Uniswap Hit with Patent Lawsuit Over Alleged Use of Bancor’s CPAMM Tech

Uniswap, a decentralized exchange (DEX), is now facing a patent infringement lawsuit filed by the developers behind the Bancor Protocol. The lawsuit, filed in the United States District Court for the Southern District of New York, accuses Uniswap Labs and the Uniswap Foundation of unlawfully using Bancor’s patented decentralized trading technology.

Bancor Accuses Uniswap of Unauthorized Use of Technology

The legal filing was brought by the Bprotocol Foundation and LocalCoin Ltd., Bancor’s original developer. According to the complaint, Uniswap’s protocol is based on Bancor’s patented constant product automated market maker (CPAMM) design. Bancor claims it created this model in 2016 and filed for a patent in early 2017.

Bancor was granted two patents for its CPAMM structure, which enables token swaps using smart contracts without relying on a centralized authority. The Bancor Protocol launched in June 2017 and was the first DEX to implement the CPAMM mechanism.

The complaint states that Uniswap Labs launched its protocol in November 2018, over a year after Bancor filed its patents. Bancor now argues that Uniswap has “profited greatly” from using this technology without approval, license, or partnership. Post the announcement of the lawsuit, the UNI token price has dipped by over 3% to $5.80 as of press time.

Legal Action Targets Uniswap Labs and Foundation

The lawsuit names both Uniswap Labs and the Uniswap Foundation as defendants. Bancor’s team alleges that Uniswap Labs used the patented technology to build its platform and that the Uniswap Foundation supported and encouraged the use of the protocol.

“Bancor’s patented technology is one of the most important innovations in blockchain,” said Mark Richardson, Project Lead at Bancor. “For the last eight years, Uniswap has been using our patented technology without our permission.”

Richardson added that protecting their invention is essential for long-term growth in the decentralized finance (DeFi) sector. “If companies like Uniswap can act unchecked, we fear it will hinder innovation across the industry to the detriment of all DeFi players,” he said.

Bancor’s CPAMM Model at the Center of Dispute

At the heart of the dispute is the CPAMM mechanism, which replaced traditional order books with automated pricing based on token supply ratios. This innovation allows decentralized exchanges to offer continuous liquidity without third-party intermediaries.

Bancor’s 2017 white paper outlined how this model works, and the team used it to create the first smart contract-based DEX. The CPAMM model has since become a widely adopted method in DeFi platforms, with Uniswap being one of its most visible users.

The lawsuit claims that Uniswap’s ongoing updates, including the recent launch of v4, continue to rely on the same patented design. Bancor is now seeking monetary damages but did not disclose a specific amount.

Market Context and Next Steps

The lawsuit comes shortly after the exchange surpassed $3 trillion in trading volume, a milestone that highlights its leading role in the DEX space. The protocol has grown steadily despite increased regulatory scrutiny and market volatility.

Legal analysts expect the case to attract attention across the DeFi industry due to the importance of CPAMM in many DEX protocols. If the court finds in the Bancor’s favor, the outcome could influence how decentralized platforms handle intellectual property in blockchain technology.

No comment has yet been made by Uniswap Labs or the Uniswap Foundation regarding the legal proceedings.

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Kelvin Munene Murithi

Kelvin is a distinguished writer with expertise in crypto and finance, holding a Bachelor’s degree in Actuarial Science. Known for his incisive analysis and insightful content, he possesses a strong command of English and excels in conducting thorough research and delivering timely cryptocurrency market updates.

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