DCT

1:25-cv-04214

Bprotocol Foundation v. Universal Navigation Inc

Log In

I. Executive Summary and Procedural Information

  • Parties & Counsel:
  • Case Identification: 1:25-cv-04214, S.D.N.Y., 05/20/2025
  • Venue Allegations: Plaintiffs allege venue is proper in the Southern District of New York because Defendants have a regular and established place of business in the district, have committed acts of infringement in the district, and a substantial part of the events giving rise to the claims occurred there.
  • Core Dispute: Plaintiffs allege that Defendants’ Uniswap Protocol and associated Interface infringe two patents related to systems and methods for decentralized cryptocurrency exchange using an automated market maker.
  • Technical Context: The technology at issue is a foundational component of Decentralized Finance (DeFi), specifically the use of smart contracts to create "constant product automated market makers" (CPAMMs) that provide algorithmic liquidity and price discovery for cryptocurrencies without relying on a traditional order books.
  • Key Procedural History: The complaint alleges a narrative in which Plaintiffs’ inventors conceived of the patented technology, implemented it in their own "Bancor Protocol," and disclosed it to Ethereum co-founder Vitalik Buterin, who subsequently guided the development of the accused competing Uniswap Protocol. The complaint also references statements made by the patent examiner during the prosecution of both asserted patents, noting the examiner found the claimed techniques inventive over the prior art for determining a token's price based on its supply, a reserve, and a reserve ratio constant.

Case Timeline

Date Event
2017-01-08 Priority Date for ’049 and ’291 Patents (Provisional App. 62/443,722 filed)
2017-05-30 Plaintiffs release Bancor Protocol whitepaper
2017-06-12 Plaintiffs launch Bancor Protocol
2017-09-18 Plaintiffs' inventors allegedly meet with Vitalik Buterin to discuss the CPAMM design
2018-01-08 ’291 Patent application filed
2018-11-01 Uniswap Protocol v1 launched
2020-01-23 ’291 Patent application published
2020-11-19 ’049 Patent application filed
2021-03-11 ’049 Patent application published
2021-08-31 U.S. Patent No. 11,107,049 issues
2023-02-07 U.S. Patent No. 11,574,291 issues
2025-05-20 Complaint filed

II. Technology and Patent(s)-in-Suit Analysis

U.S. Patent No. 11,107,049 - "Methods for exchanging and evaluating virtual currency"

  • Patent Identification: U.S. Patent No. 11107049, "Methods for exchanging and evaluating virtual currency," issued August 31, 2021. (Compl. ¶45).
  • The Invention Explained:
    • Problem Addressed: The patent addresses the difficulty of establishing value and liquidity for the ever-increasing number of cryptocurrency "Tokens." (Compl. ¶17; ’049 Patent, col. 2:13-15). Traditional exchange mechanisms that rely on matching willing buyers and sellers are described as "not viable" for the vast number of new tokens that have limited or no trading volume. (’049 Patent, col. 2:19-28).
    • The Patented Solution: The invention proposes a system implemented on a secure ledger (like a blockchain) that uses a smart contract to algorithmically determine a token's price. (Compl. ¶¶ 38-39). Instead of matching orders, the price is calculated based on a formula using the total supply of the token, the amount of a different token held in reserve, and a predefined "reserve ratio constant." (’049 Patent, Abstract; col. 6:5-10). This allows for continuous, automated price discovery and exchange without needing a counterparty for each trade. (’049 Patent, col. 6:22-25).
    • Technical Importance: This automated market maker (AMM) model solves the "Coincidence of wants problem (CoW)" for illiquid assets, providing a "radically different ecosystem" for decentralized trading. (’049 Patent, col. 14:8-13, 13:63-67).
  • Key Claims at a Glance:
    • The complaint asserts at least independent claim 1. (Compl. ¶70).
    • Essential elements of claim 1 include:
      • A secure ledger network comprising a processor and storage medium.
      • Receiving a request to validate a smart contract that sets rules for a transaction.
      • Updating the ledger with the validated smart contract.
      • Receiving a request to execute a transaction for a first cryptocurrency token.
      • Performing the transaction, which includes determining a price of the first token based on its status (total amount in circulation, Tt), the status of another token (total reserve, Tr), and a "reserve ratio constant (Rr)."
      • The price determination specifically comprises setting the price as Tr/Tt*Rr.
    • The complaint reserves the right to assert additional claims. (Compl. ¶69).

U.S. Patent No. 11,574,291 - "Methods for exchanging and evaluating virtual currency"

  • Patent Identification: U.S. Patent No. 11574291, "Methods for exchanging and evaluating virtual currency," issued February 7, 2023. (Compl. ¶47).
  • The Invention Explained:
    • Problem Addressed: Similar to the ’049 patent, the invention aims to solve the liquidity and price discovery problem for the "long tail" of cryptocurrencies (altcoins) that cannot be efficiently traded on traditional exchanges due to a lack of matched buy and sell orders. (Compl. ¶¶ 26-27; ’291 Patent, col. 2:15-29).
    • The Patented Solution: The patent describes a secure ledger network that uses a smart contract to facilitate exchanges. The core of the solution is a process for "determining an amount" of one token to be exchanged for another. This determination is based on the status of both tokens (total amount in circulation and total reserve) and a predefined "reserve ratio constant." (’291 Patent, Abstract; col. 5:25-40). This automated calculation enables instant, on-chain conversions.
    • Technical Importance: The invention provides a foundational model for automated market makers, which are central to the functionality of modern decentralized exchanges (DEXs). (Compl. ¶37).
  • Key Claims at a Glance:
    • The complaint asserts at least independent claim 1. (Compl. ¶87).
    • Essential elements of claim 1 include:
      • A secure ledger network with a processor and storage medium.
      • Receiving a request to validate a smart contract.
      • Updating the ledger with the validated smart contract.
      • Receiving a request to execute a transaction.
      • Performing the transaction, which includes obtaining the status of a first token (total amount, Tt), another token (total reserve, Tr), and a reserve ratio constant (Rr).
      • The execution further comprises "determining an amount" of at least one of the tokens to be exchanged based on these statuses.
    • The complaint reserves the right to assert additional claims. (Compl. ¶86).

III. The Accused Instrumentality

Product Identification

  • The accused instrumentalities are the Uniswap Protocol (versions v1-v4) and the associated Uniswap Interface. (Compl. ¶63).

Functionality and Market Context

  • The Uniswap Protocol is described as an "automated liquidity protocol" implemented as a set of smart contracts on the Ethereum blockchain. (Compl. ¶73). Its core function is to facilitate the decentralized exchange of cryptocurrency tokens using a "constant product formula," commonly expressed as x*y=k. (Compl. ¶¶ 61, 73). The Uniswap Interface is a web-based graphical user interface that allows end-users to interact with the Protocol to swap tokens or to contribute assets to (and withdraw from) liquidity pools. (Compl. ¶10, 63). The complaint includes a screenshot of the Uniswap Interface showing a user selecting a pair of tokens (ETH and USDC) to provide liquidity to a pool. (Compl. p. 26).
  • The complaint alleges the Uniswap Protocol is the "largest and most popular decentralized exchange" and has processed "trillions of dollars of trading volume," making it a central pillar of the DeFi ecosystem. (Compl. ¶¶ 6, 62).

IV. Analysis of Infringement Allegations

U.S. Patent No. 11,107,049 Infringement Allegations

Claim Element (from Independent Claim 1) Alleged Infringing Functionality Complaint Citation Patent Citation
A secure ledger network for executing cryptocurrency transactions, the secure ledger network comprising... The Uniswap Protocol is a system of smart contracts implemented on the Ethereum blockchain, which is a secure ledger network. ¶73 col. 1:35-37
receiving... a request to validate a smart contract that determines at least one rule for performing a transaction related to a first cryptocurrency token; The Uniswap Protocol is implemented as a set of smart contracts that are validated and executed on the Ethereum blockchain. ¶74 col. 25:6-10
performing an execution of the transaction, the execution comprises: determining a price of the first cryptocurrency token based on a status of the first cryptocurrency token, a status of an other cryptocurrency token, and a reserve ratio constant; When a user provides liquidity, the amount of LP tokens (the first cryptocurrency token) received is determined based on the total supply of LP tokens (Tt), the reserve of a deposited token (Tr), and an alleged reserve ratio (Rr) of one. ¶75 col. 26:17-23
wherein the determining of the price of the first cryptocurrency token comprises setting the price of the first cryptocurrency token as Tr/Tt*Rr. The complaint alleges that the determination of the amount of LP tokens received corresponds to a price per LP token calculated by the formula Tr/Tt*Rr, where Rr is one. ¶75 col. 26:24-26
updating the secure ledger about a completion of the transaction; The resulting transaction, including the transfer of tokens, is recorded on the Ethereum blockchain. ¶75 col. 26:27-29

U.S. Patent No. 11,574,291 Infringement Allegations

Claim Element (from Independent Claim 1) Alleged Infringing Functionality Complaint Citation Patent Citation
A secure ledger network for executing cryptocurrency transactions, the secure ledger network comprising... The Uniswap Protocol operates on the Ethereum blockchain, which is a secure ledger network comprising hardware processors and storage. ¶¶90-91 col. 25:1-3
validating the smart contract; Smart contracts for the Protocol are validated and executed on the Ethereum blockchain, which comprises a plurality of hardware processors. ¶91 col. 25:40-41
perform an execution of the transaction, the execution comprises: obtaining a status of the first cryptocurrency token comprising a total amount (Tt)... a status of another cryptocurrency token comprising a total reserve (Tr)... and a reserve ratio constant (Rr)... The Protocol executes transactions based on the total supply of LP tokens (Tt), the reserve of a deposited token (Tr), and an alleged reserve ratio constant (Rr) of one. ¶92 col. 25:46-54
and determining an amount of at least one of the first cryptocurrency token, and the other cryptocurrency token obtained in exchange... based on the status of the cryptocurrency token, the status of the other cryptocurrency token, and the reserve ratio constant; When providing liquidity, the amount of LP tokens received is determined based on the amount of one of the deposited tokens, the total supply of LP tokens (Tt), the reserve of the selected token (Tr), and an alleged reserve ratio (Rr) of one. ¶92 col. 25:55-60
update the secure ledger about a completion of the transaction. The completed transaction is recorded on the Ethereum blockchain. ¶92 col. 25:61-63
  • Identified Points of Contention:
    • Formulaic Scope: A primary point of contention will likely be whether the Uniswap Protocol's x*y=k constant product formula constitutes "determining a price... as Tr/Tt*Rr" as required by claim 1 of the ’049 Patent. The complaint's assertion that the reserve ratio (Rr) is "one" (Compl. ¶75, 92) appears to be an attempt to equate the two different formulas, which raises the question of whether this simplification accurately reflects the operation of the accused protocol or the meaning of the claim term.
    • Technical Equivalence: The claims of the ’291 Patent recite "determining an amount... based on" the various statuses, which may be broader than the specific price formula in the ’049 Patent. The court will need to determine if the Uniswap Protocol's method of calculating output amounts falls within the scope of this language, or if there are material differences in the underlying technical operations.
    • Definitional Scope: The analysis raises the question of whether a "liquidity pool token" (LP token), which represents a proportional share of a pool's assets, meets the claim limitation of a "cryptocurrency token" in the context of the patents' specifications.

V. Key Claim Terms for Construction

  • The Term: reserve ratio constant (Rr)

    • Context and Importance: This term appears in the independent claims of both patents and is a critical variable in the claimed pricing/amounting formula. The complaint's infringement theory hinges on the allegation that this value is "predefined" and is equal to "one" in the Uniswap system (Compl. ¶¶ 75, 92). Practitioners may focus on this term because the Uniswap Protocol is not publicly described as using a "reserve ratio constant" as a direct input parameter, making the existence and definition of this term central to the literal infringement dispute.
    • Intrinsic Evidence for Interpretation:
      • Evidence for a Broader Interpretation: The patent specification defines the "Constant Reserve Ratio (CRR)"—which appears to correspond to the claimed Rr—as "the ratio between the reserve balance and the token market cap." (’049 Patent, col. 13:30-32). Plaintiffs may argue that this is a functional definition and that such a ratio can be derived from the Uniswap Protocol's state, even if not explicitly coded as a parameter named "Rr."
      • Evidence for a Narrower Interpretation: Claim 1 of the ’291 patent requires Rr to be "predefined." The specification describes the CRR as a "standard predetermined parameter" set upon token creation, with an example of 10% (i.e., 0.1). (’049 Patent, col. 17:11-13; Fig. 1). Defendants may argue that for this element to be met, "Rr" must be an explicit, predefined input to the smart contract, not an after-the-fact derived value.

  • The Term: determining a price (’049 Patent) vs. determining an amount (’291 Patent)

    • Context and Importance: The subtle difference in phrasing between the lead claims of the two patents could be outcome-determinative. The ’049 Patent recites a specific formula for "determining a price," while the ’291 patent recites "determining an amount" based on the same inputs. Practitioners may focus on this distinction because if the Uniswap Protocol is found not to calculate a "price" using the exact Tr/Tt*Rr formula, the broader "determining an amount" language in the ’291 patent might still be found to cover Uniswap's functionality.
    • Intrinsic Evidence for Interpretation:
      • Evidence for a Broader Interpretation (for determining an amount): The specification describes the overall process as one of exchanging tokens and calculating the output, which is fundamentally a determination of an "amount." The abstract of the ’291 patent focuses on "determining an amount" of tokens to be exchanged. (’291 Patent, Abstract).
      • Evidence for a Narrower Interpretation (for determining a price): Claim 1 of the ’049 patent explicitly links the "determining a price" step to the specific formula Tr/Tt*Rr. (’049 Patent, col. 26:24-26). Defendants may argue this ties the definition of "price" in the claim to the result of that exact calculation, and not to a price derived from any other formula.

VI. Other Allegations

  • Indirect Infringement: The complaint alleges that both Uniswap Labs and Uniswap Foundation induce infringement under 35 U.S.C. § 271(b). The allegations are based on Defendants developing and providing the Protocol and Interface, publishing instructional materials and technical documentation, and providing grants to encourage third parties to build on and use the infringing system. (Compl. ¶¶ 11, 79, 96).
  • Willful Infringement: The complaint alleges willful infringement based on both pre-suit and post-suit knowledge. Pre-suit knowledge allegations are based on circumstantial evidence, including Plaintiffs' status as pioneers in the space, the publication of the patent applications, and an alleged chain of events where Plaintiffs disclosed their invention to an industry leader who then allegedly nurtured the development of the accused product. (Compl. ¶¶ 78, 95). Post-suit knowledge is alleged from the date of the complaint's filing. (Compl. ¶¶ 77, 94).

VII. Analyst’s Conclusion: Key Questions for the Case

  • A core issue will be one of claim construction and formulaic scope: Can the specific pricing formula recited in the ’049 patent (price = Tr/Tt*Rr) be construed to read on the accused Uniswap Protocol's x*y=k algorithm? This will depend heavily on whether Plaintiffs can prove that the claimed "reserve ratio constant (Rr)" is a "predefined" element of the Uniswap system as alleged.
  • A key evidentiary question will concern knowledge and willfulness: What evidence, beyond the circumstantial narrative presented, can Plaintiffs provide to establish that Defendants had actual, pre-suit knowledge of the patented inventions? The outcome of this question will be critical to the claim for willful infringement and potential enhanced damages.
  • A central technical dispute will be one of operational equivalence: Even if not literally infringing, does the Uniswap Protocol's method of calculating exchange amounts perform substantially the same function, in substantially the same way, to achieve substantially the same result as the patented methods? This will be particularly relevant for the potentially broader "determining an amount" language of the ’291 patent.