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Winston & Strawn win for international securities exchange before Patent Trial and Appeal Board.

Summary: Winston & Strawn had a significant win last week for the International Securities Exchange in front of The Patent Trial and Appeal Board (PTAB), with ...

Winston & Strawn had a significant win last week for the International Securities Exchange in front of The Patent Trial and Appeal Board (PTAB), with three decisions that invalidate all claims in the three CBOE patents asserted against The International Securities Exchange Holdings, Inc. (ISE).

PTAB and the U.S. Patent and Trademark Office (USPTO) have issued three decisions in response to petitions filed by ISE to invalidate three CBOE patents (US Patent Nos. 7,356,498, 7,980,457 and 8,266,044). The PTAB agreed with ISE and found that all three patents are invalid. These patents formed the basis of litigation that CBOE brought against ISE in the case of Chicago Board Options Exchange, Incorporated v. International Securities Exchange, LLC, the proceedings in which have been pending the outcome of the PTAB review.


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"We are pleased that the PTAB agreed with ISE's position and invalidated the CBOE patents and are grateful for their careful consideration of this important matter," said Gary Katz, ISE president and chief executive officer.

Today, ISE operates two U.S. options exchanges, ISE and ISE Gemini, and provides a trading experience to its member firms through its patented market structure, technology, unique functionality for trading complex orders, and customer service. In addition to the options business, ISE ETF Ventures provides its partners with a range of capabilities in index development, index licensing, and financing of exchange-traded products.

As a member of Eurex Group, ISE and ISE Gemini are combined with Eurex Exchange to form one of the largest transatlantic derivatives marketplaces, with daily trading volumes exceeding nine million contracts across a range of asset classes.

Michael M. Murray of Winston & Strawn LLP, which represented ISE, recently sat down with InsideCounsel for an exclusive interview to discuss the significance of PTAB of the USPTO issuing these three decisions.

According to Murray, CBOE sued ISE in November 2012 alleging infringement of three patents and demanding $525,000,000 in past damages, plus future royalties and an injunction. He said if you assume damages have accrued at the same rate since the complaint, it would be more than $800 million to date.

These decisions from the PTAB have cancelled every claim of each of these patents. Unless CBOE can reverse this result on appeal, CBOE will take nothing from its suit against ISE and the court will dismiss the case with prejudice.

Murray said that these decisions are also interesting in that they provide guidance concerning how the Supreme Court's decision in Alice Corp. v. CLS Bank should be applied to alleged inventions in the financial services industry.

"I am happy that these decisions should bring CBOE's case against ISE to a swift conclusion, with CBOE taking none of the more than half a billion dollars it was seeking," explained Murray. "CBOE will also not be able to seek damages from other options markets that use market maker risk protection."

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Publication:Inside Counsel
Date:Mar 6, 2015
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