The AsicBoost controversy has added another chapter to its book.

Yesterday, law firm Getech Law published an open letter, which was subsequently confirmed to be legitimate by Timo Hanke, the initial submitter of the AsicBoost patent application. In the open letter, the law firm states that several chip producers and sellers are infringing on the intellectual property derived from the pending AsicBoost patent. As such, these companies should “cease production and sales activities of any products in connection to the pending patent application.”

While the letter does not state it explicitly, and Getech Law preferred not to name specific companies when asked by Bitcoin Magazine, the open letter seems to refer to recent revelations of Bitmain’s implementation of AsicBoost in their specialized Bitcoin mining (ASIC) chips. Indeed, if the letter’s claims hold up, Bitcoin’s biggest mining hardware producer may be unable to sell most of their hardware for the time being.

Otherwise, as Getech Law attorney Jun Ye told Bitcoin Magazine:

If the potential infringements cannot be stopped by the announcement and subsequent cease-and-desist letters, we will have no choice but to seek damages in court once our pending application is issued by the USPTO and other patent offices.

AsicBoost

AsicBoost has had a controversial history within the Bitcoin industry so far.

Initially patented by mathematician and former CoinTerra CTO Timo Hanke, AsicBoost is perhaps best described as a sort of “shortcut” that exploits a weakness in Bitcoin’s proof-of-work algorithm. By reusing some of their work, miners can save between 10 and 30 percent of the energy costs associated with mining. This can add up to a significant increase in profits over time — perhaps in excess of over $100 million per year if no other miners use it.

And it could be the case that no other miners would use it precisely because of AsicBoost’s pending patent. The patent application is therefore controversial, as some believe that such a state-enforced monopoly on using technology could further centralize and skew Bitcoin’s mining ecosystem. About a year ago several Bitcoin developers even proposed changing Bitcoin’s mining algorithm slightly in order to make AsicBoost’s technology obsolete.

But the AsicBoost controversy really exploded onto the scene several weeks ago, as it was discovered that covert use of AsicBoost is incompatible with Segregated Witness, the protocol upgrade proposed by the Bitcoin Core development team. Moreover, it was revealed that Bitmain had implemented the technology in its chips. This might explain why the Chinese mining giant has been opposing the upgrade so far — though the company denies this is the case.

Patent Infringement

Now, it seems Bitmain may not even be legally allowed to have AsicBoost implemented in its chips.

While Hanke was known to have submitted a patent for AsicBoost along with RSK CEO Sergio Demian Lerner, Bitmain initially claimed to hold the patent in China. As such, the company said it shouldn’t be a problem — from a legal perspective — to apply the technology at least within the Chinese jurisdiction.

But it now seems that Hanke claimed his worldwide priority date at the end of 2013, while Bitmain’s patent application stems from 2015. And because of the International Patent System (PCT), Hanke’s application should apply to China as well.

“Although Bitmain has also filed a patent application in China with similar features, we are confident that our patent application has an earlier priority date,” Ye told Bitcoin Magazine.

The patent application is not Hanke’s anymore. Two weeks ago, he sold the patent to Little Dragon Technology, a company based in California. According to Ye, Little Dragon Technology plans to operate in the Bitcoin industry, though it was not yet revealed how, exactly.

Either way, neither Hanke nor Little Dragon Technology gave anyone permission to use AsicBoost. This suggests, at least according to Getech Law, that anyone using AsicBoost is infringing on Little Dragon Technology’s intellectual property. And while Ye did not want to name any specific companies that may be infringing on the intellectual property — Bitmain or otherwise — he did reveal it may be more than one company.

As the open letter states:

“To date, no individual or business entity has been authorized to use or sell products based on the ASICBOOST patent application, yet some bitcoin miner manufacturers have implemented various features of the pending ASICBOOST patent in their mining hardware and firmware, potentially infringing the pending ASICBOOST patent.”

Consequences

In the open letter published yesterday, Getech Law wrote that ASIC producers should immediately cease production and sales of AsicBoost-related products. Additionally, the letter said infringers should contact Getech Law and disclose their relevant production and sales records since 2015. And it called on people who know more about potential patent infringement to contact the law firm.

If ASIC producers do continue to produce or sell AsicBoost-related products, Getech Law warned that there would be subsequent legal action.

“The open letter (announcement) is the first step to enforce my client’s IP rights. We hope that the community can become aware of the potential infringement,” Ye told Bitcoin Magazine.

The future for AsicBoost itself seems unclear, too. While debate over whether or not to disable it on a protocol level is ongoing within Bitcoin’s technical community, the open letter spoke of an “unfair advantage” it could give to miners.

And, speaking to Bitcoin Magazine, Ye said:

“We do not want to monopoly the market based on the pending patent. That is, we hope anyone who wants to use the technology can come to us such that we can negotiate reasonable license agreements for them to use the technology.”

Bitmain stated that they were not available for comment at time of publication.