DEF buys patent to stop lawsuits against MakerDAO and Compound

The DeFi Education Fund (DEF) purchased a patent owned by True Return Systems (TRS) that was the basis of lawsuits against decentralized autonomous organizations (DAOs) MakerDAO and Compound Protocol for infringement. 

The patent is for an oracle-like system for “separation and linkage of stacked modular data storage and processing.” DEF will “dedicate” the patent to the public, preventing the patent from being used in similar suits in the future.

A patent for data storage technology

DEF characterized TRS as a “patent troll,” that is, a firm that pursues patent claims that may be unfounded. DEF argued in a September petition to the United States Patent and Trademark Office (USPTO) that the technology TRS had patented in 2018 was already in wide use. DEF listed four technologies that served the same purpose and were created in 2014 and 2016.

The USPTO was required to respond to decide in six months whether it would review the patent and make a ruling on whether or not to cancel the patent in 12 months. DEF chief legal officer Amanda Tuminelli said in a statement provided to Cointelegraph:

“As a result of our settlement with TRS, TRS will dismiss the legal proceedings against MakerDAO and Compound Protocol. […] As we said when we first brought our petition to invalidate the patent, offensive patenting is antithetical to the ethos of open source software development.”

TRS filed complaints against MakerDAO and Compound Protocol in October 2022, demanding payment of damages from patent infringement and enjoining the DAOs from future use of the subject matter TRS claims. The patent purchase resolves the suits.

Trying to profit off a patent

Tuminelli said in a September X post that “TRS’s goal was to name defendants who could not answer the complaint so TRS could get a default judgment and then try to enforce that judgment against token holders. […] Patent trolls pick targets that either can’t challenge them in court or don’t have the resources to do so.”

TRS had attempted to sell the patent as a non-fungible token (NFT) on Open Seas in November 2021. It was believed to be the first time a patent had been tokenized. However, it did not find a buyer. TRS asked 2,250 ETH (ETH) for the NFT and rejected the single offer it received for it, which was for 0.69 ETH.

TRS’s website was offline at the time of writing. TRS founder Jack Fonss died in March.