Why Did the Court Throw Out the Case?
A federal judge in New York has dismissed a patent infringement lawsuit brought by entities affiliated with Bancor against Uniswap, finding that the patents at issue claim abstract ideas and are not eligible for protection under US patent law.
In a memorandum opinion and order dated Feb. 10, Judge John G. Koeltl of the US District Court for the Southern District of New York granted a motion to dismiss filed by Universal Navigation Inc. and the Uniswap Foundation. The complaint had been brought by Bprotocol Foundation and LocalCoin Ltd.
The court concluded that the asserted patents are directed to the abstract idea of calculating crypto exchange rates and therefore fail the two-step framework for patent eligibility set out by the US Supreme Court. Under that test, courts first determine whether a patent claims an abstract idea, and then consider whether it contains an “inventive concept” that transforms that idea into a patent-eligible application.
Koeltl wrote that the patents were directed to “the abstract idea of calculating currency exchange rates to perform transactions.” He described currency exchange as a “fundamental economic practice” and said that calculating pricing information is abstract under established precedent.
Investor Takeaway
What Was Bancor Alleging?
The lawsuit centered on technology behind decentralized exchanges, specifically the “constant product automated market maker” model used to price tokens and manage liquidity pools. Bancor-affiliated entities argued that Uniswap’s protocol infringed patents tied to automated token pricing mechanisms.
The dispute focused on whether implementing a pricing formula through blockchain-based smart contracts could qualify as a patentable invention. The plaintiffs argued that embedding the formula in decentralized infrastructure created a protectable technological advance.
The court disagreed. Koeltl rejected the argument that placing the formula on blockchain infrastructure made it patentable, stating that the patents merely used existing blockchain and smart contract tools “in predictable ways to address an economic problem.”
He added that limiting an abstract idea to a particular technological setting does not make it eligible for patent protection. The opinion further held that the patents lacked an “inventive concept” sufficient to convert the abstract idea into a patent-eligible application.
Did the Complaint Adequately Allege Infringement?
The court also found that the amended complaint did not plausibly allege direct infringement. According to the memorandum, the plaintiffs failed to identify how Uniswap’s publicly available code includes the specific reserve ratio constant described in the patents.
Claims of induced and willful infringement were dismissed as well. The judge found that the complaint did not plausibly allege that the defendants had knowledge of the patents before the lawsuit was filed, weakening the argument that any infringement was deliberate.
In procedural terms, the case was dismissed without prejudice. That gives the plaintiffs 21 days to file an amended complaint. If they do not do so, the dismissal will convert to one with prejudice, which would bar the claims from being refiled in their current form.
Investor Takeaway
What Was the Immediate Market Reaction?
Shortly after the ruling, Uniswap founder Hayden Adams wrote on X, “A lawyer just told me we won.”
While the decision is not final, it represents a courtroom win for Uniswap at an early stage of the litigation. More broadly, it adds to a body of US case law that scrutinizes patents covering financial formulas and economic methods, particularly when implemented using widely available software tools.
For decentralized finance protocols, the ruling offers a reminder that courts may treat core pricing and liquidity logic as economic abstractions rather than proprietary inventions, especially when those mechanisms mirror long-standing financial practices adapted to blockchain infrastructure.
