Blockchain firm sues Coinbase for $350M alleging patent infringement

Blockchain firm sues Coinbase for $350M alleging patent infringement

After being accused by Veritaseum Capital, a blockchain-based software company, of infringing a patent related to its blockchain technology, crypto exchange Coinbase is now seeking $350M in damages.

Veritaseum claims that Coinbase violated its patent for cryptocurrency payment transfer technology, the “566 Patent,” according to a lawsuit filed by Brundidge & Stanger at the U.S. District Court of Delaware.

Veritaseum claimed that the patent revolves about “novel systems, devices and methods” that enable parties to “enforce values transfer agreements” without trust in one another. Coinbase is alleged to have used this method for many of its infrastructure services.

“Defendant’s infringing actions include, but are not limited, to its website […] Coinbase Android Mobile wallet […] iOS phone wallet […] and its Coinbase Cloud, Coinbase commerce APIs, Query, Transact, Participate and Validator software.

The law firm explained that the patent can be used with proof-of–stake (PoS), and proof-of–work (PoW), which could allow the transfer of cryptocurrency payments and trading on chains that support those consensus mechanisms.

Infringement of patent claims covers PoS & PoW Ethereum and transfer of NFTs & Bitcoin. This is in addition to my numerous warnings about the dangers of poor due diligence. Since 2015, this information was publicly available. I have been tweeting about it for nearly a year. This should not surprise anyone! https://t.co/MjuJSvYBrc
— Reggie Middleton DeFi Patent US11196566, JP6813477 (@ReggieMiddleton) September 22, 2022

Veritaseum defended the $350m figure by arguing Coinbase had “gained substantial profit by virtue of its infringement” and Veritaseum Capital had “sustained damages direct and proximately to that result.”

They also pointed out that Veritaseum had sent Coinbase a July letter informing it of the alleged infringement.

“Defendant knew, or should have known, the ‘566 Patent.” The ‘566 Patent was known to defendant at least three days before July 3, 2022. If not earlier, it was already known from other sources.

Vertiaseum’s July “Coinbase” report indicated that other “centralized” and “decentralized” digital asset exchanges may also use “unlicensed patented IP from Veritaseum.

Coinbase is hit by 2 new lawsuits in the SEC probe

According to court documents, Patent 566 was granted to Vertiaseum founder Reggie Middleton and coinventor Mathew Bogosian by the U.S. Patent and Trademark Office Dec. 7. 2021. Vertiaseum didn’t mention for how long Coinbase allegedly used Patent 566.

Veritaseum Capital requested that the dispute be resolved by a trial before a jury in Delaware.

Coinbase was contacted by Cointelegraph for comment, but they did not respond to our request at the time of publication.

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