DeFi group petitions to stop ‘patent troll’ targeting DeFi protocols

The DeFi Education Fund says a patent owned by True Return Systems is being used to try to profit from lawsuits against decentralized protocols.

A decentralized finance (DeFi) advocacy body has petitioned the United States Patent and Trademark Office (USPTO) to review a patent owned by a company it has accused of being a a “patent troll” — a firm that aims to profit from patent lawsuits.

In a Sept. 11 blog post, the DeFi Education Fund (DEF) said on Sept. 7 that it filed an over 90-page petition to the Patent Trial and Appeal Board in a bid to cancel a patent owned by True Return Systems.

Granted in 2018, the patent lays claim to a process for “linking off-chain data to a blockchain,” DEF legal chief Amanda Tuminelli said in a Sept. 11 X (Twitter) post.

Tuminelli claimed True Return tried to sell its patent as a nonfungible token (NFT). After no buyer, it filed suit against the DeFi protocols MakerDAO and Compound Finance in October.

4/ When that didn’t work, in October 2022, TRS sued MakerDAO and “Compound Protocol” in two separate federal court proceedings, alleging patent infringement.
Docket links: https://t.co/w47v7fAAEthttps://t.co/ExTapxhKNq

— Amanda Tuminelli (@amandatums) September 11, 2023

“Clearly [True Return’s] goal was to name defendants who could not answer the complaint so [it] could get a default judgement,” Tuminelli said.

She claimed True Return would try to enforce the court’s ruling against token holders and repeat the process with other protocols “that either can’t challenge them in court or don’t have the resources to do so.”

DEF claimed True Return’s tech in the patent isn’t new at the time it was granted and claims to highlight similar existing tech such as the InterPlanetary File System (IPFS) along with the decentralized storage platforms Sia, Storj and Swarm.

8/ In our petition, we make the point that the “invention” in the patent was not new in 2018. There are many examples of “prior art” the Patent Board can look at – examples – a NASDAQ patent that links price data off-chain to on-chain transaction historyhttps://t.co/amz3jREab7 pic.twitter.com/RJ3VVGFeEj

— Amanda Tuminelli (@amandatums) September 11, 2023

True Return Systems acknowledged Cointelegraph’s request for comment but did not immediately provide a comment.

Related: SEC’s Gary Gensler to hold firm on crypto enforcement in Senate hearing

DEF said it launched the petition with USPTO to defend the ability to use and develop open source software, to stop any potential plans by True Return to sue crypto projects and help MakerDAO and Compound’s legal defence.

True Return has three months to optionally respond to the petition, after six months the USPTO must make a decision if it will move forward with reviewing the patent where it has 12 months to decide if the patent should be cancelled.

Magazine: Hall of Flame: Crypto lawyer Irina Heaver on death threats, lawsuit predictions