DCT

2:25-cv-00519

Malikie Innovations Ltd v. Core Scientific Inc

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I. Executive Summary and Procedural Information

  • Parties & Counsel:
  • Case Identification: 2:25-cv-00519, E.D. Tex., 05/12/2025
  • Venue Allegations: Venue is based on Defendant’s operation of bitcoin mining facilities within the Eastern District of Texas, specifically in Denton, Texas.
  • Core Dispute: Plaintiff alleges that Defendant’s bitcoin mining and transaction processing operations infringe five patents related to elliptic curve cryptography (ECC) for accelerating digital signature verification and performing efficient finite field calculations.
  • Technical Context: The technology at issue is elliptic curve cryptography, which provides the mathematical foundation for the digital signatures that secure transactions on blockchain networks like Bitcoin.
  • Key Procedural History: The asserted patents originate from a portfolio developed by Certicom Corporation and later acquired by BlackBerry. Plaintiff alleges it is the current successor-in-interest. The complaint states that Defendant emerged from Chapter 11 bankruptcy on January 23, 2024, and that the infringement allegations are for post-emergence activities. Plaintiff also alleges providing pre-suit notice of infringement to Defendant in letters dated March 28, 2025, and April 18, 2025.

Case Timeline

Date Event
2001-12-31 Priority Date for ’960 and ’062 Patents
2005-01-18 Priority Date for ’827 and ’370 Patents
2008-05-13 ’960 Patent Issued
2009-07-17 Priority Date for ’286 Patent
2013-09-10 ’286 Patent Issued
2014-03-04 ’062 Patent Issued
2014-07-22 ’827 Patent Issued
2019-05-07 ’370 Patent Issued
2024-01-23 Defendant Emerged from Bankruptcy; Alleged Infringement Period Begins
2025-03-28 Plaintiff’s First Alleged Notice Letter to Defendant
2025-04-18 Plaintiff’s Second Alleged Notice Letter to Defendant
2025-05-12 Complaint Filed

II. Technology and Patent(s)-in-Suit Analysis

U.S. Patent No. 8,788,827, “Accelerated Verification of Digital Signatures and Public Keys,” issued July 22, 2014

The Invention Explained

  • Problem Addressed: The patent’s background, as described in the complaint, identifies a performance bottleneck in cryptographic systems using the Elliptic Curve Digital Signature Algorithm (ECDSA). Specifically, verifying a signature was recognized to take approximately twice as long as creating one, because verification involves two time-consuming scalar multiplication operations, whereas signing only requires one (Compl. ¶72, citing ’827 Patent, Ex. 1 at 3:5-17).
  • The Patented Solution: The invention claims to provide computational techniques that accelerate this verification process. The complaint highlights two such techniques: generating an indicator with the signature to speed up the recovery of an ephemeral public key (R), and recovering a signer’s public key (Q) by computing Q=r⁻¹(sR-eG) (Compl. ¶74-75, citing ’827 Patent, Ex. 1 at 4:48-5:4, 7:39-58). These methods reduce the overall computational load required to validate a digital signature (Compl. ¶75).
  • Technical Importance: By reducing the time needed for signature verification, the invention allows for a higher throughput of secure transactions, a critical factor in systems that depend on cryptographic validation at scale (Compl. ¶75).

Key Claims at a Glance

  • The complaint asserts at least independent claim 1 (Compl. ¶120).
  • The complaint does not provide the text of the asserted claims. However, it summarizes the invention of the ’827 Patent as being directed to methods for "generating a public key of the signer of a digital signature by computing Q=r⁻¹ (sR-eG)" (Compl. ¶118).

U.S. Patent No. 10,284,370, “Accelerated Verification of Digital Signatures and Public Keys,” issued May 7, 2019

The Invention Explained

  • Problem Addressed: As a continuation of the ’827 Patent, the ’370 Patent shares a common specification and addresses the same technical problem of slow ECDSA signature verification times (Compl. ¶62, ¶72).
  • The Patented Solution: The patented solution is substantively the same as that of the ’827 Patent, focusing on computational techniques to accelerate the verification of digital signatures and the recovery of public keys (Compl. ¶63, ¶74-75).
  • Technical Importance: The technical importance is identical to that of the parent ’827 Patent (Compl. ¶75).

Key Claims at a Glance

  • The complaint asserts at least independent claim 1 (Compl. ¶128).
  • The complaint does not provide the text of the asserted claims. It summarizes the invention of the ’370 Patent as being directed to methods for "verifying a digital signature included with a message using a public key omitted from the message but recovered by computing Q=r⁻¹ (sR-eG)" (Compl. ¶126).

Multi-Patent Capsule: The “Finite Field Engine Patents”

  • Patent Identification: U.S. Patent No. 7,372,960 and U.S. Patent No. 8,666,062, both titled “Method and Apparatus for Performing Finite Field Calculations,” issued May 13, 2008, and March 4, 2014, respectively (Compl. ¶77, ¶79).
  • Technology Synopsis: These patents address the technical challenge of efficiently implementing ECC across various finite fields, which can require either large, duplicative code for specific fields or slow, generic code (Compl. ¶88, citing ’960 Patent, Ex. 3 at 2:8-24). The invention provides for a "finite field engine" that performs operations by representing elements as a fixed number of machine words, executing a non-reducing operation, and then applying a specific modular reduction, enabling the creation of fast engines without duplicating the bulk of the program instructions (Compl. ¶91, citing ’960 Patent, Ex. 3 at 6:30-7:18).
  • Asserted Claims: At least claim 3 of the ’960 Patent and at least claim 1 of the ’062 Patent are asserted (Compl. ¶136, ¶140).
  • Accused Features: The accused features are Defendant’s bitcoin mining equipment and wallets that perform finite field calculations consistent with the Bitcoin protocol (Compl. ¶136, ¶140).

Multi-Patent Capsule: The “Improved Modular Reduction” Patent

  • Patent Identification: U.S. Patent No. 8,532,286, “System and Method for Reducing the Computation and Storage Requirements for a Montgomery-Style Reduction,” issued September 10, 2013 (Compl. ¶94).
  • Technology Synopsis: The patent addresses the computational and storage costs of Montgomery reduction, a type of modular arithmetic used in cryptography (Compl. ¶96). The invention teaches a technique that uses a "modified reduction value" in place of the standard modulus and another precomputed value (μ), which reduces the number of required registers and multiplications, particularly benefiting resource-constrained architectures (Compl. ¶104, citing ’286 Patent, Ex. 5 at 4:40-6:65, 5:28-36).
  • Asserted Claims: At least claim 1 is asserted (Compl. ¶144).
  • Accused Features: The accused features are Defendant’s bitcoin mining equipment and wallets that perform Montgomery-style reductions as part of their cryptographic operations (Compl. ¶144).

III. The Accused Instrumentality

Product Identification

The accused instrumentalities are Defendant Core Scientific’s digital asset mining operations, which include both its "self-mining" activities and its hosting services for customers (Compl. ¶39, ¶45, ¶49). These operations utilize specialized hardware such as application-specific integrated circuits (ASICs), computers, nodes, and software wallets that comply with the Bitcoin protocol (Compl. ¶43, ¶46, ¶51).

Functionality and Market Context

Defendant’s operations involve using powerful computers to solve cryptographic problems to validate transactions and add new blocks to the Bitcoin blockchain (Compl. ¶43). This process inherently includes generating and verifying ECDSA digital signatures using the "secp256k1" curve, as specified by the Bitcoin protocol (Compl. ¶47). The complaint portrays Defendant as "one of the largest Bitcoin miners in the world," with its mining facilities collectively capable of performing over 20 quintillion cryptographic calculations per second (Compl. ¶38, ¶40). The complaint includes a map showing the nationwide distribution of Defendant's data centers, which supports the allegation of large-scale operations (Compl. ¶39, p. 23). Defendant’s self-mining revenue for the year ending December 31, 2024, is alleged to be $510.7 million (Compl. ¶45).

IV. Analysis of Infringement Allegations

The complaint references exemplary claim charts attached as exhibits but does not include them in the filing (Compl. ¶120, ¶128). The following is a summary of the narrative infringement theory for the lead patents.

The complaint’s central theory is that the patented technologies were foundational innovations by Certicom that were subsequently incorporated into the Bitcoin protocol (Compl. ¶5, ¶52). The complaint links the "Accelerated Verification Patents" to the "GLV Endomorphism" technique, an optimization that speeds up signature verifications and was allegedly adopted by the Bitcoin community (Compl. ¶20-21). Therefore, the complaint alleges that by operating mining hardware and software that complies with the standardized Bitcoin protocol, Defendant necessarily practices the patented methods for verifying digital signatures and recovering public keys (Compl. ¶47, ¶52). Infringement is alleged to occur whenever Defendant’s systems—whether for its own mining or for its hosting customers—validate transactions on the Bitcoin blockchain or generate new transactions (e.g., selling mined bitcoin), as these actions require performing the patented cryptographic operations (Compl. ¶47, ¶50).

Identified Points of Contention

  • Scope Questions: The infringement theory raises the question of whether using a public, open-source protocol that allegedly embodies patented inventions constitutes direct infringement by a user of that protocol. A central dispute may be the extent to which the specific steps of the asserted claims are required by the Bitcoin protocol specification versus being merely one possible implementation.
  • Technical Questions: A key technical question will be what evidence demonstrates that Defendant's specific implementations (e.g., the software running on its ASICs and nodes) perform the patented methods. While the complaint alleges compliance with the Bitcoin protocol is sufficient, the defense may argue that the actual operations do not map to the specific limitations of the asserted claims or that the protocol can be practiced in a non-infringing manner.

V. Key Claim Terms for Construction

The complaint does not provide the full text of the asserted claims. Based on the complaint’s narrative summary of the inventions, the following term may be critical.

  • The Term: "recovering...a public key...by computing Q=r⁻¹(sR-eG)" (from the summary of the ’370 Patent, Compl. ¶126)
  • Context and Importance: This phrase appears to describe the core technical step of the "Accelerated Verification Patents." The infringement theory depends on whether Defendant's standard Bitcoin transaction verification process can be characterized as performing this specific computation. Practitioners may focus on this term because its construction will determine whether simply executing the Bitcoin protocol's standard verification function meets this limitation.
  • Intrinsic Evidence for Interpretation:
    • Evidence for a Broader Interpretation: The complaint describes the patents as teaching "computational techniques" that provide a "technological improvement" (Compl. ¶63, ¶74). This language may support an interpretation focused on the mathematical result of the computation, suggesting that any system achieving the Q=r⁻¹(sR-eG) outcome infringes, regardless of the precise software code or hardware logic used.
    • Evidence for a Narrower Interpretation: The complaint notes the patents teach "improvements to the ECDSA digital signature verification process" that "accelerate" it (Compl. ¶74). This may support an argument that the term "computing" requires not just performing the mathematical operation, but doing so using the specific speed-enhancing methods and embodiments disclosed in the patent specification.

VI. Other Allegations

  • Indirect Infringement: The complaint alleges induced infringement based on Defendant deploying and operating bitcoin mining machines for its hosting customers, thereby allegedly encouraging them to perform the patented methods (Compl. ¶122, ¶130, ¶146). Contributory infringement is alleged on the basis that the supplied mining machines are not staple articles of commerce and are incapable of substantial non-infringing use (Compl. ¶123, ¶131, ¶147).
  • Willful Infringement: Willfulness is alleged for the ’827, ’370, and ’286 patents based on pre-suit knowledge from notice letters sent on March 28, 2025, and April 18, 2025. The complaint alleges that Defendant continued its infringing activities despite this notice (Compl. ¶119, ¶127, ¶143).

VII. Analyst’s Conclusion: Key Questions for the Case

  • A core issue will be one of infringement by standard: can Plaintiff prove that compliance with the public Bitcoin protocol necessarily requires practicing the specific steps of the asserted patent claims? The case may depend on the evidentiary link between the patent claims and the mandatory operations of the Bitcoin software and hardware used by Defendant.
  • A key legal question will be one of claim scope: will claim terms such as "computing" be construed broadly to cover any system that performs the claimed mathematical function, or narrowly to require the specific accelerative algorithms taught in the patent specifications?
  • A significant damages question will turn on willfulness: given that the alleged infringement period begins after Defendant’s emergence from bankruptcy, the court will likely scrutinize the timing, content, and receipt of the post-emergence notice letters to determine if they establish the knowledge and intent required for enhanced damages.