Last week, the DeFi Education Fund (DEF) swung into motion, submitting a petition with the U.S. Patent and Trademark Office. Significantly, this transfer comes after a lawsuit towards MakerDAO and Compound Protocol by True Return Systems LLC. The Connecticut-based tech firm claims these decentralized autonomous organizations (DAOs) knowingly infringed on their 2018 patent, threatening the very basis of open-source innovation within the crypto world.
The Patent in Question
True Return owns a patent granted in 2018, claiming an innovation for transferring off-chain knowledge by means of oracles. Oracles are third-party providers that liaise between the blockchain world and real-world knowledge. Moreover, True Return asserts it has the unique proper to prosecute for infringement, as outlined in its complaints towards MakerDAO and Compound Protocol.
However, the DeFi Education Fund argues that the patent is way from novel. The group cites a Nasdaq patent filed greater than a 12 months earlier than True Return’s utility. Amanda Tuminelli, DEF’s Chief Legal Officer, states,
“The Nasdaq patent closely resembles True Return’s, focusing on bringing price feed data on-chain. Hence, the patent should never have been granted.”
Legal Tug-of-War and the Implications
What provides complexity to the scenario is the decentralized nature of the defendants—DAOs, or decentralized autonomous organizations, which aren’t managed by a single entity. Consequently, no person confirmed up in court docket to defend MakerDAO and Compound Protocol, making it simple for True Return to hunt a default judgment.
As of July, MakerDAO has enlisted the authorized providers of Perkins Coie, whereas Compound Labs is searching for to intervene within the case, represented by Morrison Cohen LLP. Additionally, DEF has initiated an Inter Partes Review (IPR) course of to reveal that “prior art” invalidates the True Return patent. In the petition, DEF cites the Nasdaq patent and different applied sciences like IPFS and SIA, circulated properly earlier than the True Return patent.
The DeFi Education Fund is standing up towards what it labels ‘patent trolling,’ aspiring to safeguard the cryptocurrency business’s dedication to open-source software program improvement. By doing so, DEF hopes to problem True Return Systems and set a precedent that might deter future infringement claims towards decentralized entities. It’s a fancy authorized battle with excessive stakes, one that might considerably affect the way forward for innovation within the cryptocurrency realm.
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