Petition To Defend DeFi: Group Battles Patent Troll Threat

The DeFi Education Fund has requested the United States Patent and Trademark Office (USPTO) to review a patent by True Return Systems. According to the organization, True Return Systems is using this patent for their financial gain by initiating legal actions against decentralized protocols, labeling them as ‘patent trolls.’

On Sept 11, in a recently published blog post, the DeFi Education Fund (DEF) shared that they took significant action on Sept 7. They diligently prepared and submitted an extensive petition spanning over 90 pages to the Patent Trial and Appeal Board. This petition serves as their effort to request the cancellation of a patent owned by True Return Systems.

In 2018, Amanda Tuminelli, the legal head of DEF, announced through a Twitter post on Sept 11 that they obtained a patent. This patent claims ownership of a method called “associating off-chain data with a blockchain.

Tuminelli claimed that True Return attempted to market its patent as a nonfungible token (NFT). When no buyer was found, the company took legal action against DeFi platforms 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/w47v7fAAEt https://t.co/ExTapxhKNq
— Amanda Tuminelli (@amandatums) September 11, 2023

Tuminelli noted that True Return’s objective was clear: they aimed to identify defendants who could not respond to the complaint, allowing them to secure a default judgment.

True Return’s Patent Under Scrutiny: DeFi Fight For Innovation

She stated that True Return intended to pursue legal actions against token holders in court. They also planned to apply the same strategy to other protocols that cannot legally challenge or lack the necessary resources for a counterclaim.

However, DEF claimed that the technology described in True Return’s patent lacked novelty at its granting. In addition, they highlighted resemblances to established technologies like the Interplanetary File System (IPFS) and decentralized storage platforms such as 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

However, DEF announced initiation a petition with the USPTO to protect the freedom and advancement of open-source software. This action aims to prevent potential litigation from True Return against cryptocurrency projects. It also provides support for the legal defense efforts of MakerDAO and Compound.

Additionally, True Return grants a three-month window within which an optional response to the petition can be submitted. Following this period, the USPTO must decide whether to proceed with the patent review. We will allocate the subsequent 12 months to determine the potential invalidation of said patent.

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