On February 11, the U.S. Southern District of New York Federal Court issued an important ruling, dismissing patent infringement claims brought by Bprotocol Foundation and LocalCoin Ltd. related to Bancor against Uniswap. Judge John G. Koeltl, in a memorandum opinion released on February 10, stated that the patents involved are essentially “abstract concepts” that do not meet the criteria for patent protection under U.S. patent law.
The case centered around the “constant product automated market maker” model, which is one of the core liquidity pricing mechanisms in decentralized finance. The plaintiffs claimed that Uniswap illegally used their automated pricing and liquidity pool technology, but the court found that these patents merely involve “fundamental economic practices of calculating currency exchange rates for trading,” and even when implemented on blockchain and smart contracts, they do not qualify for patent protection.
The judge further noted that deploying abstract formulas on blockchain infrastructure does not constitute a technological breakthrough with “inventive concepts,” and therefore cannot satisfy the two-step patent eligibility test established by the U.S. Supreme Court. Additionally, the court ruled that the plaintiffs failed to reasonably demonstrate how Uniswap’s open-source code includes the key parameters described in the patents. The complaint also had clear deficiencies regarding direct infringement, inducement, and willful infringement.
This ruling is a procedural victory for Uniswap but not a final decision. The court allowed the plaintiffs 21 days to file an amended complaint; otherwise, the case will be dismissed with prejudice. Following the announcement, Uniswap founder Hayden Adams expressed optimism on social media, stating “We won.”
Industry experts believe that this case not only concerns the patent dispute between Uniswap and Bancor but could also set a precedent regarding whether core DeFi algorithms can be patented. As on-chain financial innovation continues to deepen, such judicial rulings will likely influence the technological boundaries and regulatory environment of the crypto industry.
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