused on 'property and Bitcoin' or are we just spit-balling various legal issues for LegalEagle to research for his paper?

LegalEagle offered that he is going to write a paper on the property rights surrounding Bitcoin a few posts back.  Everything past that is an attempt to drill into the issue and figure out why or why not it is property. 

Because of the analogy with real coins, "I own 5.6 Bitcoins" is easy to express, but hard to support legally.

I'm open to hearing other interesting aspects though.

[marcus_of_augustus]

Alright, so I just finished reading through this thread, and I must say I'm a bit confused....what exactly are we talking about here? Is the primary topic focused on 'property and Bitcoin' or are we just spit-balling various legal issues for LegalEagle to research for his paper?

Spit-balling, imo.

[blakdawg]

Second, 'Bitcoin', and resulting 'bitcoins', are really just a math equation and results of that equation. Obviously, neither the equation '2+2=4' nor '4' are not copyrightable. However, if you use a particular font, color, etc. and fix it in a medium then you may be able to have a copyright attach to that particular work. Copyright is a very abstract area of law in that sense. Consequently, copyrighting the math equation that is Bitcoin is, almost without a doubt, going to fail just like you would fail with trying to copyright the general formula '2+2=4'.

I'm sure I could beat a summary judgement motion that Bitcoins are just math during discovery. And I'm not even a lawyer.  Think MP3 compression or RSA public key encryption.  Both are tools that allow for expression.

I think it would be helpful to distinguish between discussing code that achieves a particular result (the source code or executables for, say, bitcoind) and the output or results of using that code.

There should be no argument that Excel, the spreadsheet, is subject to copyright. And there should also be no argument that, if I use Excel (or some other computerized tool) to calculate the result of an equation or expression, that the result is not subject to copyright by virtue of the fact that I used copyrighted code to create it, versus working it out by hand with pencil & paper.

I do not see a meaningful difference between a simple equation and a complicated one - I suspect that all of us would easily agree that "2 * 2 = 4" is not subject to copyright; I find the idea that "342972134893249 * 212312389547523 = 72817233507401087375017372227" is not copyrightable a tiny bit more uncomfortable, since obviously there's more work required to reach the result, and that's not exactly an equation that a lot of us wander around with at the tip of our tongues. But I can't come up with a principled legal reason to distinguish between them, that's meaningful in a copyright sense, since it's well established that copyright is intended to protect creative expression, not sweat-of-the-brow hard work (see, e.g., Feist v. Rural Telephone).

(People unfamiliar with copyright may want to be aware that while a particular number or fact is not subject to copyright, a collection of numbers or facts that has been deliberately arranged/edited/curated can be, but only to the extent of that human creative intervention. Similarly, a creator can take something which is not subject to copyright and add something to it, and the resulting combination is copyrightable. So I can't hold a copyright to Plato's Republic; but if I came up with a new translation of it to English, I could copyright that; or I could take a public domain translation and intersperse commentary and artwork that I created, and get a copyright in the resulting work, but only to the extent of my additions/changes.)

So I am curious to hear more about the argument that BTC could be protected by copyright - either the private keys ("wallet"), or the abstract idea of value which is represented on the blockchain and is controlled by the keys. The private keypair, as far as I know (and this is bumping up against the limit of my understanding of the technical side of BTC/Bitcoin) is simply a group of numbers that happen to have a particular characteristic; they were identified through an iterative process by which potential candidates were created randomly and tested for having that characteristic, and the first which were found to have that characteristic were selected. So I don't really see any of the traditional creative/editorial input from a human being which has historically been an essential part of the creation of a copyrightable work.

Of course, it would be possible to argue that the creative/editorial input was added at the time the program was written, in the description of the criteria for identifying viable private keys - but that suggests that all of our BTC's are the property of the development team, since they're the ones who provided that input.

(Of course, this would be different in the case of vanity addresses, since the holder of the address made a deliberate choice about the text they wanted included in the address. Most of the addresses which are short enough to be found this century are also probably short enough to be uncopyrightable, but at least it's the beginning of an argument.)

I am not wild about calling the blockchain a contract from a legal point of view because it's not at all clear to me who the parties are, or what their agreement is, or what the terms of the contract are. We could say that all of the activity for a day or a week or a year or all time on, say, the NYSE is one big multiparty contract - but I'm not sure it really makes any sense, or that it helps us much, or has any real meaning.

In many ways, Bitcoin is reinventing the Torrens title system, except that the underlying good is an intangible shared expectation of value, not real estate; and there isn't one central registry, but a decentralized peer-to-peer registry.

[sunnankar]

But I can't come up with a principled legal reason to distinguish between them,

Now we are getting somewhere. I told you this was not a very easy issue and it is a condition precedent to so many other arguments.

So I am curious to hear more about the argument that BTC could be protected by copyright - either the private keys ("wallet"), or the abstract idea of value which is represented on the blockchain and is controlled by the keys.

A few days ago I ran into a very prominent IP attorney and legal theorist who has published a few IP focused books and a book about online contract formation. He was gracious enough to spend about 15-20 minutes answering a few of my questions in the hallway. I objectively explained the Bitcoin facts, as best as I understand them, and asked if any property rights could attach and if so what kinds. He probed me further on more specific facts, etc. The bottom line was probably not, as I suspected, but he would do some additional research on it because he found the topic very interesting (particularly the part about being able to form contracts/meditation with 2 of 3 keys signing a transaction, etc.).

Anyway, just some more shoulder shrugging I suppose.

In many ways, Bitcoin is reinventing the Torrens title system, except that the underlying good is an intangible shared expectation of value, not real estate; and there isn't one central registry, but a decentralized peer-to-peer registry.

And given that real property could theoretically be titled in the blockchain and actually be more secure than a typical registry with big banks engaging in false affidavits, counterfeit court summons, etc. ..... it remains to be seen what else might flow out of this new math problem known as Bitcoin.

[dentldir]

I think it would be helpful to distinguish between discussing code that achieves a particular result (the source code or executables for, say, bitcoind) and the output or results of using that code.

There should be no argument that Excel, the spreadsheet, is subject to copyright. And there should also be no argument that, if I use Excel (or some other computerized tool) to calculate the result of an equation or expression, that the result is not subject to copyright by virtue of the fact that I used copyrighted code to create it, versus working it out by hand with pencil & paper.

Agreed.  Bitcoin is software, a messaging network, a distributed storage device, a collective of workers who modify storage, and a property concept.

The software license is explicitly stated, so I believe it's solid. MIT/X11.
The messaging network uses the software, its not particularly creative, but needs to be protected as speech.
The distributed storage device is the block chain which has no explicit license to go with it.  None on the horizon.
The collective of workers (miners) are the ones who update the block chain.  Not sure where they live in this whole picture.
The property concept is some kind of intangible, hopefully one that can live comfortably within the law.

I do not see a meaningful difference between a simple equation and a complicated one - I suspect that all of us would easily agree that "2 * 2 = 4" is not subject to copyright; I find the idea that "342972134893249 * 212312389547523 = 72817233507401087375017372227" is not copyrightable a tiny bit more uncomfortable, since obviously there's more work required to reach the result, and that's not exactly an equation that a lot of us wander around with at the tip of our tongues. But I can't come up with a principled legal reason to distinguish between them, that's meaningful in a copyright sense, since it's well established that copyright is intended to protect creative expression, not sweat-of-the-brow hard work (see, e.g., Feist v. Rural Telephone).

Its how people use the software/math that makes the difference.  An MP3 encoder is just a set of equations too, but if you feed it a creative work, you still get a creative work no matter how much math is involved.  In Bitcoin, the math is just a transport layer for the messages from people who have the freedom to speak.  I probably can't make the copyright argument whole, but people sending messages to each other has to be protectable at least.

So I am curious to hear more about the argument that BTC could be protected by copyright - either the private keys ("wallet"), or the abstract idea of value which is represented on the blockchain and is controlled by the keys. The private keypair, as far as I know (and this is bumping up against the limit of my understanding of the technical side of BTC/Bitcoin) is simply a group of numbers that happen to have a particular characteristic; they were identified through an iterative process by which potential candidates were created randomly and tested for having that characteristic, and the first which were found to have that characteristic were selected. So I don't really see any of the traditional creative/editorial input from a human being which has historically been an essential part of the creation of a copyrightable work.

I've tried fairly extensively to make a copyright argument stick, but I've yet to find one that doesn't have a giant hole in it that a judge would plow right through.

Another possible outline: The private keys themselves are an number representing an idea (so not protectable).  The address is an expression of that idea (too brief to be copyrighted). The broadcast of the message to the network is a person trying to say something very unique (speech).  The miners writing it into the block chain is an update to a collective work (collection of speech).

Still lots of problems here.  The address might be too brief (but its incredibly unique, which is the important legal test in precedence).  The broadcast to the network might not be considered speech.  And I have no idea where the block chain falls.  I've suggested that it be explicit covered by a public domain license, but even that's murky waters at this point.

Vanity addresses make it even more interesting.  Now you have a creative work that took a ton of effort to come upon.  Its still very brief by normal standards.  But I can't find anywhere in precedence where brevity prevented protection.  I've only seen uniqueness.  And addresses have mathematically provable uniqueness.  This is another case of a program doing all the "creative" work since vanitygen or oclvanityminer will actually create the address.

For another analogy to a distributed money system,  see Halwala.  Someone mentioned it on the forums earlier.  It came up in US vs Banki I believe.  Similar to Bitcoin, but that case was more about moving money to Iran than anything else.  Oh yeah, and they were using real money.

[marcus_of_augustus]

The intangible asset classification (like goodwill) raises the question whether any (all?) digital money would be classed as intangible wouldn't it?

Like the digital money held in databases of MegaBank corp on deposit for loyal customers, wouldn't that be an "intangible asset" by the same reasoning as bitcoin is an intangible asset?

Aren't all currencies that are not redeemable in hard asset (like gold, silver, commodity basket) intangible assets?

[sunnankar]

The intangible asset classification (like goodwill) raises the question whether any (all?) digital money would be classed as intangible wouldn't it?

FASB and IFRS are standards not law. More error from the fledgling Legal Beagle. Although, tax carryovers from goodwill could be construed as property interests but that is most likely totally outside the scope of this discussion.

Like the digital money held in databases of MegaBank corp on deposit for loyal customers, wouldn't that be an "intangible asset" by the same reasoning as bitcoin is an intangible asset?

No. FRN$ can be titled just like real property, such as a house, can be titled. There is a chain of title whether recorded or not. Just because the title exists both physically and digitally does not necessarily make the underlying asset 'intangible'.

The issue is whether 'bitcoins' can be owned or titled? There is clear law on banking and deposits, etc. including areas like escheat. Bitcoin is governed under the MIT license and 'bitcoins' are just math equation outputs. The argument against property ownership in bitcoins is akin to just like you 2+2=4 and Person A cannot claim title to '4' so likewise the 'bitcoins' in an address are like '4'. Therefore, 'bitcoins' and 'bank deposits' are different when it comes to property interests.

[matonis]

I think your copyright argument is far too tenuous and detached from both the spirit and intent of copyright law and the actual protections it grants.

But even accepting for the sake of argument your previous points; how do you attach a copyright to the private key that is stored in the form of a brainwallet?

What happened to LegalEagle? Perhaps, he is off reading Brainwallet: The Ultimate in Mobile Money

You are trying to establish a property right in the private key, right?

Perfectly stated. A private key, especially in the form of a brainwallet, is an "illusory" and unenforceable construct. If not a legal air guitar, then it is most likely a negotiable verbal IOU with about the same level of enforceability.

[blakdawg]

While this doesn't address the wallet/keypair issue, one way to more clearly define the role/meaning of the blockchain would be for it to include actual statements of fact or performative utterances.

I don't know what the actual data structure of the blockchain looks like - but whatever it looks like today, it could be modified to include something like:

"I, the holder of private key <blah>, with respect to the 5.5 BTC I received in prior block <blahblah>, assert that I am the legal owner thereof, and I further assign all right, title, and interest in those funds as follows: 2.5 BTC to the holder of private key <blah 2> and 3.0 BTC to the holder of private key <blah 3>."

.. the main advantage I see to that would be that it could potentially turn misuse of someone's BTC's into fraud, given the explicit assertion of ownership, which if false, might constitute fraud. (Fraud has a complicated legal definition which is different from state to state, so I'm using that term loosely here.)

On the other hand, I recognize that not everyone wants to reach that result; but this strikes me as one approach to turning the blockchain into something recognizable to legal system(s).

[marcus_of_augustus]

to turning the blockchain into something recognizable to legal system(s).

... because bending technology to suit the legal system(s) inflexibility is such a good idea ....

[sunnankar]

What happened to LegalEagle? Perhaps, he is off reading Brainwallet: The Ultimate in Mobile Money

Perhaps wandering around in the weeds.

What is the saying? Good choices come from experience and experience comes from bad choices. And a smart man learns from his own bad choices a really smart man learns from the bad choices of others.

Our little Legal Beagle seems to have a preconception about what Bitcoin and bitcoins are thus forming a legal conclusion and is now trying to fit the law to match that legal conclusion (and probably having a very hard time doing so!). Typical error from one who fails to reason correctly.

Hopefully I can find some caselaw that defines money more clearly.

Good luck, have your library get you a copy of Dr. Vieira's Pieces of Eight. Hurry, it may take a while. But to save you some time; you are probably chasing a red herring off in the weeds with this issue.

Perhaps.  But I do think bitcoins are property, even if they're not considered "money".

[blakdawg]

to turning the blockchain into something recognizable to legal system(s).

... because bending technology to suit the legal system(s) inflexibility is such a good idea ....

or, perhaps it's looking at the law as the distillation of centuries' worth of human experience with transactions, property, and disputes, and piggybacking on the lessons learned by others, rather than insisting on novelty for its own sake, and re-learning some difficult lessons the hard way.

[sunnankar]

to turning the blockchain into something recognizable to legal system(s).

... because bending technology to suit the legal system(s) inflexibility is such a good idea ....

or, perhaps it's looking at the law as the distillation of centuries' worth of human experience with transactions, property, and disputes, and piggybacking on the lessons learned by others, rather than insisting on novelty for its own sake, and re-learning some difficult lessons the hard way.

That is what common law and stare decisis is all about. The problem is that the legal conclusion of ownership of bitcoins does not fit neatly into that history with this new technology.

Sure, foxes have a lot in common with fish, oil and natural gas (all areas of law shaped by that stupid fox!). But it takes the legal system a while to get there.

[LegalEagle]

I stopped responding because the argument that there are no property rights in bitcoin whatsoever is completely ridiculous and not even worthy of my time.  There are property rights in WoW gold (subject to your contract with Blizzard), why should this be any different?  

If a bitcoin scam makes it to court, no judge in their right mind is going to say, "Oh, sorry, you're screwed out of your $10k investment because there are no property rights in bitcoin."  They're going to attach property rights, and award fair market value, regardless of whether any fiat currency changed hands between the victim and the scammer.  James Madison said that property is "that dominion which one man claims and exercises over the external things of the world, in exclusion of every other individual," (quoting William Blackstone) and that "it embraces every thing to which a man may attach a value and have a right . . . ."

If you can't grasp that concept, this may help:

If I steal 10,000 in euros from you and you sue to recover it, the judgment you're awarded is not the intrinsic value of the paper and ink that it was printed on.  It is the value of the cash in the marketplace.  The same thing applies if someone hacks into your bank account, where most of the money only exists as accounting entries.  Money is an intangible asset with property rights.  Bitcoin is an intangible asset with property rights.  What exactly is so farfetched about this idea???  We have always had property rights in mediums of exchange.  It's basic commerce.

Sunnankar:

I don't know any better way to articulate it than this:  you're an idiot.  The only real "goose chase" I've been on at all was looking into the topic you suggested in the first place.  I've talked to a lot of professors and practicing attorneys in the last week or so, and they all agree that the attachment of property rights to bitcoin is so obvious that it is barely even a legitimate question.  So thanks for absolutely nothing.

I'm also wondering what qualifications you have that make you feel like you know so much, because after talking with extremely competent attorneys and professors, I see that everything you've said in this thread is laughably wrong.  It was a huge waste of time to even respond to you.  Do you even practice law or have any legal training whatsoever?  Even if you do, I would be shocked to learn you did anything more complex than ambulance chasing or divorces.

If you guys still don't agree, that's fine, you can just wait for the first court case involving bitcoin.  I know that doesn't add much to my argument now, but it'll make it that much better when that opinion comes out and I can pull this thread up again.

[Serith]

Assuming that a particular law has to be enforceable to have any meaning, would it be possible to enforce anything in case bitcoins considered "property"? If not, shouldn't bitcoins be considered "not property" on that basis alone?

[LegalEagle]

Assuming that a particular law has to be enforceable to have any meaning, would it be possible to enforce anything in case bitcoins considered "property"? If not, shouldn't bitcoins be considered "not property" on that basis alone?

Of course it would be possible to enforce a judgment.  Judgment liens and jail time make the court system quite coercive.