Malikie Innovations – the company that acquired tens of thousands of patents from BlackBerry in 2023 – has just filed a lawsuit against two giants in the Bitcoin mining industry, Marathon Digital and Core Scientific. Why? Malikie claims they own patents related to Elliptic Curve Cryptography (ECC) technology – the security foundation currently used by Bitcoin's blockchain.
According to the lawsuit, Malikie has taken over approximately 32,000 "non-core" patents from BlackBerry – a telecommunications company once famous for its line of smartphones. They claim that groundbreaking inventions related to ECC that they own were later chosen by Bitcoin developers to integrate into the protocol.
Malikie alleges that both Marathon Digital Holdings and Core Scientific are using ECC-based encryption methods – which fall under their patents – to support Bitcoin mining activities.
Are Bitcoin users in danger?
According to lawyer Aaron Brogan – founder of Brogan Law – the likelihood of these lawsuits affecting individual users is very low, even if the patents are confirmed as valid by the court.
"Suing individual users is complicated because most of them have no money – or as it's called in legal terms, 'judgment-proof' (unable to recover money even if they win the lawsuit)," Brogan shared with Cointelegraph.
On the contrary, Bitcoin mining companies are a "juicy target." Brogan says these entities are always attractive prey for patent hunters because they have money, and if they win the lawsuit, Malikie could recover royalties from the past 6 years – a figure that is not easy to calculate and often requires a second trial to determine accurately. However, Brogan believes that the compensation could be very large and even push defendants into bankruptcy risk.
Large-scale repercussions
Brogan also warns that if Malikie wins the lawsuit, they could use this precedent to expand litigation against other Bitcoin mining companies in the U.S. – which could have serious consequences for the entire Bitcoin network.
"If they choose that strategy, it could weaken the security of the Bitcoin network," he commented.
Nevertheless, Brogan argues that Malikie is likely to choose the negotiation option to collect royalties until the patent expires, rather than undermine the entire industry.
According to legal expert Niko Demchuk – head of the legal department at AMLBot, a company specializing in compliance and cryptocurrency investigations – he believes that Malikie's chances of winning the lawsuit are not high:
"Malikie's claims seem weak if the patents they cite have expired, or only cover techniques that existed before Bitcoin implemented ECC. Even if there are still valid patents, their scope may be limited to implementation details, not the core ECC algorithm that Bitcoin uses."
However, Demchuk also admits that the final outcome depends on the details of the cited patents and how the court interprets their scope.
Not the first time
This is not the first time lawsuits related to intellectual property have targeted Bitcoin. Previously, the site bitcoin.org was forced to remove the Bitcoin whitepaper in a failed lawsuit by Craig Wright – who claims to be Satoshi Nakamoto, the anonymous founder of this protocol. The site later reposted the document.
During the period from 2017 to 2019, Craig Wright also filed up to 114 patents related to blockchain technology, in an effort to gain control over important parts of the Bitcoin system.
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