Judge dismisses Bancor-related patent lawsuit against Uniswap
A New York federal judge has dismissed a patent infringement lawsuit filed by Bancor's affiliates against Uniswap, ruling that the asserted patents claim abstract ideas and are ineligible for protection under US patent law.
In a memorandum opinion and order issued Tuesday, February 10, Judge John G. Coltle of the U.S. District Court for the Southern District of New York ruled in favor of BitProtocol Foundation and LocalCoin Ltd. The defendant's motion to dismiss the complaint against Universal Navigation Inc and the Uniswap Foundation is granted.
The court ruled that the patents address an abstract idea for calculating crypto currency values and therefore fail the two-step test for patent eligibility established by the US Supreme Court.
The ruling marks a procedural victory for Uniswap, but it is not final. The suit was dismissed without prejudice, giving the defendants 21 days to file an amended complaint. If an amended complaint is not filed, the dismissal will be reversed with prejudice.
“A lawyer told me we won,” Uniswap founder Hayden Adams wrote on X shortly after the verdict.
Cointelegraph reached out to representatives of the Bprotocol Foundation and Uniswap for comment but did not receive a response by press time.
The judge confirmed that he will ask for the draft ideas of the patent
As previously reported, Bancor sued Uniswap for infringing patents related to a “fixed product automated market making” system that supports decentralized exchanges.
The dispute centered on the illegal use of the Uniswap protocol, a proprietary technology for automated token pricing and liquidity pools.
Coltle said the patents were directed at “the abstract idea of calculating exchange rates for carrying out transactions.”
He wrote that money exchange is a “fundamental economic practice” and that the calculation of pricing information is a precedent set by the Federal Court.
The judge rejected arguments that applying a pricing formula to blockchain infrastructure made the claims patentable, and said the patents only use existing blockchain and smart contract technology to “solve an economic problem in predictable ways.”
Limiting an abstract idea to a specific area of technology does not make it patentable, he said. The court found no “inventive concept” capable of turning the abstract idea into a patent-eligible application.
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The complaint failed to plead violation
Beyond patent eligibility, the court found that the amended complaint did not allege direct infringement.
According to the memorandum, the plaintiffs have failed to identify how Uniswap's publicly available code incorporates the required reserve ratio specified in the patent.
The judge also dismissed the claims of willful infringement, citing persuasive arguments that the defendants were aware of the patents before filing suit.
Dismissal without prejudice Bprotocol Foundation and LocalCoin Ltd. It leaves open the possibility that they may try to file again with improved claims.
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