DCT

6:26-cv-06875

Malikie Innovations Ltd v. Fortitude Mining LLC

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I. Executive Summary and Procedural Information

  • Parties & Counsel:
  • Case Identification: 6:26-cv-06875, W.D.N.Y., 08/28/2026
  • Venue Allegations: Venue is based on Defendant's alleged principal place of business and corporate headquarters being located in Fairport, New York, within the Western District of New York.
  • Core Dispute: Plaintiff alleges that Defendant's Bitcoin mining operations and associated transaction processing infringe two patents related to efficient cryptographic computation methods.
  • Technical Context: The technologies at issue are elliptic curve cryptography (ECC) and secure hash algorithms (SHA), which are foundational cryptographic primitives for securing transactions and performing the "mining" process in cryptocurrencies like Bitcoin.
  • Key Procedural History: Plaintiffs are successors-in-interest to a patent portfolio developed by Certicom Corp. and later acquired by BlackBerry Ltd. The complaint alleges Defendant was on notice of the patents-in-suit and the infringement allegations due to a prior lawsuit filed on December 12, 2025, against Foundry Digital LLC, a related entity from which Defendant was spun out.

Case Timeline

Date Event
2009-07-17 '286 Patent Priority Date
2011-04-06 '039 Patent Priority Date
2013-09-10 '286 Patent Issue Date
2014-04-29 '039 Patent Issue Date
2025-01-01 Fortitude Mining begins operations as a standalone business (approximate date based on complaint)
2025-12-12 Alleged notice of infringement via filing of complaint against Foundry Digital LLC
2026-08-28 Complaint Filing Date

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

U.S. Patent No. 8,532,286 - "System and Method for Reducing the Computation and Storage Requirements for a Montgomery-Style Reduction"

The Invention Explained

  • Problem Addressed: The patent describes that in cryptography, a common operation called "Montgomery reduction" is used for modular arithmetic but can be computationally slow and demanding on processor resources Compl. ¶¶61-62 This standard method requires storing multiple values in limited processor registers and performing multiple calculation steps for each part of the operation, which is inefficient, particularly on resource-constrained devices '286 Patent, col. 1:20-33 '286 Patent, col. 5:28-36
  • The Patented Solution: The invention proposes a method to make Montgomery-style reductions more efficient by using a single, pre-computed "modified reduction value" (denoted as n') instead of the two separate values (µ and n) used in the standard approach '286 Patent, abstract This modified value allows for a "replacement" of the least significant part of a number being processed, rather than a "cancellation," which reduces the number of required multiplications and the amount of register storage needed '286 Patent, col. 5:37-44 '286 Patent, col. 6:1-11
  • Technical Importance: This optimization enhances the performance of cryptographic operations, such as those in Elliptic Curve Cryptography (ECC), especially on processors with limited registers like the ARM architecture, which are common in mobile and embedded systems '286 Patent, col. 6:51-65

Key Claims at a Glance

  • The complaint asserts at least independent claim 1 Compl. ¶90
  • The essential elements of independent claim 1 are:
    • A method for performing a Montgomery-style reduction on a cryptographic apparatus.
    • Obtaining an operand for the operation.
    • Computing a modified operand using a "reduction value" (which is a function of the modulus) to perform a "replacement" of a least significant word of the operand, explicitly distinct from a "cancellation" thereof.
    • Outputting the modified operand.
  • The complaint indicates that an exemplary claim chart for claim 1 is attached as an exhibit, and reserves the right to assert other claims Compl. ¶90 Compl. ¶95

U.S. Patent No. 8,712,039 - "Efficient Implementation of Hash Algorithm on a Processor"

The Invention Explained

  • Problem Addressed: The patent addresses the challenge of efficiently implementing secure hash algorithms of the SHA-2 family (like SHA-256, used in Bitcoin) on processors with limited register space, such as ARM processors Compl. ¶74 Because the algorithm's state is too large to be held entirely in the processor's registers, frequent and slow data loading from memory is required, creating a performance bottleneck '039 Patent, col. 1:47-54
  • The Patented Solution: The invention describes a method to optimize hashing by maximizing the reuse of data already present in the processor's registers, thereby minimizing memory access '039 Patent, abstract This is achieved by "categorizing and unrolling" the algorithm's iterations into "even" and "odd" steps and "reversing" the sequence of computations between them. This structure allows the results of one iteration to be used immediately in the next, which is alleged to reduce the average number of required memory load operations by at least half '039 Patent, col. 3:50-63 '039 Patent, abstract
  • Technical Importance: This efficiency improvement is critical for computationally intensive hashing applications like cryptocurrency "mining," where speed and power efficiency directly impact profitability Compl. ¶¶24-25

Key Claims at a Glance

  • The complaint asserts at least independent claim 1 Compl. ¶95
  • The essential elements of independent claim 1 are:
    • A method for maximizing the number of registers available for a subsequent iteration of a hash algorithm.
    • Categorizing and unrolling the algorithm's iterations into "even" and "odd" iterations.
    • Reversing the sequence of computations in the even iterations compared to the odd iterations.
    • This reversal results in reducing the average number of words that need to be loaded into registers by at least one-half.
    • Combining an even and an odd iteration to form a new loop iteration.
  • The complaint indicates that an exemplary claim chart for claim 1 is attached as an exhibit, and reserves the right to assert other claims Compl. ¶95

III. The Accused Instrumentality

Product Identification

The accused instrumentalities are Defendant Fortitude Mining's Bitcoin mining operations, including the use of hardware and software for digital asset mining, such as mining rigs, application-specific integrated circuits (ASICs), computers, and related software applications Compl. ¶49 Compl. ¶95

Functionality and Market Context

  • Fortitude Mining is described as "the self-mining division of Foundry," which was "spun out as a standalone business" and is a "leading venture miner" Compl. ¶46 Compl. ¶47
  • Fortitude operates a "best-in-class mining fleet" and participates in the "Foundry USA Pool," which the complaint identifies as the world's largest Bitcoin mining pool, responsible for over 30% of the global Bitcoin hashrate Compl. ¶42 Compl. ¶46 Compl. ¶48 The complaint includes a pie chart showing Foundry USA's 30.5% market share of Bitcoin mining pools Compl. p. 28
  • The accused functionality centers on two core aspects of Bitcoin:
    1. Mining: Fortitude uses specialized computers to perform a vast number of SHA-256 hash calculations as part of Bitcoin's "proof-of-work" consensus mechanism to validate transactions and create new blocks on the blockchain Compl. ¶¶24-25 Compl. ¶40 This is the basis for the infringement allegations against the '039 Patent.
    2. Transactions: Fortitude generates and verifies digital signatures using Elliptic Curve Digital Signature Algorithm (ECDSA) to conduct Bitcoin transactions, such as receiving mining rewards from the mining pool Compl. ¶¶51-53 This is the basis for the infringement allegations against the '286 Patent.

IV. Analysis of Infringement Allegations

The complaint references claim-chart exhibits that were not provided. The following is a prose summary of the infringement theories presented in the complaint.

  • '286 Patent Infringement Allegations
    The complaint alleges that Fortitude is responsible for the generation and verification of digital signatures as part of its Bitcoin operations, such as when receiving payouts from the Foundry USA mining pool Compl. ¶51 Bitcoin transactions are secured using the ECDSA algorithm with the secp256k1 curve Compl. ¶15 Compl. ¶51 The infringement theory suggests that the execution of these cryptographic functions necessarily involves Montgomery-style reduction, and that the software and/or hardware used by Fortitude or its agents (like Foundry) implements the patented method of using a "reduction value" to perform a "replacement" of a least significant word, as recited in claim 1 Compl. ¶88 Compl. ¶90 The complaint also raises indirect infringement, alleging Fortitude encourages others, including Foundry, to perform these infringing acts Compl. ¶90

  • '039 Patent Infringement Allegations
    The complaint alleges that Fortitude directly infringes the '039 Patent by using specialized hardware and software for Bitcoin mining Compl. ¶95 Bitcoin mining is a computationally intensive process of repeatedly performing the SHA-256 hash function Compl. ¶40 A figure in the complaint illustrates how transactions are chained together using hashes to form a secure blockchain Compl. p. 24 The infringement theory posits that the accused mining hardware (e.g., ASICs) and associated software are designed for maximum efficiency and, in doing so, implement the patented method of claim 1. Specifically, it is alleged that they achieve efficiency by categorizing hash iterations into "even and odd" ones and "reversing" the computational sequence to minimize memory loads and maximize the reuse of data in processor registers (Compl. ¶¶93; Compl. ¶95).

  • Identified Points of Contention:

    • Scope Questions: A central question for the '286 Patent will be the construction of the claim phrase "replacement... rather than perform a cancellation thereof." The patent positions this as a key distinction over the prior art, and infringement will depend on whether the accused ECDSA implementation performs a "replacement" as the patent defines it, or a standard "cancellation." For the '039 Patent, a similar question arises for the term "reversing a sequence of computations," and whether the optimization techniques used in modern ASICs fall within the scope of that term as described in the patent.
    • Technical Questions: A key evidentiary challenge for the plaintiff may be demonstrating what occurs inside the accused instrumentalities. For the '286 Patent, this involves showing that the specific software libraries used for Bitcoin transactions implement the patented "replacement" logic. For the '039 Patent, it may require reverse-engineering or obtaining discovery on the proprietary architecture of Bitcoin mining ASICs to prove they implement the claimed "even/odd reversal" hashing strategy.

V. Key Claim Terms for Construction

  • Term from the '286 Patent: "replacement of a least significant word of the operand, rather than perform a cancellation thereof" (from claim 1)

    • Context and Importance: This phrase is the central point of novelty asserted in the patent, distinguishing the claimed invention from standard Montgomery reduction. The outcome of the infringement analysis for the '286 Patent will likely depend on whether the accused cryptographic process is found to perform a "replacement" or a "cancellation."
    • Intrinsic Evidence for Interpretation:
      • Evidence for a Broader Interpretation: A party may argue that the term should cover any process that uses a modified reduction value (n') to effectively zero-out the least significant word without first calculating a separate multiplier (m), thereby avoiding the multiplication and storage associated with standard cancellation.
      • Evidence for a Narrower Interpretation: A party may argue the term is limited to the specific embodiment described in the specification, where the replacement is performed according to the formula a=[...,a₁,0]+a₀×n'×2ʷ '286 Patent, col. 6:58-62 '286 Patent, FIG. 7 This would narrow the claim to a specific mathematical implementation.

  • Term from the '039 Patent: "reversing a sequence of computations in the even iterations to those in the odd iterations" (from claim 1)

    • Context and Importance: This term describes the core mechanism claimed to achieve the patent's stated goal of reducing memory loads by at least half. Practitioners may focus on this term because infringement will hinge on whether the optimization strategy within the accused mining hardware can be characterized as such a "reversal."
    • Intrinsic Evidence for Interpretation:
      • Evidence for a Broader Interpretation: A party could contend that the term applies to any method that reorders the fundamental computational steps between consecutive unrolled iterations in a way that allows register values to be immediately reused, fulfilling the claim's objective.
      • Evidence for a Narrower Interpretation: A party could argue the term is defined by the specific implementation detailed in the specification, particularly "Pseudocode 2," which shows a concrete reordering of steps like the calculation of t and H '039 Patent, col. 4 They might argue that other optimization techniques, such as heavy pipelining or parallelization found in ASICs, are structurally different and not a "reversal."

VI. Other Allegations

  • Indirect Infringement: The complaint alleges indirect infringement of the '286 Patent by inducement. The factual basis is that Fortitude encourages others, including the mining pool operator Foundry, to generate and verify Bitcoin transactions (which allegedly use the patented method) as a necessary part of the mining and payout process Compl. ¶90
  • Willful Infringement: The complaint alleges willful infringement of both patents. The basis for this allegation is pre-suit knowledge. It is alleged that Fortitude was put on notice of the patents and the specific infringement theories on "at least the December 12, 2025 filing of the Complaint in Malikie Innovations Ltd. v. Foundry Digital LLC," a case against a closely related entity. The complaint further alleges that Fortitude took no action to stop its infringement after being put on notice Compl. ¶89 Compl. ¶91 Compl. ¶94 Compl. ¶96

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

  • A core issue will be one of technical proof: Can the Plaintiffs produce sufficient evidence to demonstrate that the algorithms implemented in widely-distributed Bitcoin software and highly proprietary mining ASICs practice the specific methods claimed in the patents-in-suit? This moves beyond simply showing that the accused products perform hashing and digital signatures, and into the details of how they do so.
  • A second key issue will be one of definitional scope: Will the court construe the claim term "replacement... rather than... cancellation" in the '286 Patent and "reversing a sequence of computations" in the '039 Patent broadly enough to cover the highly optimized, potentially distinct methods used in modern cryptocurrency systems, or will it adopt a narrower construction tied strictly to the patents' embodiments?
  • Finally, a significant legal question will concern knowledge and willfulness: How will the defendant's corporate history as a spin-out of Foundry, the target of a prior lawsuit by the same plaintiff, impact the court's assessment of when the defendant had knowledge of its alleged infringement for the purposes of willfulness and enhanced damages?