DCT

2:23-cv-00130

Intercurrency Software LLC v. Morgan Stanley & Co LLC

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I. Executive Summary and Procedural Information

  • Parties & Counsel:
  • Case Identification: 2:23-cv-00130, E.D. Tex., 03/28/2023
  • Venue Allegations: Plaintiff alleges venue is proper because Defendant maintains a regular and established business presence within the Eastern District of Texas.
  • Core Dispute: Plaintiff alleges that Defendant’s financial trading platforms infringe patents related to systems and methods for conducting security transactions in a user's preferred currency by performing real-time currency conversions.
  • Technical Context: The technology at issue facilitates international securities trading by displaying asset prices and settling transactions in an investor's home currency, aiming to eliminate the price uncertainty caused by fluctuating exchange rates.
  • Key Procedural History: The complaint alleges that the Patents-in-Suit were allowed by the U.S. Patent and Trademark Office after examiners conducted thorough searches and considered relevant prior art, and argues this supports their validity and eligibility. No prior litigation or post-grant proceedings are mentioned.

Case Timeline

Date Event
2007-04-18 Priority Date for ’107, ’863, and ’930 Patents
2018-08-28 U.S. Patent 10,062,107 Issues
2020-09-15 U.S. Patent 10,776,863 Issues
2022-09-20 U.S. Patent 11,449,930 Issues
2023-03-28 Complaint Filed

II. Technology and Patent(s)-in-Suit Analysis

U.S. Patent 10,062,107, “Consolidated Trading Platform” (Issued Aug. 28, 2018)

The Invention Explained

  • Problem Addressed: The patent’s background section describes the problem faced by investors wishing to trade assets in a foreign market, such as a Chinese investor trading on a U.S. exchange. Such investors had to separately convert bulk currency before and after trading, leaving them with "no certain knowledge of what profit or loss" they would realize due to exchange rate fluctuations that could occur between the time of the trade and the time of the currency conversion (’107 Patent, col. 1:53-60; Compl. ¶16).
  • The Patented Solution: The invention proposes a "three-tier architecture" that integrates a brokerage, a market exchange, and a currency exchange into a "consolidated trading platform" (’107 Patent, col. 2:24-33). This platform allows a trader to view prices and execute transactions in their preferred "home" currency, with the system performing the currency conversion "at a transactional level" to provide immediate certainty regarding the transaction's value (’107 Patent, col. 1:63-65; Compl. ¶17). Figure 2B of the patent illustrates this three-tier architecture connecting an investor to asset and currency exchanges through a brokerage (’107 Patent, Fig. 2B).
  • Technical Importance: This approach seeks to eliminate the risk and uncertainty inherent in cross-border securities trading by locking in a currency exchange rate at the moment of the transaction itself (Compl. ¶20).

Key Claims at a Glance

  • The complaint asserts independent Claim 1 as exemplary (Compl. ¶37).
  • 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 by determining a prevailing exchange rate.
    • Displaying all costs and fees in the preferred currency, which are dynamically changed with the exchange rate.
    • Conducting a transaction of the asset by transmitting a request to the market exchange server.
    • Receiving a settlement notification, where the trading server is configured to calculate the prevailing exchange rate "right before the transaction takes place" and execute the transaction with that calculated rate.
    • Performing a currency conversion of the transaction from the market currency to the preferred currency.

U.S. Patent 10,776,863, “Method and Apparatus for Displaying Trading Assets in a Preferred Currency” (Issued Sep. 15, 2020)

The Invention Explained

  • Problem Addressed: The ’863 Patent, a continuation of the ’107 Patent, addresses the same problem of transactional uncertainty in cross-currency trading, where an investor "had no certain knowledge of what profit or loss he was going to get because the currency exchange rate must be obtained for a bulk amount at another time" (’863 Patent, col. 1:55-60).
  • The Patented Solution: The solution is also a consolidated trading platform, but the claims focus specifically on the method of displaying asset information. The system receives an indication of a preferred currency, determines a prevailing exchange rate, and then displays the asset's costs and fees to the trader in that preferred currency, with the displayed value dynamically changing as the exchange rate fluctuates (’863 Patent, col. 10:4-16). This provides the trader with "certain knowledge of what to pay for the asset, or profit or loss when acting on the asset" (’863 Patent, col. 10:14-16).
  • Technical Importance: The invention's focus is on providing a real-time, converted-currency view of an asset's value, which allows international investors to make more informed trading decisions based on prices presented in their own currency (’863 Patent, Abstract).

Key Claims at a Glance

  • The complaint asserts independent Claim 1 as exemplary (Compl. ¶53).
  • Essential elements of Claim 1 include:
    • Coupling a trading server to one or more 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 by determining a prevailing exchange rate and a valuation of the asset that "changes in accordance with the prevailing exchange rate updated constantly even when a market value of the asset remains unchanged."
    • Conducting a transaction of the asset and executing it with a "calculated prevailing exchange rate obtained right before the transaction to prevent uncertainty."

U.S. Patent 11,449,930, “Method and Apparatus for Trading Assets in Different Currencies” (Issued Sep. 20, 2022)

Multi-Patent Capsule

  • Technology Synopsis: A continuation of the ’863 Patent, the ’930 Patent discloses a system for trading assets across different currencies. The technology centers on a trading server that receives a trader's preferred currency, calculates and displays the costs to own or sell an asset in that preferred currency, and upon receiving a trade instruction, determines a new prevailing exchange rate "right before" the transaction to execute the trade and settlement, thereby avoiding subsequent currency fluctuation risk (’930 Patent, Abstract; col. 2:15-24).
  • Asserted Claims: The complaint asserts independent system Claim 12 as exemplary (Compl. ¶69).
  • Accused Features: The complaint alleges that Defendant’s system, comprising "the Morgan Stanley & Co. LLC Wealth Management trading servers coupled to one or more currency exchange servers... and one or more market exchange servers," infringes this patent (Compl. ¶69).

III. The Accused Instrumentality

  • Product Identification: The "Accused Instrumentalities" are identified as Defendant's "Morgan Stanley Wealth Management and E*Trade Cryptocurrency exchange platforms and systems" (Compl. ¶31).
  • Functionality and Market Context:
    • The complaint alleges these platforms constitute a "consolidated trading platform" for executing clients' foreign exchange (FX) transaction requests (Compl. ¶¶31-32). The system is alleged to support trading in assets denominated in a foreign currency, with FX orders executed through various Morgan Stanley affiliates, described as a "back-to-back trade" (Compl. ¶32). A screenshot from the E*Trade website is provided as an example of the accused platform, showing offerings for "indirect exposure to popular cryptocurrencies via securities and futures" (Compl. p. 8). This screenshot illustrates the platform's public-facing interface for trading cryptocurrency-related securities (Compl. p. 8).
    • The complaint describes Morgan Stanley Wealth Management as a "global financial services and wealth management firm" that generates substantial revenue from the accused services (Compl. ¶¶32, 36).

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 a trading server (Morgan Stanley Wealth Management) coupled to currency exchange servers (Morgan Stanley International PLC and Capital Services LLC) and market exchange servers (Compl. ¶37(i)). ¶37(i) col. 8:46-50
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 trader (Compl. ¶37(ii)). ¶37(ii) col. 8:51-52
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 a client computer to display an asset in the preferred currency while it is being traded in a market currency (Compl. ¶37(iii)). ¶37(iii) col. 8:53-56
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 trading server conducts a transaction by transmitting a request to a market exchange server when a trader proceeds with a trade (Compl. ¶37(iv)). ¶37(iv) col. 9:5-9
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 from all exchange rates obtained from the one or more currency exchange servers right before the transaction takes place... and executes the transaction... Defendant’s system receives a settlement notification for a transaction executed under user-set conditions, with the trading server configured to calculate the prevailing exchange rate from exchange servers right before the transaction and execute it with that rate (Compl. ¶37(v)). ¶37(v) col. 9:10-22
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 Defendant’s system performs a currency conversion from the market currency to the preferred currency using the calculated prevailing exchange rate (Compl. ¶37(vi)). ¶37(vi) col. 9:23-28

’863 Patent Infringement Allegations

The complaint alleges that Claim 1 of the ’863 Patent is infringed by the Accused Instrumentalities (Compl. ¶53). However, it does not provide a detailed, element-by-element mapping of the accused system’s functionality to the specific limitations of Claim 1. The infringement theory is broadly stated as Defendant practicing and providing "a trading server, such as the Morgan Stanley & Co. LLC Wealth Management trading servers coupled to one or more currency exchange servers... and one or more market exchange servers" (Compl. ¶53). Without more specific allegations mapping product features to claim elements, a detailed claim chart analysis is not possible based on the complaint alone.

Identified Points of Contention

  • Architectural Questions: The complaint alleges a distributed system of "Wealth Management trading servers" plus affiliate servers for currency and market exchange meets the "trading server" limitation (Compl. ¶37(i)). A central dispute may be whether this distributed architecture corresponds to the integrated "trading server" recited in the claims, which is itself required to perform key functions like calculating the exchange rate.
  • Technical Questions: The complaint alleges the trading server is "configured to calculate the prevailing exchange rate" from "all exchange rates obtained" right before a transaction, mirroring the claim language ('107 Patent, cl. 1; Compl. ¶37(v)). A key evidentiary question will be what proof exists that the accused system performs this specific function, as opposed to, for example, using a single predetermined rate provided by one of its affiliates. The mechanism and timing of this calculation will likely be a point of significant technical dispute.

V. Key Claim Terms for Construction

Term 1: "trading server"

  • Context and Importance: This term, appearing in Claim 1 of the ’107 Patent, defines the central apparatus of the invention. Its construction is critical to determine whether the allegedly distributed architecture of Morgan Stanley’s platforms (trading platform servers plus affiliate servers) can be considered a single infringing "server." Practitioners may focus on this term because the plaintiff's theory appears to require aggregating legally distinct entities to meet the claim limitations (Compl. ¶37(i)).
  • Intrinsic Evidence for Interpretation:
    • Evidence for a Broader Interpretation: The specification describes a "three-tier architecture" and a "consolidated trading platform," which could suggest that the "trading server" is a logical system comprised of multiple, distributed physical components working together (’107 Patent, col. 2:24-33).
    • Evidence for a Narrower Interpretation: Figure 2A depicts a "brokerage" server (208) as a distinct entity that communicates over a network with a separate "currency exchange" server (206) and "asset exchange" server (210). This could support an interpretation that the "trading server" is a more unitary component, distinct from the exchange servers it is coupled to (’107 Patent, Fig. 2A).

Term 2: "configured to calculate the prevailing exchange rate from all exchange rates obtained from the one or more currency exchange servers right before the transaction takes place"

  • Context and Importance: This functional language from Claim 1 of the ’107 Patent is highly specific and central to the invention's goal of eliminating price uncertainty. The dispute will likely center on the meaning of "calculate," "from all exchange rates," and "right before," which collectively define the core technical operation.
  • Intrinsic Evidence for Interpretation:
    • Evidence for a Broader Interpretation: The patent does not define a specific algorithm for the calculation. A party could argue that "calculate" simply means to determine or select a rate, and "from all exchange rates" means from the pool of available rates, not literally every single rate feed.
    • Evidence for a Narrower Interpretation: The use of "calculate... from all exchange rates" could be construed to require a specific act of synthesizing multiple data points into a new, unique rate, rather than just passing along a single rate from one source. The phrase "right before the transaction" could be interpreted to require a just-in-time calculation, posing a high standard of proof regarding the system's timing and operation (’107 Patent, col. 9:16-22).

VI. Other Allegations

  • Indirect Infringement: Plaintiff alleges that Defendant induces infringement by "advertising an infringing use" of the Accused Instrumentalities (Compl. ¶¶45, 61, 77). The complaint does not, however, cite specific advertisements, user manuals, or other instructional materials that allegedly encourage infringement.
  • Willful Infringement: The willfulness allegations are based on two theories. First, Plaintiff alleges that infringement will be willful post-filing, as the complaint itself serves as actual notice of the patents (Compl. ¶¶41, 57, 73). Second, Plaintiff alleges pre-suit willful blindness, based on an alleged "practice of not performing a review of the patent rights of others first for clearance" before launching products (Compl. ¶¶46, 62, 78).

VII. Analyst’s Conclusion: Key Questions for the Case

  • A core issue will be one of architectural mapping: Can the complaint’s theory of infringement, which aggregates servers from different Morgan Stanley entities (Compl. ¶32, ¶37), satisfy the claim requirement for a single "trading server" that is itself "configured to calculate" a prevailing exchange rate, or does this improperly combine distinct systems to read on the patent?
  • A key evidentiary question will be one of functional proof: What specific evidence will demonstrate that the accused platforms perform the claimed, highly specific function of calculating a "prevailing exchange rate from all exchange rates... right before the transaction takes place" ('107 Patent, cl. 1), as distinct from a more conventional approach of using a single, predetermined rate from an affiliate?
  • A foundational legal question may be one of patent eligibility: Given the subject matter of currency conversion in financial transactions, the court will likely need to analyze whether the claims are directed to a patent-ineligible abstract idea under 35 U.S.C. § 101 and, if so, whether they contain a sufficient "inventive concept" that transforms them into a patent-eligible application.