Back in 2005, I began covering a major development in the financial industry – patents. More specifically, I began covering the patent infringement cases by Trading Technologies against a number of firms including CQG. 

That case, which lasted almost 12 years with appeals, is now essentially settled by the US Court of Appeals for the Federal Circuit, which affirmed the validity of TT’s patents, and essentially backed a lower court’s finding that CQG infringed on TT’s patents. The settlement awarded in the lower court was for $16 million. 

TT’s patent litigation is well-known in the industry by now. But in the early 2000s, after TT secured a patent from the US Patent and Trademark Office for its now famous MD Trader (and its price ladder), patents on software in the industry were largely unknown. And the idea of defending that patent against competitors and customers alike was met with disbelief and in some corners, disgust. More than one executive said they would fight TT’s patents till the bitter end. 

Such is the case, it appears, for CQG, which battled in court with TT since 2005. It wasn’t alone as the court grouped CQG, eSpeed, Rosenthal Collins Group, GL Trade and Futurepath together to expedite the process. Those cases were either settled, or won by TT. No matter how far afield defendants looked for so-called “prior art” that preceded TT’s patent, nothing stuck; not GL’s claim that it developed its own system in 1999 called Tradepad, nor a system designed for the Tokyo Stock Exchange, or a thing called the WIT Digital Stock Market. 

In the end, TT has successfully defended its patents and today holds around 700 of them. TT has never been apologetic about its patent defense, as it believes MD Trader is an innovation that helped transform the financial industry as it moved into electronic markets. As such, that invention should and will be defended against anyone who infringes on it.

TT’s Steve Borsand, executive vice president, intellectual property and the chief attorney on such cases, said it was pleased with the court’s decision. “While TT prefers to license its intellectual property outside of the court system, TT appreciates that the court has supported their strong belief in protecting their research and development,” he said in a statement. 

One thing is clear. The enforcement of software patents from TT and also a separate patent called the Susan Wagner patent (later purchased by eSpeed), have had a major impact on the industry. Firms now have made patent registration a major part of their businesses. Innovation has always been a hallmark of the financial industry and patents have brought a level of protection for those innovations.


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