Liquidnet Gets Second Patent, Static Persists on First
Traders Magazine Online News, June 29, 2010
Liquidnet said it received a second patent on its equity trading system from the U.S. Patent and Trademark Office and that counterclaims in a suit it initiated against Investment Technology Group on a previously issued patent had been dropped.
But ITG said Tuesday that it believed that patent was invalid and that its move was made to simplify the overall issues in the patent infringement dispute.
The new patent, No. 7,747,515, is entitled "Electronic Securities Marketplace Having Integration With Order Management Systems," which Liquidnet said protects proprietary methods for generating liquidity for institutional block trades using computers.
"This is further recognition of the continued innovation that we have led over the last decade in making trading more efficient for the institutional trading community," said Seth Merrin, founder and chief executive for Liquidnet.
Liquidnet also disclosed that ITG in April voluntarily dropped a counterclaim filed in 2006 against Liquidnet involving the previous patent that it had received.
Liquidnet has alleged that ITG infringes that trading technology patent and ITG had sought, Liquidnet said, more than $200 million for "tortious interference with prospective business relations."
Liquidnet said the dismissal of the counterclaim means that ITG's claim cannot be asserted against Liquidnet in the future. Liquidnet said it will continue to pursue its patent infringement claims against both ITG and Pulse Trading, Inc.
Liquidnet Holdings, the parent of Liquidnet, was previously issued U.S. Patent No. 7,136,834 on Nov. 14, 2006. This is the patent that ITG, while dropping its counterclaim, believes is not valid.
"We do not believe that ITG has in any way infringed Liquidnet's '834 patent, and furthermore, we believe the patent is invalid," said Mats Goebels, managing director and general counsel at ITG. "ITG voluntarily dismissed its counterclaim for tortious interference, a small element of the larger lawsuit, in order to simplify the issues in the case. In our view, this move does not change the overall picture of the patent infringement lawsuit."
Liquidnet's patent infringement suit "is wholly without merit," Goebels added. ITG contends that Liquidnet derived its patent from work done in 1997 and 1998 by other parties.
Liquidnet operates a block-trading venue that serves 36 equity markets across five continents.
This story originally ran in Securities Industry News.
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