Yesterday, Paradigm filed a memory of Amicus BPROTOCOL Foundation c. UNISWAP Labs (Sdny). The case involves patents that seek to monopolize the basic economic concept of the use of a mathematical formula to fix exchange rates for currency trade, which exists for centuries, long before blockchains or crypto. Our memory explains why these claims are not valid under the law of established patents and why allow them to stand would harm innovation in Defi.
Why this counts
Basically, this trial does not really concern Uniswap or even a single patent. It is a question of knowing if someone should be able to claim the property on the concept of manufacturing of the secular market, simply because they describe it with an equation and implement it on a blockchain. Market manufacturers have existed from the first scholarships: they provide liquidity, are ready to buy and sell, and ensure that the markets work smoothly. Patent law has always drawn a luminous line here: abstract ideas, fundamental economic practices and basic mathematics are not patentable. These are the shared infrastructure of trade, and they belong to everyone. Leaving a game to close it for a predatory financial gain would be like granting someone a patent on a long division or a compound interest.
Defi issues
DEFI has the potential to make financial markets more transparent, more accessible and more resilient. As we discussed in our March study on the importance of deffi, even major traditional financial institutions are preparing for a world where decentralized finance plays a central role in the main commercial functions. They see writing on the wall: open protocols reduce costs, reduce counterparty risks and allow innovation at Internet speed. This point of view has now been taken up by no less a figure than the ATKINS dryer, which is clear DEFI is not a Backwater experience – it is the future of finance.
Decentralized exchanges like Uniswap are a key element in this story. They allow anyone who exchanges digital assets directly, without relying on intermediaries who can fail, be hacked or extract excessive costs. Their force comes from the open-source code and transparent intelligent contracts, features that make the resilient system, true and widely accessible. This opening is not a bug but the defining functionality; It allows anyone, anywhere, to rely on and improve what preceded. This radical opening represents the democratized promise of the crypto, the idea that everyone can easily access powerful tools and exchange around the world.
The patents said in this case the point in the opposite direction. They seek to close the shared construction blocks and undermine the opening that makes DFI prosper and open source technologies. In other words, the BPROTOCOL attempt to take advantage of an abstract idea that they did not even invent the risks stifling one of the most promising developments in our financial system, which sorely needs technological update. Proving the complaint of the complainants would be an anhistoric reading of the previous past which would fatally damage this brightness of innovation, as a freezing of May on a flowery field. The court should end this case before it goes further.
Our position
Paradigme invests and supports open and decentralized technologies because we think they are expanding what is possible in the financial markets. We have filed this thesis because the patent complaints exceeded, exaggerated and excessive should not be authorized to derail this progress. The law is clear that abstract ideas and mathematical formulas are not patentable. Maintaining this principle is essential if we want to see continuous growth, creativity and competition.
The full AMICUS file is available here.
