A U.S. federal court in New York has dismissed a patent infringement lawsuit filed by entities affiliated with Bancor against the Uniswap Foundation and Universal Navigation Inc., after determining that the patents in question describe abstract ideas and do not qualify for protection under American patent law. The ruling represents a procedural win for Uniswap in what has been a closely watched legal dispute in the decentralized finance sector.

The original lawsuit, brought by Bprotocol Foundation and LocalCoin Ltd., alleged that Uniswap’s protocol unlawfully utilized patented methods related to the constant product automated market maker (AMM) model a mathematical mechanism that enables trades without a traditional order book by recalculating token prices based on pool balances. However, U.S. District Judge John G. Koeltl ruled that the claims were directed at the abstract idea of calculating exchange rates, which is considered a fundamental economic practice and not eligible for patent protection under the Supreme Court’s two-step test.

In his memorandum opinion, the judge noted that merely implementing the pricing formula on blockchain infrastructure does not transform an unpatentable abstract concept into a patent-eligible invention because doing so uses existing technology in predictable ways to address an economic problem. The court also found that the complaint failed to plausibly allege direct infringement, as the plaintiffs did not clearly demonstrate how Uniswap’s publicly available code incorporated the specific patented features. Claims of induced and willful infringement were also dismissed.

While the dismissal is a positive procedural outcome for Uniswap, it was granted without prejudice, meaning the plaintiffs have 21 days to file an amended complaint that might address the court’s reasoning and attempt to overcome the eligibility issues. If no amended complaint is filed within that window, the dismissal will convert to one with prejudice, ending the legal challenge permanently.

The case drew significant attention in the DeFi community because it touched on deep questions about intellectual property rights in an industry built partly on open-source collaboration and shared protocol standards. Uniswap’s legal defence emphasised that basic mathematical formulas and mechanisms that underpin automated market makers should remain in the public domain and not be restricted through patent claims, arguing that allowing such patents could hinder innovation across decentralized finance.

For investors and developers, this ruling helps clarify the legal landscape surrounding protocol innovation and patent enforcement. The dismissal may ease concerns that foundational DeFi mechanisms could be restricted through intellectual property claims, a factor that had previously injected uncertainty into development and deployment strategies for decentralized exchanges. However, the possibility of an amended complaint means that this legal question has not been entirely resolved. Sentiment in the sector is cautiously positive, as clearing a major lawsuit helps reassure market participants that key DeFi technologies remain unfettered by broad patent assertions.