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08/11/2024

DEF Acquires Patent to Shut Down Lawsuits Against MakerDAO and Compound

The DeFi Education Fund (DEF) has acquired a patent owned by True Return Systems (TRS), which was the basis of lawsuits against decentralized autonomous organizations MakerDAO and Compound Protocol for alleged patent infringement. Patent for Data Storage Technology The patent covers an "oracle-like" system for "separating and linking stored data and processing stacked modules." DEF will "dedicate" the patent to the public, preventing its use in future lawsuits.

DEF Acquires Patent to Shut Down Lawsuits Against MakerDAO and Compound

The DeFi Education Fund (DEF) has acquired a patent owned by True Return Systems (TRS), which was the basis of lawsuits against decentralized autonomous organizations MakerDAO and Compound Protocol for alleged patent infringement.

Patent for Data Storage Technology

The patent covers an "oracle-like" system for "separating and linking stored data and processing stacked modules." DEF will "dedicate" the patent to the public, preventing its use in future similar lawsuits.

DEF described TRS as a "patent troll" — a company that pursues patent claims that may lack merit. DEF argued in a petition filed with the U.S. Patent and Trademark Office (USPTO) in September that the technology TRS patented in 2018 had already been in widespread use prior to that date. DEF cited four technologies serving the same purpose that were developed in 2014 and 2016.

Technology similar to TRS's patent. Source: DeFi Education Fund

The USPTO was asked to respond within six months on whether to review the patent, and to issue a ruling on invalidation within 12 months. Amanda Tuminelli, Chief Legal Officer of DEF, said in a statement to Cointelegraph:

"As part of the agreement with TRS, TRS will drop its legal proceedings against MakerDAO and Compound Protocol. […] As we said when we first filed the petition to invalidate the patent, using patents as a weapon runs counter to the spirit of open-source software development."

TRS filed suit against MakerDAO and Compound Protocol in October 2022, seeking damages for patent infringement and an injunction barring the DAOs from using the technology TRS claimed. The patent acquisition resolved those lawsuits.

Attempting to Profit from the Patent

Tuminelli wrote in an X post in September that "TRS's strategy was to name defendants who couldn't respond to the lawsuit so that TRS could obtain default judgments and then attempt to enforce those judgments against token holders. […] Patent trolls typically target entities that cannot challenge them in court or lack the resources to do so."

TRS attempted to sell the patent as a non-fungible token (NFT) on OpenSea in November 2021. Reportedly the first patent ever tokenized as an NFT, it failed to find a buyer. TRS asked for 2,250 Ether for the NFT and rejected the only offer it received, which was 0.69 ETH.

TRS's website was offline at the time of writing. TRS founder Jack Fonss passed away in March.