09 August 2022

Court approves service of legal proceedings via NFT

Serving legal proceedings can be a necessary, but potentially troublesome legal requirement – and using the usual methods of service (personal service, first class post, leaving at a specified place, or via electronic communication) can be particularly tricky in situations where potential defendants are being purposely evasive. A recent decision from the UK High Court offers an alternative method, albeit one that is applicable only in very specific circumstances.

In this decision (D’Aloia v Binance Holdings & Others [2022]), Fabrizio D’Aloia has been allowed to serve proceedings via non-fungible tokens (NFT) airdrop to a digital wallet. The background to the case is that Mr D’Aloia had transferred a large number of cryptocurrency tokens to a purported trading account, which he later realised was fraudulent. Mr D’Aloia was able to trace these tokens to digital wallets associated with Binance (among other exchanges). Thereafter, in an attempt to recover these assets, D’Aloia sought an injunction and also sought – and was granted – permission to serve the (unknown) owners of the digital wallets via NFT airdrop to those digital wallets as well as via email.

This ruling thus enables the contacting of parties of unknown identity or address in a straightforward manner via NFT airdrop. At the present time, there seem to be rather limited circumstances in which this method might be applicable, specifically in cases of cryptocurrency misappropriation. However, if blockchains become more pervasive through society in the coming years – and more people have links to known digital wallets – this method of service might become more widely applicable. One could imagine a future in which various types of legal proceedings are served by NFT Airdrop to a wallet associated with a defendant. And this sort of rapid and undeniable service of proceedings via NFT, which would leave an immutable record on a blockchain, would offer immediately apparent benefits over the slower and more difficult to evidence service of proceedings via post.

A similar ruling was made earlier this year in the US in LCX AG, -v- John Does Nos. 1 – 25, so perhaps more countries will follow soon.

Although these cases are of course not relevant to the patenting of blockchain technology, these decisions do at least indicate that blockchains are being used for an increasingly diverse range of purposes and are increasingly finding acceptance from governmental bodies. One slightly tangential takeaway then from a patent point of view – that is particularly relevant in the UK (which currently takes a harsher view of blockchain applications than other jurisdictions) – is that it is worthwhile for applicants to think about potential (non-cryptocurrency) uses of blockchains and to describe these uses in any patent application. Linking blockchain technologies to practical uses will often be helpful for avoiding subject matter objections in patent applications.