IEX asks court to dismiss Nasdaq’s ‘baseless’ patent suit
A patent infringement lawsuit is really an attempt to “stop the march toward a fairer and more transparent market”, according to stock market platform IEX, which has sought to dismiss a complaint filed by competitor Nasdaq Technologies.
The motion to dismiss was filed (pdf) at the US District Court for the District of New Jersey yesterday, May 30.
As reported by WIPR, New York-based Nasdaq filed a patent infringement suit against competitor IEX at the New Jersey court on March 1.
The complaint alleged that Nasdaq, the world’s first electronic stock market, played a “central role” in helping IEX create an electronic trading platform in 2012 and 2013. During this period, Nasdaq claimed at least four of its key technology employees left the company for IEX.
Nasdaq accused IEX of infringing the following US patents: “Closing in an electronic market” (7,647,264, 8,280,797, 8,386,362); “Order book process and method” (7,895,112); “Multi-parallel architecture and a method of using the same” (7,933,827); “Order matching process and method” (8,244,622); and “System and method for optimising changes of data sets” (8,117,609).
Nasdaq’s suit asked the court for a permanent injunction against IEX and enhanced damages because of the former Nasdaq employees’ alleged knowledge of the infringed patents.
In the motion filed yesterday, IEX claimed that Nasdaq’s suit is “baseless”, “deficient”, and an attempt “by Nasdaq to stop the march toward a fairer and more transparent market”.
IEX said it has “fundamentally different architecture” to Nasdaq and that the claim does not identify where or how Nasdaq’s patented inventions are included in IEX’s system.
Additionally, the patents asserted in Nasdaq’s complaint claim “unpatentable abstract ideas”, according to IEX.
For example, the ‘609 patent is “directed to the patent-ineligible abstract idea of comparing first and second data sets for the purpose of updating the first data set using nothing but conventional computers”, IEX said. It is “not innovative” and does “not include an inventive concept”.
In a statement released by IEX, the company said it will “vigorously defend” itself against the patent infringement complaint while continuing “to offer long-term investors, brokers, and public companies an alternative to the conflicted business models employed by Nasdaq”.
IEX said it offers members market data and the technology to connect to its exchange for free, but Nasdaq charges “significant fees” for these services.
Sophia Lee, general counsel at IEX, said “we built our own technology with the explicit purpose of being a fundamentally different kind of exchange”.
Lee added: “The timing of Nasdaq’s claims also coincides with IEX’s approval and announced intention to launch a corporate listing business, a business in which Nasdaq has enjoyed a 40+ year duopoly.”
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