A New York federal judge has dismissed a patent infringement lawsuit filed by Bancor-affiliated entities against Uniswap, delivering an early procedural win for the decentralized exchange giant. The court ruled that the patents at issue claim abstract ideas and therefore do not qualify for protection under US patent law.
Judge John G. Koeltl of the Southern District of New York granted Uniswap’s motion to dismiss the complaint brought by Bprotocol Foundation and LocalCoin Ltd. against Universal Navigation Inc. and the Uniswap Foundation. The determination depends on the fundamental notion that abstract ideas are not patentable under US patent law.
The contention was over the technology that powers the automated market makers, which is basically the constant product formula of the decentralized exchanges. Bancor claimed that Uniswap was illegally using patented technology for the automated pricing of the tokens as well as the liquidity pools. Industry observers have closely followed this case, especially as recent DeFi legal battles and crypto regulatory crackdowns shape the competitive landscape.
Court rejects patent eligibility claims
Judge Koeltl ruled that the patents describe “the abstract idea of calculating currency exchange rates to perform transactions.” He emphasized that currency exchange qualifies as a fundamental economic practice. The act of calculating pricing information, even when implemented through blockchain code, does not transform the idea into patentable subject matter.
The court applied the US Supreme Court’s two-step patent eligibility test. First, it assessed whether the claims target an abstract idea. Second, it examined whether an “inventive concept” transforms that idea into something patent-eligible. The judge found no such inventive concept.
He rejected arguments that blockchain infrastructure or smart contracts make the claims novel. According to the opinion, the patents use existing blockchain technology in predictable ways to address an economic problem. Limiting an abstract idea to a particular technological environment does not make it patentable.
Shortly after the ruling, Uniswap founder Hayden Adams posted on X that “we won,” reflecting optimism within the Uniswap community.
Complaint fails to establish infringement
Beyond patent eligibility, the court also ruled that the complaint failed to plausibly allege direct infringement. The plaintiffs did not identify how Uniswap’s publicly available code includes the specific reserve ratio constant described in the patents.
The judge dismissed claims of induced and willful infringement as well. The complaint did not demonstrate that Uniswap knew about the patents before the lawsuit began. That absence undermined allegations of intentional misconduct.
The dismissal was without prejudice. The plaintiffs have 21 days to file an amended complaint. Should they fail to comply, the prior dismissal shall be entered with prejudice.
Legal requirements related to patent law eligibility are described under Section 101 of the US Patent Act and may be accessed via USPTO.gov. Federal procedures related to motions for dismissal may be accessed via uscourts.gov.
At least for now, the decision appears to consolidate Uniswap’s place in the competitive DeFi space. It also suggests a wary approach by the court to granting patents for monopolies over the basic economics of finance in the decentralized finance space.
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