DEF purchases patent at center of suits against MakerDAO and Compound

The DeFi Education Fund said it purchased a patent from True Return Systems that will end litigation against MakerDAO and Compound Protocol.

The patent in question is a “method and system for separating storage and process of a computerized ledger for improved function.” The patent was approved by the US Patent and Trademark Office back in 2018.

On Monday, DEF said it had “reached an agreement” to purchase the patent from TRS, leading to the immediate dismissal of the cases.

Read more from our opinion section: Crypto can benefit from patents without losing its open source ethos

DEF said it plans to dedicate the patent to the public to avoid it being used against any other projects deploying oracle technology.

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“Today, we are pleased to announce that we have purchased the patent held by True Return Systems that claims the invention of oracle-like technology and was being used to sue MakerDAO and Compound. As a result of our settlement with TRS, TRS will dismiss the legal proceedings against MakerDAO and Compound Protocol,” Amanda Tuminelli, chief legal officer at DEF, said in a statement.

True Return Systems and patent inventor Jack Fonss accused both MakerDAO and Compound of patent infringement. They claimed that the patent covered systems linking off-chain data to a blockchain. The company launched its suits against both Maker and Compound in the fall of 2022.

According to the patent page, it covers the “system, method and computer readable storage medium for storing, creating, monitoring, managing, and modifying measurement, descriptive differences and parameters of the records of distributed computerized ledgers works through a separation and linkage of stacked modular data storage and processing.”

Tuminelli, in an X post last September, said that TRS had previously attempted to sell the patent as an NFT on OpenSea “for millions of dollars.” The OpenSea page shows that the patent was initially listed for 2,250 WETH, or $6 million in today’s conversion. It was lowered to 1,250 WETH ($3.3 million) three years ago, but no offers near that range were made.

“Patenting technology that is widely used, like oracle technology, is antithetical to the ethos of open-source software development. And as anyone with access to GitHub knows, TRS was absolutely not the first to ‘invent’ this technology,” she wrote.

True Return Systems filed a voluntary dismissal of its suits against both Maker and Compound.

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