On May 20, the Bprotocol Foundation and LocalCoin filed a lawsuit in the U.S. District Court for the Southern District of New York against Uniswap Labs and the Uniswap Foundation, accusing them of unlicensed use of patented technology that underpins automated trading on decentralized exchanges (DEXs).
Bprotocol Foundation is a nonprofit known for supporting the development of the Bancor protocol, while LocalCoin is the original developer behind Bancor. Both firms claim that Uniswap has been infringing on Bancor’s intellectual property for years.
The lawsuit centers around key elements of decentralized trading — specifically, smart contract structures that power what’s known as the constant product automated market maker, or CPAMM, the same mechanism that drives Uniswap’s core functionality.
Bancor says it first created this technology in 2016 and filed a provisional patent for it on January 8, 2017. The team then built the Bancor Protocol — widely considered to be the first decentralized exchange built entirely on automated market makers.
“Bancor’s patented technology is one of the most important innovations in blockchain, and we are exceptionally proud of the role it has played in revolutionizing the world of decentralized finance,” said Mark Richardson, project lead at Bancor.
“However, when an organization continuously uses our invention without our authorization and does so as a means of competing with us, we must take action,” Richardson continued. “For the last eight years, Uniswap has been using our patented technology in its projects without our permission. As a result, we have taken legal action to defend our technology for the good of the entire DeFi community.”
The plaintiffs are seeking damages, claiming that Uniswap’s alleged unauthorized use of the patented CPAMM tech gave it an unfair competitive edge while ignoring the foundational work done by Bancor.
Both Bancor and Uniswap are well-known DEXs that allow users to trade crypto assets directly from their wallets — without the need for centralized exchanges like Coinbase or Binance.
A Uniswap Labs spokesperson told TheStreet Roundtable, “This lawsuit is meritless, and we will defend ourselves accordingly. The code for the Uniswap Protocol is public and has been for years. What a wasteful distraction at a time of historic momentum for DeFi.”