Coinbase allegedly used patented technology for another software company on many of its products. The plaintiff is seeking $350 million in compensation.
Veritaseum Capital LLC filed the lawsuit Thursday in a Delaware court. The company claims that Coinbase infringed a patent awarded to company founder Reggie Middleton in December by the U.S. Patent and Trademark Office. Patents are granted for low-reliability Peer-to-Peer value transfer technology provided input from third-party involvement.
Lawsuit filings indicate Coinbase infringed Middleton’s intellectual property rights by infringing patent claims across multiple services on Coinbase’s website. These include Coinbase Cloud, Coinbase Pay, Coinbase Wallet, Delegate and Validator software and others.
Coinbase appeared to have “uncooperative” with Veritasium when it then tried to resolve the matter without court intervention, according to Brundidge Stanger’s attorney Carl Brundidge.
“Defendant creates, uses, sells, and/or supports infringing products and services on the Bitcoin, Bitcoin Cash, Litecoin, Ethereum , and Solana platforms as well as NFTs for his products and services running on the platform and facilitates the aforementioned platforms.”
As a result, Veritaseum could be awarded $350,000,000 in damages, due to the “substantial profits” Coinbase made through the alleged violation and the “irreparable damages” that Coinbase caused to Veritaseum.
History of disputes with the SEC
What both Coinbase and Veritasium have in common beyond their technology is a history of securities disputes with the Securities and Exchange Commission (SEC).
In 2019, Middleton and two of the Veritasium entities paid more than $9 million to the SEC to settle fees for selling a cryptocurrency token called VERI in 2017 and 2018. The SEC has accused the company of manipulating the price of the token and misleading investors about information surrounding profit potential.
Similarly, Coinbase was sued by the commission in July for allegedly listing unregistered securities on its platform. Coinbase claims that the products in question are not securities.