US Court Hands Uniswap Initial Victory by Throwing Out Bancor's Patent Lawsuit
Uniswap's dismissal motion was approved by the court without prejudice, providing the plaintiffs a 21-day window to modify their case before it becomes permanently dismissed.
Judge John G. Koeltl of a New York federal court has thrown out a patent infringement case initiated by entities connected to Bancor against Uniswap, determining that the disputed patents involve abstract concepts and do not qualify for protection under United States patent legislation.
According to a memorandum opinion and order issued on Feb. 10, Judge Koeltl from the US District Court for the Southern District of New York approved the motion to dismiss the legal complaint that Bprotocol Foundation and LocalCoin Ltd. had lodged against Universal Navigation Inc. and the Uniswap Foundation.
The judicial determination concluded that the disputed patents focus on the abstract concept of computing cryptocurrency exchange rates and consequently do not pass the two-step evaluation for patent eligibility that was established by the United States Supreme Court.
This judicial decision represents a procedural victory for Uniswap, though it does not constitute a final resolution. The dismissal was issued without prejudice, providing the plaintiffs with a 21-day period to submit a revised complaint. Should no amended complaint be submitted, the dismissal will be transformed into one with prejudice.
Following the court's decision, Hayden Adams, the founder of Uniswap, shared on X, "A lawyer just told me we won."
Representatives from both Bprotocol Foundation and Uniswap were contacted by Cointelegraph for statements regarding the matter, but no response was obtained prior to the time of publication.
Court determines patents involve abstract concepts
According to prior reporting, the allegations from Bancor stated that Uniswap had violated patents connected to a "constant product automated market maker" framework that serves as the foundation for decentralized exchanges.
The legal battle focused on the question of whether Uniswap's protocol engaged in unauthorized usage of proprietary technology for automated token price determination and liquidity pool management.
In his ruling, Koeltl stated that the disputed patents are focused on "the abstract idea of calculating currency exchange rates to perform transactions."
The judge noted in his written opinion that currency exchange represents a "fundamental economic practice" and that computing pricing information qualifies as abstract according to established precedent from the Federal Circuit.
Arguments suggesting that the implementation of the pricing formula on blockchain infrastructure rendered the claims eligible for patent protection were rejected by the judge, who stated the patents simply utilize existing blockchain and smart contract technology "in predictable ways to address an economic problem."
According to the judge's determination, confining an abstract idea to a specific technological environment does not render it eligible for patent protection. The judicial review also determined there was no "inventive concept" adequate to convert the abstract idea into an application eligible for patent protection.
Legal filing fails to adequately allege infringement
In addition to the issue of patent eligibility, the court determined that the amended complaint failed to plausibly demonstrate direct infringement.
The memorandum stated that the plaintiffs did not successfully identify the manner in which Uniswap's publicly accessible code incorporates the necessary reserve ratio constant that is specified within the patents.
Claims regarding induced and willful infringement were also dismissed by the judge, who found that the complaint failed to plausibly demonstrate that the defendants had knowledge of the patents prior to the filing of the lawsuit.
The nature of the dismissal without prejudice maintains the option for Bprotocol Foundation and LocalCoin Ltd. to potentially refile their case with modified claims.