Legal Action Against Uniswap Over Patent Infringement
Bprotocol Foundation and LocalCoin Ltd., the creators of the Bancor Protocol, have initiated legal proceedings against Uniswap Labs and the Uniswap Foundation, alleging infringement of patented technology related to automated cryptocurrency trading. The crux of the lawsuit revolves around a smart contract framework known as the constant product automated market maker (CPAMM). Bancor asserts that it developed this model in 2016, enabling users to trade digital currencies without relying on traditional exchanges or centralized market makers. The protocol was patented by Bancor in early 2017 and publicly launched later that summer. The complaint states that Uniswap has employed this same technology since at least 2018 without obtaining a license or establishing any formal agreement.
Origins of the Dispute
Bancor’s legal representatives have highlighted two U.S. patents related to the CPAMM model, which originated from their foundational work on decentralized liquidity systems. They contend that these patents encompass the essential technology that supports numerous decentralized finance (DeFi) platforms today. Bancor claims that Uniswap was aware of the origins of this system yet proceeded to integrate the same framework into its first protocol version in 2018, continuing its use in subsequent updates, including the anticipated version 4. Mark Richardson, Project Lead at Bancor, stated, “We have always championed innovation, but it is crucial that such innovation respects the rights of the original creators. Protecting our intellectual property is vital for the ecosystem’s health. If entities like Uniswap can operate without accountability, it poses a risk to innovation across the industry, ultimately affecting all DeFi participants.”
Details of the Legal Claims
Bprotocol Foundation and LocalCoin are pursuing damages due to what they characterize as the ongoing unauthorized use of their patented technology. They are also accusing the Uniswap Foundation of promoting or facilitating this infringement. While the lawsuit does not specify an exact monetary claim, the potential financial implications are significant. Uniswap stands as one of the most popular platforms in the DeFi landscape, and a ruling against it could have far-reaching effects on the sector. Key points outlined in the complaint include:
– **Patent Timeline**: Bancor submitted its initial patent application on January 8, 2017, prior to Uniswap’s protocol launch.
– **Public Disclosure**: The invention was detailed in Bancor’s white paper in February 2017, followed by the public launch of the protocol on June 12, 2017.
– **Alleged Infringement**: Uniswap v1 became operational in November 2018, with Bancor asserting that the CPAMM model continues to be utilized in every version released thereafter.
“When a company persistently employs our invention without our authorization and utilizes it to compete with us, we must respond. For the past eight years, Uniswap has leveraged our patented technology in its services without our consent. Consequently, we have resorted to legal action to safeguard our innovation for the benefit of the entire DeFi community,” Mr. Richardson remarked.
Bancor and Uniswap: A Brief Overview
Bancor, a decentralized finance (DeFi) protocol that launched in 2017, was a pioneer in the automated market maker (AMM) model, facilitating on-chain token trading without the need for traditional order books or intermediaries. Governed by the Bancor DAO, the protocol continues to evolve, introducing innovative products such as Carbon DeFi, amplified and asymmetric liquidity tools, and on-chain arbitrage solutions. Conversely, Uniswap is a decentralized exchange (DEX) that enables users to swap Ethereum-based tokens directly from their wallets through an automated market maker (AMM). Available via app.uniswap.org, it operates across multiple blockchains and serves as a foundational platform within the DeFi sector. Bprotocol Foundation is a Swiss non-profit established in 2017 aimed at fostering the development and adoption of the Bancor Protocol, promoting innovations in decentralized finance through research, ecosystem enhancement, and legal defense, including the protection of patented DeFi technologies.
