Malikie, who has filed dozens of patent infringement suits in recent years, alleging that he holds rights over Elliptic Curve Cryptography (ECC) patents. This move has created alarm bells across the Bitcoin mining industry. We see litigation now against big players through CORZ and MARA. They claim that ordinary Bitcoin activities, like checking a Bitcoin transaction with ECC-based signatures, violate patents that were initially created by Certicom and subsequently purchased by BlackBerry. The suits ask for damages for past infringement that could reach into the tens of millions of dollars. They ask for a permanent injunction against further use of the claimed methods.

The ramifications of these lawsuits go well beyond the primary targets. If Malikie prevails on its claims against the EPA, the case could provide very strong precedent. This would in turn promote frivolous lawsuits, having a chilling effect on all innovation occurring in the Bitcoin ecosystem. Malikie’s sweeping allegations underscore the precarious state that all Bitcoin infrastructure companies find themselves in. The lack of implementation raised the alarm among industry stakeholders to come together and organize a collective defense. Such brinksmanship presents an eternal struggle between patent enforcement and the open-source spirit that fuels Bitcoin and other cryptocurrencies.

The litigation defense against Malikie will likely focus on the fact that Bitcoin’s cryptographic techniques are not new discoveries. Rather, they will illustrate how these approaches are grounded in decades of public research and shared innovation. Bitcoin developers and enthusiasts are actively searching for prior art that predates Malikie's patents, aiming to invalidate the company's claims. Organizations such as the Crypto Open Patent Alliance (COPA) and the Bitcoin Legal Defense Fund will need to play key roles in that defense. Together, they will offer education and resources and mobilize the growing Bitcoin community to protect it from what many consider an existential threat.

The Core of the Dispute: ECC Patents and Bitcoin Mining

These suits deal specifically with patents that are related to Elliptic Curve Cryptography (ECC). This important cryptographic technique underlies Bitcoin and enables the creation of digital signatures to prove ownership of funds and validate transactions made with them. Malikie’s core patents cover unique techniques that speed up ECC computations. These techniques are endomorphisms and modular reduction optimizations. The company claims that Bitcoin miners infringe on these patents. They accomplish this by mining transactions on the blockchain, an essential and expensive enterprise.

Federal lawsuits have now been filed in Texas’ Eastern District against CORZ and in Texas’ Western District against MARA. They are demanding damages for up to six years of back royalties—the statutory limit for past infringement. For the biggest of the large-scale miners, this could mean hundreds of millions of dollars in lost revenue. Malikie is currently moving for a preliminary injunction. If the court does grant it, the miners will be enjoined from using the allegedly infringing methods, potentially crippling their operations.

The potential reach of these lawsuits go far beyond the specific mining companies they’re targeting. If Malikie gets a win, it will most likely aim at other larger, public mining companies. It should target mining pool operators, hardware manufacturers, and wallet providers. This makes the environment erratic and intimidating, dramatically discouraging innovation and investment in the Bitcoin sector.

Industry Mobilizes to Defend Bitcoin

With lawsuit after lawsuit, Malikie has forced the Bitcoin community’s hand, and now a organized, principled defense is coming together. This defense will emphatically show, with active, real-world demonstration, that the cryptographic techniques employed by Bitcoin are not novel innovations. Rather, they draw from prior art that is already out there. Bitcoin developers and enthusiasts are actively searching for prior art that predates Malikie's patents, aiming to invalidate the company's claims.

Advocacy organizations such as COPA and individual BDLF will be pivotal to defense in this regard. Their participation is poised to be as large as it is influential. COPA, formed in 2020 by fintech and crypto firms, encourages its members to pledge not to offensively assert their own crypto-related patents and actively challenge patents that threaten the community. The Bitcoin Legal Defense Fund, announced by Jack Dorsey and others in January 2022, was initially created to help Bitcoin Core developers facing frivolous lawsuits.

The collaborative nature of the Bitcoin community is going to be one of the most important weapons we have in this battle. By pooling resources, sharing information, and coordinating legal strategies, the community aims to present a united front against Malikie's claims. A strong resistance can crush the same threat. Its ability to alternatively set forth strong precedents that deter future lawsuits.

"Patent trolls are barriers in the path of innovation… They must be stopped so that the community can continue to do the important business of building the crypto-economy." - Paul Grewal

The Broader Implications for Open-Source Innovation

The Malikie lawsuits raise more general questions about the role of patents in open-source innovation. Unsurprisingly, many in the Bitcoin community see patents on technology that is supposed to be decentralized and permissionless as anti-Bitcoin and therefore bad. They make the case that patents can actually kill innovation. Second, they think patents serve to extract rents and serve as barriers to entry for new players.

Depending on the outcome of this legal battle, the implications could be monumental for the future of Bitcoin and other open-source projects. If Malikie wins its claim, it would be a clear sign that patents are a valid tool to control and monetize widely adopted technologies. That’s a bad precedent to set, and it may discourage future innovation. A good defense against Malikie would both reinforce the open-source ethos and shield the community from other potential patent trolls in the future.

The technical shortcomings of the patent system have been amplified by the situation, highlighting a need for greater transparency and reform. Critics argue that the current system is too easily exploited by patent trolls, who often acquire patents with the sole intention of suing others for infringement. In other words, they’re calling for reforms that would make it harder to get patents on technologies that everyone uses. This is particularly critical in the context of OSS.

"If you are a builder of any kind, you are at risk!" - Dan Sanchez

Strategic Options and Potential Outcomes

There are a number of strategic avenues the Bitcoin community could pursue in Malekie’s defense. One foremost tactic is to invalidate Malikie’s patents. You do this by showing that the underlying technology was in the public domain—meaning it was already widely known and in use—long before the patents were issued. You’ll dig into whether there is any prior art—think academic papers and open-source code. Seek out additional literature that outlines the same methods.

A second, less controversial strategy would be to assert that Malikie’s patents are simply not infringed by the activities of Bitcoin mining operations. This could involve demonstrating that the specific techniques covered by the patents are not actually used in Bitcoin or that they are used in a different way than described in the patents.

An additional strategy is to attack the patents on their merits. You can put forth that they are overbroad or that they patent inventions that are obvious. This process is often cumbersome and expensive. It does a mighty fine job taking life away from patents that never should’ve been granted.

"Trolls who pick a fight with determined defendants risk losing their entire arsenal" -

Each of these lawsuits could have very different outcomes. If Malikie is successful, miners—and perhaps other Bitcoin companies—would be subject to ongoing royalties or a large one-time settlement. This would raise the cost of mining so dramatically that it might make Bitcoin unprofitable. On the other hand, if the Bitcoin community successfully defends against the lawsuits, it would not only protect itself from Malikie's claims but set a precedent that discourages future patent trolls.

"patent trolls must be stopped so the community can continue to build" - COPA's chief counsel