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ARTICLE · 26 APRIL 2023

Do DAOs Need To Worry About Infringing Patents? MakerDAO And Compound Protocol Serve As Test Cases

Herbert Smith Freehills Kramer LLP
Herbert Smith Freehills Kramer LLP
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Herbert Smith Freehills Kramer LLP

Herbert Smith Freehills Kramer LLP

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Certain decentralized autonomous organizations (DAOs) are currently named as defendants in different court cases. However, the patent infringement cases in which True Return asserts...

United StatesIntellectual Property
Kristopher B. Kastens
Kristopher B. Kastens
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Certain decentralized autonomous organizations (DAOs) are currently named as defendants in different court cases. However, the patent infringement cases in which True Return asserts that MakerDAO and Compound Protocol infringe its patent have not received much media attention, despite the fact that they may have a large impact on blockchain technology adoption and participation in DAOs. While no substantive patent law issues have been reached in either case, both have already grappled with issues important to the wider blockchain and DAO community and could be applicable to litigation with DAOs beyond the patent context.

As background, DAOs are an increasingly popular way to organize technical projects. Typically, they have governance tokens that allow anyone who purchases them to participate in the DAO. MakerDAO manages the protocol that issues Dai, an over-collateralized algorithmic stablecoin. Dai is the third-largest stablecoin, with more than $7 billion in

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