Uniswap Labs Wins Patent Dispute Over Automated Market Maker

Uniswap Labs, the team behind the decentralized exchange Uniswap, has secured a significant legal victory in a patent infringement lawsuit filed by BProtocol Foundation and LocalCoin Ltd., entities linked to the Bancor protocol.

The suit alleged that Uniswap infringed on patents for constant product automated market maker (CPAMM) technology, which is crucial for token swaps in decentralized finance (DeFi).

United States District Judge John G. Koeltl dismissed the claims in New York’s Southern District Court. The ruling declared the patents invalid as they covered abstract ideas ineligible for protection under U.S. law. This outcome is seen as safeguards for open-source innovation in DeFi.

Lawsuit Origins and Judicial Ruling

During the lawsuit, which began in May 2025 in New York’s Southern District Court, the plaintiffs sought damages for the unauthorized use of core smart contract technology. These patents involved mathematical formulas to set exchange rates in liquidity pools. Bancor claimed its earlier protocol supported Uniswap’s trading features without permission.

To uphold justice, Judge Koeltl applied the Alice test for patent eligibility. He deemed the patents to be abstract ideas, like basic currency exchange. The court dismissed the argument that using these formulas on the blockchain rendered them patent-eligible. It ruled that just applying them in a specific technology did not change their abstract nature into something patentable.

The dismissal was without prejudice, allowing the plaintiffs 21 days to revise their complaint. The court noted that there was insufficient evidence of direct infringement, inducement, or willful conduct to support the claims.

Implications for Decentralized Finance

Industry experts view the ruling as a protection for open-source development in blockchain systems. They maintain that it discourages attempts to patent old financial ideas that have simply been changed for use with distributed ledgers. Developers can now feel secure when creating automated market maker designs, without fear of being sued immediately. 

Following the victory, Uniswap’s defense team, led by Gibson Dunn, praised the cooperative nature of decentralized protocols. Founder Hayden Adams celebrated the news on X, simply stating, “A lawyer just told me we won.” On the other hand, Bancor claimed that its innovations from 2016-2017 were proprietary groundwork that Uniswap later built on.

Overall, the ruling supports shared innovation in DeFi. The precedent promotes accessibility and evolution of token trading infrastructure. Overall, the outcome advances principles of permissionless finance. However, regulatory and legal pressures persist in the sector.

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