Judge Dismisses Bancor‑Affiliated Patent Lawsuit Against Uniswap, Citing Abstract‑Idea Doctrine
New York, Feb. 10 — A federal judge in Manhattan dismissed a patent‑infringement suit filed by entities linked to the Bancor protocol against Uniswap, ruling that the asserted patents cover abstract concepts and therefore fail the U.S. patent‑eligibility test.
Ruling Overview
U.S. District Judge John G. Koeltl of the Southern District of New York entered a memorandum opinion and order on Tuesday granting Uniswap’s motion to dismiss the complaint. The lawsuit, brought by the Bprotocol Foundation and LocalCoin Ltd., alleged that Uniswap’s automated market‑maker (AMM) technology infringed two patents that describe a “constant‑product” pricing mechanism used by decentralized exchanges (DEXs).
Judge Koeltl concluded that the patents in question are directed to the fundamental economic notion of calculating exchange rates—a concept the court deemed abstract. Applying the two‑step framework established by the Supreme Court’s Alice Corp. decision, the judge found no inventive concept that would transform the abstract idea into patent‑eligible subject matter.
The dismissal is without prejudice, giving the plaintiffs a 21‑day window to file an amended complaint. If no revised pleading is submitted, the dismissal will become with prejudice, permanently barring the suit.
Legal Reasoning
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Abstract Idea – The judge identified the core of the patents as the mathematical formula used to determine token prices in a liquidity pool. He emphasized that pricing calculations are a “fundamental economic practice” and, under precedent from the Federal Circuit, are not patent‑eligible merely because they are implemented on a blockchain.
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Lack of Inventive Concept – The court rejected the argument that applying the formula within a smart‑contract environment adds sufficient technological innovation. Judge Koeltl wrote that using existing blockchain infrastructure in a predictable manner does not satisfy the requirement for an “inventive concept” that would convert an abstract idea into a patent‑eligible application.
- Insufficient Allegations of Infringement – Beyond eligibility, the opinion noted that the complaint did not plausibly demonstrate that Uniswap’s open‑source code contains the specific reserve‑ratio constant recited in the patents. Likewise, the claims of induced and willful infringement were dismissed for failing to show that the defendants were aware of the patents prior to filing the suit.
Context: Bancor vs. Uniswap
The dispute stems from the broader competition among DeFi projects over the “constant‑product” AMM model, originally popularized by Uniswap and later adopted by many other platforms, including Bancor. Bancor’s affiliates alleged that Uniswap’s implementation copied patented technology covering the formula that maintains a constant product of token reserves (the x · y = k invariant).
The case marks the latest legal challenge targeting the nascent DeFi ecosystem, where the enforceability of software‑related patents remains unsettled. Earlier in the year, Bancor filed the original complaint, seeking damages and an injunction against Uniswap’s use of the disputed technology.
Potential Implications
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DeFi Patent Landscape – The decision underscores the difficulty of enforcing patents that hinge on mathematical formulas or economic concepts, even when those concepts are embedded in blockchain protocols. Future plaintiffs may need to demonstrate a concrete technological improvement beyond the abstract algorithm to survive a §101 (subject‑matter eligibility) challenge.
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Open‑Source Development – Uniswap’s code is publicly available and widely used. A dismissal based on lack of a specific “inventive concept” may embolden other DEX projects to continue leveraging the constant‑product model without fear of immediate patent liability, provided they can avoid similar eligibility pitfalls.
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Strategic Litigation – The “without prejudice” nature of the ruling leaves the door open for a revised filing. Plaintiffs could attempt to narrow their claims, perhaps targeting a different set of patents or providing more detailed technical allegations. However, any amended complaint will likely face the same §101 hurdle unless the patentee can point to a novel implementation beyond the abstract pricing formula.
- Regulatory Outlook – While the case is a civil matter, its outcome may influence how regulators view the intersection of intellectual property and decentralized finance. Clear guidance on patent eligibility for blockchain‑based inventions could reduce litigation and promote innovation.
Key Takeaways
- Judge Koeltl ruled that the patents at issue claim an abstract idea—calculating crypto exchange rates—and therefore lack patent‑eligible subject matter.
- The dismissal is without prejudice, offering the plaintiffs a limited period to file an amended complaint; otherwise, the case will be permanently barred.
- The court also found the original complaint insufficient to allege direct, induced, or willful infringement.
- The decision highlights the challenges of asserting patents over fundamental economic formulas in the DeFi space.
- Uniswap’s founder, Hayden Adams, publicly noted the win, though the matter remains open pending potential amendment.
Cointelegraph reached out to representatives of both parties for comment. No response had been received at the time of publication.
This article is produced in accordance with Cointelegraph’s editorial standards and aims to provide accurate, timely information. Readers are encouraged to verify details independently.
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