CBOE Sues International Securities Exchange Over Patents

CBOE Holdings Inc. (CBOE)’s Chicago Board Options Exchange accused Deutsche Boerse’s International Securities Exchange LLC of infringing three of its patents with an automated system for trading options.

CBOE, in a lawsuit filed in federal court in Chicago, is seeking at least $525 million in damages, including lost profit and royalties. The patents at issue involve quote-risk monitoring and quote-modification services that were issued by the U.S. Patent and Trademark Office in 2008, 2011 and on September 11.

“CBOE has been granted a number of critical patents covering its innovative and award-winning technology,” according to the complaint. “These patents disclose and claim electronic systems and methods for automatically adjusting quotes on the exchange based on risk parameters and are crucial to market maker participation in an exchange.”

Yesterday’s complaint was filed six months after the U.S. Court of Appeals for the Federal Circuit reinstated a patent infringement case brought against CBOE by International Securities Exchange, or ISE.

Molly McGregor, a spokeswoman for New York-based ISE, declined to comment on the lawsuit.

ISE was the first all-electronic U.S. options exchange when it began in May 2000. CBOE sued ISE in 2007 after it received a letter from ISE demanding that it pay patent royalties and was sued by ISE in New York over its Hybrid Trading System that blends traditional open-outcry trading with electronic execution. Chicago-based CBOE sought a court ruling that cleared its system of any infringement claims.

The case is Chicago Board Options Exchange Inc. v. International Securities Exchange LLC, 12-cv-09805, U.S. District Court, Northern District of Illinois (Chicago).

To contact the reporter on this story: Tom Schoenberg in Washington at tschoenberg@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

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