DeFi Education Fund Shields Open-Source Cryptos From Patent Trolls

  • The DeFi Education Fund (DEF) takes action against patent trolls targeting decentralized organizations in the crypto space.
  • True Return Systems LLC has filed a lawsuit against MakerDAO and Compound Protocol, claiming patent infringement.
  • The patent in question relates to off-chain data transfer through oracles.
  • DEF argues the patent is not novel and points to prior art, including a Nasdaq patent filed before True Return’s application.

The DeFi Education Fund (DEF) has recently stepped into the fray to defend open-source cryptocurrency innovation from patent trolls. True Return Systems LLC filed a lawsuit against MakerDAO and Compound Protocol, two prominent decentralized autonomous organizations (DAOs). True Return Systems alleges that these DAOs knowingly violated their 2018 patent, a development that could potentially undermine the fundamental principles of open-source innovation within the crypto ecosystem.

The Controversial Patent

True Return Systems LLC lays claim to a patent granted in 2018, which revolves around a purported innovation related to transferring off-chain data through oracles. Oracles, in this context, are third-party services that act as intermediaries, facilitating communication between blockchain systems and real-world data sources. True Return claims to have the sole right to sue for patent infringement, as evidenced by its legal complaints against MakerDAO and Compound Protocol. However, DEF challenges the novelty of this patent. The organization highlights a Nasdaq patent filed over a year before True Return’s application, which bears a striking resemblance to the contested patent. Both patents focus on the critical task of bringing price feed data onto the blockchain. In light of these similarities, DEF asserts that the True Return patent should never have received approval.

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The Legal Complexities and Implications

The legal landscape becomes more intricate due to the decentralized nature of the defendants in this case—DAOs, or decentralized autonomous organizations, which lack centralized control. Consequently, none of the accused entities appeared in court to mount a defense against True Return’s allegations, potentially making it easier for the plaintiff to secure a default judgment.

In response, MakerDAO has sought legal representation from Perkins Coie, while Compound Labs is pursuing intervention in the case, represented by Morrison Cohen LLP. DEF, on the other hand, has initiated an Inter Partes Review (IPR) process aimed at demonstrating that prior art renders the True Return patent invalid. In its petition, DEF cites not only the Nasdaq patent but also other technologies like IPFS and SIA, all of which were widely circulated before True Return’s patent application.

The DEF’s Stand Against ‘Patent Trolling’

The DeFi Education Fund has taken a principled stance against what it terms ‘patent trolling,’ a practice that threatens the cryptocurrency industry’s commitment to open-source software development. By intervening in this legal battle, DEF aims to challenge True Return Systems and establish a precedent that may discourage future infringement claims against decentralized entities. This complex legal dispute carries significant implications for the future of innovation within the cryptocurrency realm, making it a case worth watching closely.

Expanding the Discussion

As the legal battle between DEF and True Return Systems unfolds, it underscores the broader challenges faced by the crypto industry in protecting the principles of open-source development. The clash between patented innovations and decentralized networks highlights the need for clarity in intellectual property rights within this emerging field. 

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Furthermore, this case prompts questions about the role of decentralized organizations in legal matters and their ability to mount a collective defense against patent infringement claims. Balancing innovation and legal compliance remains an ongoing challenge for the crypto space, one that may influence its future trajectory significantly.

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