From Futures & Options Week, 1 November
Industry moves to avoid TT patent suits
Mike Topping, Laurence Davison
Two firms last week launched trading software they claim will help customers avoid patent suits from litigious ISV Trading
Technologies (TT).
London-based ISV Patsystems and Chicago broker Peregrine Financial Group separately launched trading systems that represent depth of market on an active ladder display. Both firms said their products do not infringe TTâs patents on its static ladder based MD Trader. Active ladder displays were the norm prior to the introduction of MD Trader in 2000, with Patsystems among the firms to offer it.
The moves come amid mounting concern over TTâs ongoing campaign of patent litigation, which has seen suits against two of its customers settled, with a suit against Espeed still being contested.
Patsystems ceo Kevin Ashby said he believed the introduction of his firmâs Reflector product would âput our customers and others in the industry at easeâ. Patsystems has not been sued directly, but has been named in at least one of the other suits.
Sources told FO Week that prior to this development some of Patsâ large customers had considered dropping the ISV as a possible way to avoid legal action from TT. End users were apparently approached by clearing firms and asked what impact there would be if Patsystems was withdrawn.
Ashby told FO Week he was not aware of such discussions but
acknowledged that many firms were considering the impact of
the TT patents, which amounted to a âsword of Damoclesâ hanging over the industry. âIt has created a great deal of uncertainty and, in a situation where people donât know what is going to happen, they tend to do nothing, which is no good from a
commercial perspective.â
Reflector was unveiled to positive responses at last weekâs FIA Expo in Chicago.
Nick Garrow, Patsystemsâ head of sales, told FO Week, âwe have probably done over 100 demos here and the feedback we have received has been very positive. We have seen some of the
biggest US FCMs here, and many of them have not only said
thank you for developing this work around, but are also pleased
with what has been added.â
Toshihiko Endo, head of system development at Patsystems
customer Nihon Unicom told FO Week he was confident that using
Patsystems wold not make his firm the object of TTâs legal attention. âI have seen a demo [of Reflector], and although I havenât been able to use it live yet, I like what they have done,â he added.
PFGâs Best Direct Fast product was produced as a joint venture with ISV TradeMaven and uses a similar dynamic display to Reflector.
PFG ceo Russ Wasendorf told FO Week, âWeâve not only read TTâs patents in detail ourselves, but weâve had them examined by patent attorneys. They have patented a static price ladder and combined that with some other claims; the technology we have does not use a static price array â this is dynamic. It moves as the market moves, and itâs not until you are prepared to implement your strategy⦠that the prices stop moving.â
Both Patsystems and PFG have applied for patents on their new functionality, but said they did not plan to use their intellectual
property as a revenue driver. âWeâre not interested in seeing
someone else lose just so we can win â thatâs never been our
approach,â Wasendorf said.
Ashby said he was also no fan of the use of intellectual property
as a revenue driver, but conceded that he could not rule it out
as a future strategy. âI would prefer it if we continued to make
money from the provision of products and services rather than
through IP. But I have shareholders to think of, and if thatâs the
way the industry is going to go, weâd have to look at it.â
Although TradeMaven plans to generate revenue by selling the
new product to independent clients, Wasendorf said that at
present PFG has no plans to white label the system and sell it
externally, instead focusing on the firmâs âsomewhere north of
40,000 customersâ as a target market.
Patsystemsânew functionality has been incorporated into the JTrader product, and will be included in the Trademark platform,
due for release next year. Ashby said the firm is not immediately
withdrawing its static ladder display and that it was up to firms to
decide whether to continue offering it to their customers.
Industry moves to avoid TT patent suits
Mike Topping, Laurence Davison
Two firms last week launched trading software they claim will help customers avoid patent suits from litigious ISV Trading
Technologies (TT).
London-based ISV Patsystems and Chicago broker Peregrine Financial Group separately launched trading systems that represent depth of market on an active ladder display. Both firms said their products do not infringe TTâs patents on its static ladder based MD Trader. Active ladder displays were the norm prior to the introduction of MD Trader in 2000, with Patsystems among the firms to offer it.
The moves come amid mounting concern over TTâs ongoing campaign of patent litigation, which has seen suits against two of its customers settled, with a suit against Espeed still being contested.
Patsystems ceo Kevin Ashby said he believed the introduction of his firmâs Reflector product would âput our customers and others in the industry at easeâ. Patsystems has not been sued directly, but has been named in at least one of the other suits.
Sources told FO Week that prior to this development some of Patsâ large customers had considered dropping the ISV as a possible way to avoid legal action from TT. End users were apparently approached by clearing firms and asked what impact there would be if Patsystems was withdrawn.
Ashby told FO Week he was not aware of such discussions but
acknowledged that many firms were considering the impact of
the TT patents, which amounted to a âsword of Damoclesâ hanging over the industry. âIt has created a great deal of uncertainty and, in a situation where people donât know what is going to happen, they tend to do nothing, which is no good from a
commercial perspective.â
Reflector was unveiled to positive responses at last weekâs FIA Expo in Chicago.
Nick Garrow, Patsystemsâ head of sales, told FO Week, âwe have probably done over 100 demos here and the feedback we have received has been very positive. We have seen some of the
biggest US FCMs here, and many of them have not only said
thank you for developing this work around, but are also pleased
with what has been added.â
Toshihiko Endo, head of system development at Patsystems
customer Nihon Unicom told FO Week he was confident that using
Patsystems wold not make his firm the object of TTâs legal attention. âI have seen a demo [of Reflector], and although I havenât been able to use it live yet, I like what they have done,â he added.
PFGâs Best Direct Fast product was produced as a joint venture with ISV TradeMaven and uses a similar dynamic display to Reflector.
PFG ceo Russ Wasendorf told FO Week, âWeâve not only read TTâs patents in detail ourselves, but weâve had them examined by patent attorneys. They have patented a static price ladder and combined that with some other claims; the technology we have does not use a static price array â this is dynamic. It moves as the market moves, and itâs not until you are prepared to implement your strategy⦠that the prices stop moving.â
Both Patsystems and PFG have applied for patents on their new functionality, but said they did not plan to use their intellectual
property as a revenue driver. âWeâre not interested in seeing
someone else lose just so we can win â thatâs never been our
approach,â Wasendorf said.
Ashby said he was also no fan of the use of intellectual property
as a revenue driver, but conceded that he could not rule it out
as a future strategy. âI would prefer it if we continued to make
money from the provision of products and services rather than
through IP. But I have shareholders to think of, and if thatâs the
way the industry is going to go, weâd have to look at it.â
Although TradeMaven plans to generate revenue by selling the
new product to independent clients, Wasendorf said that at
present PFG has no plans to white label the system and sell it
externally, instead focusing on the firmâs âsomewhere north of
40,000 customersâ as a target market.
Patsystemsânew functionality has been incorporated into the JTrader product, and will be included in the Trademark platform,
due for release next year. Ashby said the firm is not immediately
withdrawing its static ladder display and that it was up to firms to
decide whether to continue offering it to their customers.