- A US federal judge has dismissed a patent infringement lawsuit brought by Bancor against Uniswap Labs, the creator of the top decentralized exchange.
- The court ruled that Bancor’s patents claimed abstract ideas, such as the exchange of currency, which are ineligible under US patent law.
- This ruling is the second major win for Uniswap this week, following a 30% surge in its UNI token after BlackRock announced integrating its token onto the protocol.
- The case centered on a “constant product automated market maker” (CPAMM) mechanism that both protocols use for decentralized trading.
In a significant legal victory for the decentralized finance (DeFi) sector, a New York judge dismissed a patent lawsuit against Uniswap Labs this week. The case, filed by the creators of the rival Bancor protocol, alleged that Uniswap improperly used Bancor’s patented trading infrastructure. Court documents filed on Tuesday show District Judge John Koeltl granted Uniswap’s motion to dismiss the case. Consequently, the plaintiffs failed to state a valid legal claim for patent infringement.
The lawsuit specifically concerned a trading mechanism called a constant product automated market maker (CPAMM). Bancor pioneered this mechanism in 2017 and Uniswap popularized it a year later. However, the court determined that Bancor’s patents claimed ineligible abstract ideas, like currency exchange. “This case is a win for DeFi by protecting developers’ ability to build on and improve what came before without patent trolls claiming ownership of centuries-old economic concepts,” said Jolie Yang, assistant general counsel at Uniswap Labs, on X.
Meanwhile, this marks the second major win for Uniswap in a short period. The protocol’s native UNI token surged 30% recently. This increase followed an announcement from investment giant BlackRock about bringing its digital token onto the Uniswap platform. Separate legal disputes have also targeted other major DeFi protocols in the past.
For instance, True Return Systems filed infringement lawsuits against MakerDAO and Compound in October 2022. TRS claimed these protocols infringed on a patent related to oracle technology. Those suits were ultimately dismissed after a DeFi lobbying group purchased the patent.
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