In a decision that could shape the future of decentralized finance, a federal judge in New York has dismissed Bancor’s patent infringement lawsuit against Uniswap. This case, which pitted two decentralized exchange (DEX) giants against each other, centered on the intellectual property rights of Constant Product Automated Market Makers (AMMs).
A Categorical Rejection Based on Abstract Concepts
On February 10, 2026, Judge John G. Koeltl of the U.S. District Court for the Southern District of New York ruled in favor of Uniswap, determining that patents US 11,107,049 and US 11,574,291 held by Bprotocol Foundation and LocalCoin Ltd. – the entities behind Bancor – concern « abstract ideas » and are therefore not eligible for protection under U.S. patent law.
This decision relies on the two-step test established by the U.S. Supreme Court in Alice Corp. v. CLS Bank International (2014), which serves as the benchmark for determining the eligibility of software patents. The court concluded that Bancor’s patents are directed toward « the abstract idea of calculating cryptocurrency exchange rates to perform transactions » and contain no « inventive concept » sufficient to make them patentable.
The Genesis of the Conflict: Who Invented the AMM?
Bancor claims to have invented the Constant Product Automated Market Maker (CPAMM) model as early as 2016. The mathematical formula at the heart of this innovation – x × y = k – allows two assets in a liquidity pool to automatically adjust their price after each transaction, replacing the traditional order books of centralized exchange platforms.
In January 2017, Bancor filed a patent application for this technology before launching the first AMM-based DEX in June 2017. Two U.S. patents were subsequently granted, both titled « Methods for exchanging and evaluating virtual currency ».
On May 20, 2025, Bancor decided to take action by filing a lawsuit accusing Uniswap of using this patented technology without authorization since the launch of Uniswap v1 in November 2018. Mark Richardson, head of the Bancor project, stated: « When an organization continuously uses our invention without our permission to compete against us, we must defend our intellectual property through legal means ».
Uniswap immediately countered by calling the lawsuit « completely baseless », emphasizing that its protocol code has been public and open source for years.
The Alice Test: Why the Patents Failed
Judge Koeltl rigorously applied the framework established by the Alice ruling, which consists of two crucial steps:
Step 1 – Is the patent directed toward an abstract concept? The court determined yes, ruling that currency exchange constitutes a « fundamental economic practice » and that calculating price information is abstract according to established case law.
Step 2 – Is there an « inventive concept »? The court found no element transforming this abstract idea into a patentable application. The judge rejected the argument that implementing the formula on a blockchain would make the claims patentable, finding that the patents simply use existing blockchain technology and smart contracts « in a predictable manner to solve an economic problem ».
The court specified an important principle: « Limiting an abstract idea to a particular technological environment does not make it patent eligible ». In other words, applying a simple mathematical formula to blockchain is not sufficient to obtain patent protection.
Gaps in the Infringement Allegations
Beyond the question of patent eligibility, the court also found that the amended complaint did not plausibly allege direct infringement. The plaintiffs failed to identify how Uniswap’s public code includes the « reserve ratio constant » specified in their patents.
The judge also rejected allegations of induced and willful infringement, finding that Bancor did not plausibly demonstrate that Uniswap knew of the patents’ existence before the lawsuit was filed.
Dismissal Without Prejudice: The Case Isn’t Over
Although this decision represents a major procedural victory for Uniswap, it is not final. The case was dismissed « without prejudice », meaning Bancor has 21 days to file an amended complaint with revised arguments. If no new complaint is filed within this timeframe, the dismissal will become final.
Shortly after the decision was announced, Uniswap founder Hayden Adams celebrated the victory on X (formerly Twitter): « A lawyer just told me we won ».
Massive Support from the DeFi Ecosystem
Throughout the proceedings, several major organizations from the crypto industry supported Uniswap by filing amicus curiae (friend of the court) briefs:
- The DeFi Education Fund and Solana Policy Institute filed a brief in September 2025, arguing that Bancor’s patents « seek to capitalize on emerging technologies by attempting to claim abstract ideas simply by applying them in the context of the latest technologies ».
- Paradigm, the crypto investment firm, also supported Uniswap through law firm Cleary Gottlieb, explaining that the activities described in the patents « existed well before blockchains or crypto ».
These interventions underscore the importance of this case for the entire DeFi sector, where innovation largely relies on open source protocols and shared standards.
Implications for the Future of DeFi
This decision sends a powerful signal to the market: fundamental financial mechanisms based on simple mathematical formulas are difficult to protect by patent, particularly when they are openly shared and widely adopted by the industry.
The DeFi Education Fund warned in its brief that « innovators are often small businesses and startups that lack the resources to defend against abstract patents in protracted litigation. Even the perceived risk of patent litigation would discourage market entry and creativity ».
This decision suggests that the basic tools of DeFi – like AMMs – cannot easily be restricted or monetized through patents, thus protecting the open source innovation that characterizes the crypto ecosystem.
The Alice Test and Blockchain Patents
The Alice Corp. v. CLS Bank International (2014) ruling established a strict framework for the eligibility of software patents in the United States. This test is particularly relevant for blockchain-related inventions, as patents that merely implement conventional economic practices on a generic blockchain are regularly invalidated.
Although nearly 14,000 blockchain patent applications have been filed and approximately 10,000 patents granted over the past decade, the bar remains high for claims that simply transpose existing economic concepts into a new technological environment.
Conclusion: A Victory for Open Source
The dismissal of Bancor’s lawsuit against Uniswap marks a crucial moment for decentralized finance. This decision protects the fundamental principle of open and collaborative innovation that has allowed the DeFi ecosystem to thrive.
It remains to be seen whether Bancor will attempt to reformulate its arguments in an amended complaint or whether this case marks the end of an attempt to monopolize an innovation now considered a common good of the crypto industry.
For developers and entrepreneurs in the sector, this precedent strengthens confidence in the ability to innovate freely on shared protocols, without fearing lawsuits for patent infringement on fundamental mathematical concepts.
