DCT
2:23-cv-00080
Intercurrency Software LLC v. Fidelity Brokerage Services LLC
I. Executive Summary and Procedural Information
- Parties & Counsel:
- Plaintiff: Intercurrency Software LLC (Texas)
- Defendant: Fidelity Brokerage Services LLC, National Financial Services LLC, Fidelity FOREX, Inc., and FMR LLC (collectively "Fidelity") (Delaware)
- Plaintiff’s Counsel: Garteiser Honea, PLLC
- Case Identification: 2:23-cv-00080, E.D. Tex., 02/28/2023
- Venue Allegations: Venue is alleged to be proper based on Defendant maintaining a regular and established business presence in the Eastern District of Texas, including physical locations and employees.
- Core Dispute: Plaintiff alleges that Defendant’s International Stock Trading platform infringes patents related to systems and methods for conducting financial transactions in a user's preferred currency.
- Technical Context: The technology concerns integrated financial trading platforms that enable users to view pricing and execute transactions for foreign assets in their local currency, thereby mitigating the risk and uncertainty of currency exchange rate fluctuations.
- Key Procedural History: The asserted patents form a family, with U.S. Patent 10,776,863 being a continuation of U.S. Patent 10,062,107, and U.S. Patent 11,449,930 being a continuation of the '863 patent. The complaint notes that the patents were allowed after examination by three different patent examiners and have cited patents issued to Bank of America.
Case Timeline
| Date | Event |
|---|---|
| 2007-04-18 | Priority Date for '107, '863, and '930 Patents |
| 2018-08-28 | U.S. Patent 10,062,107 Issued |
| 2020-09-15 | U.S. Patent 10,776,863 Issued |
| 2022-09-20 | U.S. Patent 11,449,930 Issued |
| 2023-02-24 | Date of last visit to Accused Instrumentality website cited in complaint |
| 2023-02-28 | Complaint Filing Date |
II. Technology and Patent(s)-in-Suit Analysis
U.S. Patent 10,062,107 (the “’107 Patent”), “Consolidated Trading Platform,” issued August 28, 2018
The Invention Explained
- Problem Addressed: The patent's background section identifies a problem for investors trading securities in a foreign market, where transactions must be conducted in the foreign currency. This forces the investor to perform separate currency conversions, creating a lack of "certain knowledge of what profit or loss he was going to get because the currency exchange rate... may fluctuate significantly" (’107 Patent, col. 1:55-60). The prior art allegedly lacked the ability to perform currency conversion "at a transactional level" (’107 Patent, col. 1:61-64).
- The Patented Solution: The invention claims to solve this problem through a "consolidated trading platform" that integrates a brokerage, a market exchange, and a currency exchange (’107 Patent, col. 2:23-28). This system presents all prices, data, and transaction results in the trader's "preferred currency," so the trader "always knows exactly what he/she may end up with" (’107 Patent, col. 2:32-35). Currency conversion is performed automatically in conjunction with the securities transaction, based on a prevailing exchange rate obtained at that time (’107 Patent, col. 2:35-38).
- Technical Importance: The described technology aims to remove the uncertainty and risk of currency fluctuation from international securities trading by integrating the currency exchange directly into the trading workflow (’107 Patent, col. 2:15-19).
Key Claims at a Glance
- The complaint asserts independent claim 1 (Compl. ¶38).
- Essential elements of Claim 1 include:
- Providing a trading server coupled to currency and market exchange servers.
- Receiving an indicator of a preferred currency from a trader.
- Causing a client computer to display an asset in the preferred currency while it is being traded in a market currency.
- Conducting a transaction by transmitting a request to a market exchange server.
- Receiving a settlement notification, wherein conditions include a price in the preferred currency, and the trading server calculates a prevailing exchange rate "right before the transaction takes place" to prevent uncertainty.
- Performing a currency conversion from the market currency to the preferred currency using the calculated rate.
U.S. Patent 10,776,863 (the “’863 Patent”), “Method And Apparatus For Displaying Trading Assets In A Preferred Currency,” issued September 15, 2020
The Invention Explained
- Problem Addressed: As a continuation of the '107 Patent, the '863 Patent addresses the same technical problem: the financial uncertainty and inconvenience for investors when trading assets denominated in a foreign currency, which requires separate and often ill-timed currency conversions ('863 Patent, col. 1:49-60).
- The Patented Solution: The patent describes a similar three-tier architecture (brokerage, market exchange, currency exchange) that provides a consolidated platform ('863 Patent, col. 2:23-28). The solution focuses on displaying the asset's valuation in the user's preferred currency, with the valuation "chang[ing] in accordance with the prevailing exchange rate updated constantly," even if the underlying market value of the asset is unchanged ('863 Patent, Claim 1). This gives the trader a real-time view of the asset's value in their own currency.
- Technical Importance: This approach provides investors with continuous, all-in cost certainty for cross-border trades, a significant improvement over prior art systems that required post-trade currency reconciliation and exposed investors to currency risk ('863 Patent, col. 2:15-19).
Key Claims at a Glance
- The complaint asserts independent claim 1 (Compl. ¶54).
- Essential elements of Claim 1 include:
- Coupling a trading server to currency and market exchange servers.
- Receiving an indicator of a preferred currency from a trader.
- Causing a client computer to display the asset in the preferred currency.
- Determining a prevailing exchange rate, where the displayed "valuation of the asset in the preferred currency changes in accordance with the prevailing exchange rate updated constantly."
- Displaying all costs and fees in the preferred currency.
- Conducting a transaction and receiving a settlement notification.
Multi-Patent Capsule: U.S. Patent 11,449,930 (the “’930 Patent”)
- Patent Identification: U.S. Patent 11,449,930, "Method And Apparatus For Trading Assets In Different Currencies," issued September 20, 2022.
- Technology Synopsis: As a further continuation in the same patent family, this patent details a method for trading assets across different currencies. The invention addresses transactional currency risk by providing a system that calculates and displays costs and fees in a trader's selected currency based on a dynamically updated exchange rate. The system then executes the trade and settles it using a second exchange rate calculated at the moment of the transaction to ensure final price certainty for the trader.
- Asserted Claims: The complaint asserts independent claim 12 (Compl. ¶70).
- Accused Features: The complaint alleges that Fidelity's trading platform, which couples trading servers with currency exchange and market exchange servers, infringes by providing a system for trading international assets that displays values in a preferred currency (Compl. ¶70).
III. The Accused Instrumentality
- Product Identification: Fidelity’s "International Stock Trading platform and system" (Compl. ¶32).
- Functionality and Market Context: The complaint describes the accused platform as allowing users to "trade in 25 countries with the flexibility to settle in either U.S. dollars or the local currency" and to "exchange between 16 different currencies" (Compl. ¶32). The platform is alleged to consolidate domestic and international trading in a single account and provide access to "real-time market data" (Compl. ¶32). The complaint includes a screenshot from Fidelity's website showing its marketing claims for the International Stock Trading service (Compl. ¶32). The complaint further alleges that currency exchanges for these transactions are handled by an affiliate, Fidelity FOREX, Inc., at the direction of Fidelity Brokerage Services LLC (Compl. ¶33).
IV. Analysis of Infringement Allegations
’107 Patent Infringement Allegations
| Claim Element (from Independent Claim 1) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| providing a trading server coupled to one or more currency exchange servers and one or more market exchange servers; | Defendant provides Fidelity trading servers coupled to Fidelity FOREX servers (currency exchange) and market exchange servers. | ¶38(i) | col. 4:65-5:5 |
| receiving in the trading server an indicator of a preferred currency from a trader; | Defendant's system receives an indicator of a preferred currency from the user. | ¶38(ii) | col. 5:36-40 |
| causing a client computer associated with the trader to display at least an asset in the preferred currency while the asset is being traded in a market currency... | Defendant's system causes the user's computer to display an asset in the preferred currency. | ¶38(iii) | col. 5:56-58 |
| conducting in the trading server a transaction of the asset by transmitting a transaction request from the trading server to a market exchange server when the trader decides to proceed with trading the asset; | Defendant's system conducts a transaction by sending a request to a market exchange server when the user elects to trade. | ¶38(iv) | col. 5:61-6:4 |
| receiving a settlement notification... wherein the conditions include a price at which the asset is traded in the preferred currency, the trading server is configured to calculate the prevailing exchange rate... right before the transaction... to prevent uncertainty...; and | Defendant's system receives a settlement notification, and is configured to calculate a prevailing exchange rate just before the transaction to prevent currency uncertainty. | ¶38(v) | col. 9:15-22 |
| performing a currency conversion of some portion or all of the transaction from the market currency to the preferred currency... | Defendant's system performs a currency conversion from the market currency to the user's preferred currency. | ¶38(vi) | col. 9:23-27 |
’863 Patent Infringement Allegations
| Claim Element (from Independent Claim 1) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| coupling a trading server to one or more currency exchange servers and one or more market exchange servers; | Defendant provides Fidelity trading servers coupled to Fidelity FOREX servers and market exchange servers. | ¶54 | col. 4:65-5:5 |
| receiving in the trading server an indicator of a preferred currency from a trader; | Defendant's system allows a user to select a preferred currency for settlement and viewing. | ¶32, ¶38(ii) | col. 5:36-40 |
| causing a client computer associated with the trader to display the asset in the preferred currency... wherein... valuation of the asset in the preferred currency changes in accordance with the prevailing exchange rate updated constantly... | The accused platform provides "real-time market data" and allows users to "capitalize on foreign exchange fluctuations," suggesting a dynamic display that reflects current exchange rates. | ¶32 | col. 8:1-6 |
| conducting in the trading server a transaction of the asset...; | Defendant's system conducts a transaction when the user elects to trade an international asset. | ¶38(iv) | col. 5:61-6:4 |
| receiving a settlement notification in the trading server when the transaction of the asset is performed... | Defendant's system provides for settlement of the executed trade. | ¶38(v) | col. 9:8-12 |
- Identified Points of Contention:
- Technical Questions: A central question will be what evidence demonstrates that the accused Fidelity system actually performs the functions as claimed, particularly the requirement that a "prevailing exchange rate" is calculated "right before the transaction takes place" ('107 Patent) or that the displayed valuation is "updated constantly" ('863 Patent). The complaint relies on high-level marketing materials from a website, which may not reflect the precise backend operations of the system.
- Scope Questions: The claims recite "a trading server" performing various functions. Defendant's system is likely a distributed architecture of multiple specialized servers. This raises the question of whether Fidelity's collection of servers can be considered a single "trading server" within the meaning of the claims.
V. Key Claim Terms for Construction
The Term: "prevailing exchange rate"
- Context and Importance: The definition of this term is critical for infringement, as it relates to the timing and nature of the currency conversion that is central to the invention. The dispute will likely focus on how "prevailing" is defined—whether it means an instantaneous spot rate, an aggregated rate, or a rate from a specific provider—and how close in time to the transaction it must be obtained to be considered "prevailing" or calculated "right before the transaction."
- Intrinsic Evidence for a Broader Interpretation: The specification refers generally to rates "provided by a participating financial agency" ('107 Patent, col. 5:50-54), which may support an argument that any commercially reasonable and timely rate meets the limitation.
- Intrinsic Evidence for a Narrower Interpretation: The specification gives examples of specific rate types for different assets, such as a "30-day forward rate" for an oil contract versus a "spot next rate" for an equity ('107 Patent, col. 6:32-36). This could support an argument that the term implies a specific, technically appropriate rate for the asset class, not just any rate available at the time.
The Term: "a trading server"
- Context and Importance: Practitioners may focus on this term because the claims assign numerous, distinct functions to a single "trading server." The infringement analysis will depend on whether this term can read on a modern, distributed system composed of many servers (e.g., web servers, application servers, database servers, dedicated transaction engines).
- Intrinsic Evidence for a Broader Interpretation: The specification states that the invention's three-tier architecture "may be implemented in a single computing machine which may be viewed as a single server or distributed over many servers owned by different organizations" (’107 Patent, col. 5:29-32). This language appears to explicitly contemplate a distributed implementation.
- Intrinsic Evidence for a Narrower Interpretation: The consistent use of the singular "a trading server" in the claim language itself could be used to argue for a narrower construction requiring that a single logical or physical entity performs all the recited steps, potentially distinguishing it from a loosely coupled set of independent systems.
VI. Other Allegations
- Indirect Infringement: The complaint alleges inducement to infringe based on Defendant advertising and providing the accused platform to its customers, which allegedly encourages and instructs them to use the system in an infringing manner (Compl. ¶¶46, 62, 78).
- Willful Infringement: Willfulness is alleged on two grounds. First, it is alleged that infringement will be willful post-suit, based on the notice of infringement provided by the complaint itself (Compl. ¶¶42, 58, 74). Second, the complaint alleges pre-suit "willful blindness" based on Defendant’s alleged "practice of not performing a review of the patent rights of others" prior to launching products (Compl. ¶¶47, 63, 79).
VII. Analyst’s Conclusion: Key Questions for the Case
- A core issue will be one of evidentiary proof: What technical evidence can be produced during discovery to show that the accused Fidelity platform’s backend architecture operates in the specific manner claimed, particularly regarding the timing and integration of the exchange rate calculation relative to the securities transaction itself? The outcome may depend on whether the system's operation aligns with the claim requirements for a real-time, integrated conversion or functions more like a set of distinct services presented in a common interface.
- The case will also likely involve a question of claim scope and architecture: Can the term "a trading server," as used in the claims, be construed to cover Fidelity's modern, distributed network of servers? While the specification offers language supporting a distributed view, the debate over whether the accused system constitutes the integrated platform recited in the claims will be a central point of contention.
- A key damages-related question will be willful blindness: Can the plaintiff substantiate its allegation that the defendant maintained a "practice of not performing a review of the patent rights of others"? Proving such a corporate policy, and linking it to the standard for willful blindness, will be critical to its claim for enhanced damages.