Research Affiliates Sues Steinhardt’s WisdomTree Over Portfolio Patents

Research Affiliates LLC, the asset- management company, sued WisdomTree Investments Inc. for allegedly infringing three of its patents.

The patents include a method for using accounting-data- based indexing to create a portfolio of assets, Newport Beach, California-based Research Affiliates said in a complaint filed yesterday in federal court in Santa Ana, California.

“Our main focus is product quality and performance, but we will protect our intellectual property and the interests of our business partners when our patents are infringed,” Research Affiliates’ Chairman Rob Arnott said in a statement.

Research Affiliates, a closely held company majority owned by its employees, said $78 billion in assets are managed using investment strategies it developed. The company told WisdomTree in 2005 that it was applying for one of the patents at issue, according to the complaint.

WisdomTree responded by saying that Research Affiliates’ intellectual property rights were “speculative at best” and that WisdomTree was submitting prior public information about inventions related to the proposed patent to the U.S. Patent and Trademark Office, according to the complaint. The office issued the patent to Research Affiliates, according to the filing.

Stuart Bell, a spokesman for New York-based WisdomTree, didn’t respond to messages seeking comment.

Financial Products

Financial products that Research Affiliates claims infringe its patents include WisdomTree Dividend Index and WisdomTree Earnings Index. Research Affiliates is seeking a jury trial and a court order to stop WisdomTree from using the methods alleged to be patented.

WisdomTree, a firm specializing in exchange-traded funds, said it manages about $11.4 billion in ETF assets. Michael Steinhardt, the former hedge-fund manager, is chairman.

WisdomTree rose 11 cents, or 1.7 percent, to $6.59 at 2:40 p.m. New York time in Nasdaq Stock Market trading.

Research Affiliates is represented by the law firm Wilson Sonsini Goodrich & Rosati PC.

The case is Research Affiliates v. WisdomTree Investments, 11-01846, U.S. District Court, Central District of California, Southern Division (Santa Ana).

To contact the reporter on this story: Don Jeffrey in New York at

To contact the editor responsible for this story: Michael Hytha at

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