DCT
2:23-cv-00128
Intercurrency Software LLC v. Charles Schwab & Co Inc
I. Executive Summary and Procedural Information
- Parties & Counsel:
- Plaintiff: Intercurrency Software LLC (Texas)
- Defendant: Charles Schwab & Co., Inc. (California) and Charles Schwab Futures and Forex LLC (Delaware)
- Plaintiff’s Counsel: Garteiser Honea, PLLC
- Case Identification: 2:23-cv-00128, E.D. Tex., 03/27/2023
- 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 Schwab Global Account platform infringes patents related to integrated financial trading systems that allow users to view and execute transactions in a preferred currency that differs from the asset's native market currency.
- Technical Context: The technology addresses the complexities of international securities trading by creating a unified platform that incorporates real-time currency exchange data directly into the transaction process, aiming to provide traders with price certainty.
- Key Procedural History: The asserted patents are part of a family sharing a common priority date, with the '863 and '930 patents being continuations of the application that led to the '107 patent. The complaint asserts that patent examiners considered and rejected subject matter eligibility challenges during prosecution.
Case Timeline
| Date | Event |
|---|---|
| 2007-04-18 | Priority Date for all Patents-in-Suit |
| 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 |
| 2023-03-27 | Complaint Filed |
II. Technology and Patent(s)-in-Suit Analysis
U.S. Patent No. 10,062,107 - "Consolidated Trading Platform" (Issued Aug. 28, 2018)
The Invention Explained
- Problem Addressed: The patent's background describes a problem for investors trading securities in a foreign currency, where the need to perform a separate currency conversion before or after the trade creates uncertainty about the final profit or loss due to exchange rate fluctuations (Compl. ¶15; ’107 Patent, col. 1:38-60). This separation means the currency conversion is not performed at a "transactional level" ('107 Patent, col. 1:61-63).
- The Patented Solution: The invention claims to solve this by providing a "consolidated trading platform" that integrates a brokerage, a market exchange, and a currency exchange ('107 Patent, col. 2:25-33). This system presents all prices and executes transactions in a trader's "preferred currency" by obtaining and applying a "prevailing exchange rate" at the time of the transaction, thereby giving the trader immediate certainty on the transaction's value in their chosen currency (Compl. ¶18-19; ’107 Patent, col. 2:30-38).
- Technical Importance: The described technology aims to eliminate the risk and analytical burden associated with currency exchange rate volatility in international asset trading by integrating the conversion into the trade itself (Compl. ¶16).
Key Claims at a Glance
- The complaint asserts independent Claim 1 (Compl. ¶36).
- The essential elements of Claim 1 include:
- Providing a trading server coupled to one or more currency exchange servers and one or more 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 by determining a prevailing exchange rate and dynamically displaying costs and fees in that currency.
- Conducting a transaction by transmitting a request to the market exchange server.
- Receiving a settlement notification and executing the transaction with a calculated prevailing exchange rate obtained "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.
- The complaint's broad infringement allegations suggest Plaintiff may reserve the right to assert additional claims (Compl. ¶36).
U.S. Patent No. 10,776,863 - "Method and Apparatus for Displaying Trading Assets in a Preferred Currency" (Issued Sep. 15, 2020)
The Invention Explained
- Problem Addressed: As a continuation, this patent addresses the same problem as the '107 Patent: transactional uncertainty in international finance caused by the separation of the asset trade from the currency exchange ('863 Patent, col. 1:50-60).
- The Patented Solution: The '863 Patent also describes a "three-tier architecture" that provides a consolidated trading experience ('863 Patent, col. 2:25-30). The focus is on a method where the system displays an asset's valuation in a preferred currency that "changes in accordance with the prevailing exchange rate updated constantly," ensuring the trader has certain knowledge of the asset's cost or value at the moment of the transaction ('863 Patent, col. 8:58-65).
- Technical Importance: This invention provides a specific method for implementing the core concept of real-time, in-transaction currency conversion to reduce financial friction and risk for global traders (Compl. ¶16-19).
Key Claims at a Glance
- The complaint asserts independent Claim 1 (Compl. ¶52).
- The essential elements of Claim 1, a method claim, include:
- Coupling a trading server to currency and market exchange servers.
- Receiving an indicator of a preferred currency from a trader.
- Displaying the asset in the preferred currency, where the asset's valuation changes in accordance with a constantly updated prevailing exchange rate.
- Displaying all costs and fees in the preferred currency.
- Conducting the transaction.
- Executing the transaction with a calculated prevailing exchange rate obtained "right before the transaction" to prevent uncertainty.
- The complaint implicitly reserves the right to assert other claims (Compl. ¶52).
U.S. Patent No. 11,449,930 - "Method and Apparatus for Trading Assets in Different Currencies" (Issued Sep. 20, 2022)
- Technology Synopsis: As a further continuation in the same patent family, this patent describes a system for trading assets where the core technical problem remains the financial uncertainty from decoupled currency exchange ('930 Patent, col. 1:50-60). The described solution involves a trading server that calculates and displays costs in a first (preferred) currency for an asset traded in a second (market) currency, with the displayed values being "dynamically changed in accordance with a first prevailing exchange rate" ('930 Patent, Abstract, col. 8:30-41).
- Asserted Claims: The complaint asserts independent Claim 12 (Compl. ¶68).
- Accused Features: The complaint alleges that Defendant’s integrated platform, which allegedly includes trading servers, currency exchange servers, and market exchange servers, infringes by providing the functionality of the Schwab Global Account (Compl. ¶68-69).
III. The Accused Instrumentality
Product Identification
- The "Schwab Global Account platform and system," and all associated apparatus and methods provided by the Defendants (Compl. ¶30).
Functionality and Market Context
- The complaint alleges the Schwab Global Account is a platform "designed for U.S. investors seeking to trade online through Schwab in international markets in their local currencies" (Compl. ¶30). A screenshot provided in the complaint indicates the platform allows users to "Trade stocks directly online through Schwab in 12 of the top-traded foreign markets in their local currencies" and offers "multi-currency statement reporting" (Compl. ¶30, p. 8 Visual). The complaint further alleges that currency exchanges are handled by Defendant Charles Schwab Futures and Forex LLC for transactions conducted via Defendant Charles Schwab & Co., Inc. (Compl. ¶31).
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 "Charles Schwab trading servers" coupled to "Charles Schwab Futures and Forex LLC servers" (currency exchange) and market exchange servers. | ¶36(i) | col. 8:46-51 |
| receiving in the trading server an indicator of a preferred currency from a trader | Defendant's trading server receives an indicator of a preferred currency from a user of the Schwab Global Account. | ¶36(ii) | col. 8:52-53 |
| 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... | The Schwab Global Account platform causes a client computer to display an asset in the user's preferred currency. | ¶36(iii) | col. 8:54-65 |
| conducting in the trading server a transaction of the asset by transmitting a transaction request from the trading server to a market exchange server... | Defendant's trading server conducts a transaction by sending a request to a market exchange server when a user elects to trade. | ¶36(iv) | col. 9:5-8 |
| receiving a settlement notification... wherein... the trading server is configured to calculate the prevailing exchange rate... right before the transaction takes place... | The trading server receives a settlement notification and is configured to calculate the prevailing exchange rate immediately before the transaction. | ¶36(v) | col. 9:9-22 |
| performing a currency conversion of some portion or all of the transaction from the market currency to the preferred currency... the conversion being performed with the calculated prevailing exchange rate | The system performs a currency conversion from the market currency to the preferred currency using the calculated rate. | ¶36(vi) | col. 9:23-28 |
'863 Patent Infringement Allegations
The complaint incorporates prior allegations and broadly alleges infringement of Claim 1 of the '863 Patent but does not provide a limitation-by-limitation breakdown as it does for the '107 Patent (Compl. ¶48, 52). The following chart maps the general allegations to the claim elements.
| 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's system architecture couples its trading servers with its currency exchange servers and with market exchange servers. | ¶52 | col. 8:46-49 |
| receiving in the trading server an indicator of a preferred currency from a trader | The Schwab Global Account platform receives a user's selection of a local currency in which to trade. | ¶30, ¶52 | col. 8:50-52 |
| causing a client computer... 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 platform displays assets in local currencies, which implies the valuation is updated based on exchange rates. | ¶30, p. 8 Visual | col. 8:53-65 |
| executes the transaction with the calculated prevailing exchange rate obtained right before the transaction to prevent uncertainty... | The platform completes the transaction by performing a currency exchange, allegedly using a rate calculated just before execution to provide certainty. | ¶31, ¶52 | col. 9:16-21 |
Identified Points of Contention
- Architectural Questions: A potential dispute may arise over whether Defendant's system, which allegedly utilizes a distinct entity (Charles Schwab Futures and Forex LLC) for currency exchange, meets the "coupled" and "consolidated" architecture described in the patents, or if its functions are sufficiently separate to fall outside the claims' scope.
- Technical Questions: The infringement case may depend on evidence demonstrating the precise timing of the exchange rate calculation in the accused system. A key question is whether the system calculates a unique rate "right before the transaction takes place" as required by the claims, or if it uses a periodically updated rate that is not specific to the individual transaction instance.
V. Key Claim Terms for Construction
The Term: "prevailing exchange rate"
- Context and Importance: This term is central to the invention's goal of providing transactional certainty. Its construction will determine how tightly the exchange rate calculation must be tied to the asset transaction itself. Practitioners may focus on this term because the difference between a rate that is merely recent and a rate that is calculated "right before the transaction" ('107 Patent, col. 9:18-19) is a critical technical distinction.
- Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The specification describes the rate as being provided by a "participating financial agency" ('107 Patent, col. 6:50-54), which might support an argument that any recently published institutional rate could be considered "prevailing."
- Evidence for a Narrower Interpretation: Claim 1 of the '107 patent requires that the server "calculate the prevailing exchange rate... right before the transaction takes place" to "prevent uncertainty in currency exchanges in another time" ('107 Patent, col. 9:16-22). This language suggests a narrow interpretation requiring a dynamic, transaction-specific calculation rather than reliance on a pre-existing or periodically updated rate.
The Term: "trading server"
- Context and Importance: The claims are directed to a "trading server" that performs the core functions. The structure of Defendant's accused system will be compared against the definition of this term. Practitioners may focus on this term because the claims use the singular "a trading server," raising the question of whether a distributed system with legally distinct components can meet this limitation.
- Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The patent specification describes a "three-tier architecture" including separate elements for brokerage, market exchange, and currency exchange, which inherently suggests a distributed system ('107 Patent, Fig. 2B, col. 2:25-33). This could support construing "a trading server" to encompass multiple, coordinated computing components.
- Evidence for a Narrower Interpretation: The consistent use of the singular "a trading server" in Claim 1 could be argued to require a single, integrated apparatus that itself performs or controls all the recited steps, potentially excluding systems where functions are divided among different entities or non-integrated platforms ('107 Patent, col. 8:46).
VI. Other Allegations
- Indirect Infringement: The complaint alleges inducement to infringe, asserting that Defendant encourages infringement by advertising the accused platform and making it available for customers to use in an infringing manner (Compl. ¶41, 44, 57, 73).
- Willful Infringement: Willfulness is alleged based on Defendant's knowledge of the patents following the filing and service of the complaint (Compl. ¶40, 56, 72). The complaint also alleges willful blindness, based on an asserted "practice of not performing a review of the patent rights of others first for clearance" before launching products (Compl. ¶45, 61, 77).
VII. Analyst’s Conclusion: Key Questions for the Case
- A core issue will be one of architectural scope: does Defendant’s system, which allegedly separates brokerage services (Charles Schwab & Co., Inc.) from currency exchange services (Charles Schwab Futures and Forex LLC), constitute the integrated "trading server" coupled to exchange servers as recited in the claims, or is its architecture sufficiently distributed to fall outside the patent's scope?
- A key evidentiary question will be one of temporal precision: does the complaint's allegation that the accused platform provides real-time quotes and executes trades in local currencies meet the specific claim requirement of calculating a "prevailing exchange rate... right before the transaction takes place," or does the accused system operate on a different timing mechanism that creates a technical mismatch with the patent claims?