Bprotocol Foundation and LocalCoin Ltd. have filed a lawsuit against Uniswap Labs and the Uniswap Foundation in U.S. federal court.
Bprotocol Foundation and LocalCoin Ltd., the companies behind the Bancor (BNT) cryptocurrency protocol, have filed a lawsuit against Uniswap Labs and the Uniswap Foundation in a U.S. federal court. The lawsuit claims that Uniswap has been using a patented smart contract technology for decentralized trading without authorization.
The lawsuit centers around Bancor’s invention of the constant product automated market maker (CPAMM) model, which LocalCoin had filed a provisional patent for in January 2017 after developing it in 2016. Using this technology, Bprotocol built and launched the Bancor Protocol in June 2017. This was the first decentralized exchange (DEX) to use CPAMM smart contracts.
According to the lawsuit, Uniswap Labs went on to use this technology to build its own competing platform. Back in November 2018, Uniswap unveiled its DEX, which is also based on the same CPAMM model. However, the complaint asserts that Uniswap has been profiting from this patented structure without engaging in any licensing or partnership agreement with Bprotocol for its use.
"This invention has been pivotal in supporting Bancor's longstanding role at the forefront of decentralized finance (DeFi) innovation," the lawsuit states. It adds that Bancor released a white paper in February 2017, disclosing the technology's use and function.
However, the plaintiffs allege that Uniswap Labs was well aware of the patent status and had no right to use the invention. The lawsuit details how Uniswap launched v1 of its DEX in 2018, already utilizing CPAMM smart contracts. Since then, Uniswap Labs has released several protocol updates, including the most recent v4 version. Each version, according to the plaintiffs, continues to infringe on the same technology.
Moreover, the plaintiffs claim that Uniswap Foundation actively induced this infringement by supporting and promoting the platform's expansion. Both entities, the lawsuit suggests, had full knowledge of the patent's status.
As a result, the plaintiffs are seeking monetary compensation for years of alleged unauthorized use and damages caused by the infringement. They are also demanding injunctive relief to halt any further infringement by Uniswap Labs, including the manufacture, use, sale, and import of devices, systems, and services that embody the patented invention.
Both Uniswap and Bancor are decentralized trading platforms that allow users to buy and sell cryptocurrencies without the need for a centralized exchange. Users can trade tokens on-chain with no fuss and no third parties to facilitate the trades.
