Bancor’s developers have taken legal action against Uniswap Labs and the Uniswap Foundation, accusing them of using Bancor’s patented technology without permission. The lawsuit was filed by the Bprotocol Foundation, a nonprofit supporting Bancor, and LocalCoin Ltd., Bancor’s original developer.
According to the press release , the case is in the U.S. District Court for the Southern District of New York. Bancor claims Uniswap’s protocol uses its constant product automated market maker (CPAMM) technology, which Bancor invented in 2016 and patented in 2017. Bancor says Uniswap’s version, launched in 2018, copies this technology without approval and has earned big profits by doing so.
Bancor’s project lead, Mark Richardson, explained why they had to take action. He said, “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 added that Uniswap has been using their patented technology for eight years without permission.
He stressed that protecting their technology is important for the entire decentralized finance (DeFi) community. “If companies like Uniswap can act unchecked without consequence, we fear it will hinder innovation across the industry to the detriment of all DeFi players.”
Bancor’s CPAMM system replaced traditional trading methods on centralized exchanges. Instead of order books and market makers, this technology uses smart contracts to allow direct trading between buyers and sellers. Bancor filed a patent application in January 2017 and received two patents related to this technology. The Bancor Protocol launched in June 2017 as the first decentralized exchange powered by automated market makers.
Uniswap Labs later built their own exchange using the same technology and launched it in November 2018. Since then, Uniswap has continued to operate a protocol based on the CPAMM model. Bancor alleges that Uniswap never got authorization, license, or partnership to use this patented technology. The lawsuit seeks damages for this unauthorized use.
Bprotocol Foundation and LocalCoin, who own the rights to the invention, stated that Uniswap’s actions amount to infringement and inducement of infringement. Bancor’s whitepaper in 2017 outlined this innovation, which has significantly shaped decentralized trading. Bancor says their invention revolutionized the way cryptocurrencies are traded by enabling fully permissionless and automatic trades on-chain.
Following the lawsuit announcement, Uniswap’s token, UNI, started dropping in value. The UNI price dipped by 3.45%, now trading for $5.81. Meanwhile, the 24-hour trading volume has dropped by 15% to $261 million, according to CoinMarketCap
