The Bprotocol Foundation and LocalCoin Ltd., representing Bancor Protocol and its token BNT, have filed a lawsuit against Uniswap Labs and the Uniswap Foundation in the U.S. District Court for the Southern District of New York. The plaintiffs allege that Uniswap has infringed on Bancor's patented constant product automated market maker (CPAMM) technology, which is foundational to decentralized exchanges (DEXs).
Bancor claims to have invented the CPAMM model in 2016 and filed a provisional patent in January 2017, launching the Bancor Protocol in June 2017 as the first DEX to use this technology. The lawsuit contends that Uniswap, since launching its v1 protocol in November 2018 and through subsequent versions up to v4, has utilized this patented CPAMM model without authorization, thereby profiting from Bancor’s proprietary technology without licensing or partnership.
The complaint highlights that Bancor’s innovation eliminated the need for order books and centralized market makers by enabling seamless token trading on-chain via smart contract automation. Bprotocol and LocalCoin assert full ownership of the patents covering this technology and demand monetary damages and recognition of their intellectual property rights. The suit also alleges that Uniswap Foundation supported and promoted infringement knowingly.
This legal challenge is significant as it may set a precedent for intellectual property protections in the rapidly evolving DeFi sector, questioning how innovations can be protected within decentralized finance projects. Following the news, Uniswap’s token UNI experienced a price decline, falling approximately 3.74% over 24 hours, reflecting market concerns about potential impacts of the lawsuit.