DCT

2:23-cv-00370

Intercurrency Software LLC v. Binance Holdings Ltd

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Key Events
Amended Complaint

I. Executive Summary and Procedural Information

  • Parties & Counsel:
  • Case Identification: 2:23-cv-00370, E.D. Tex., 04/19/2024
  • Venue Allegations: Venue is alleged to be proper because Defendant is subject to personal jurisdiction in the district, has conducted business there, committed alleged acts of infringement in the district, and is not a U.S. resident.
  • Core Dispute: Plaintiff alleges that Defendant’s cryptocurrency trading platforms infringe three patents related to consolidated financial trading systems that perform real-time currency conversions to display and execute transactions in a user’s preferred currency.
  • Technical Context: The technology lies in the financial technology (FinTech) sector, specifically addressing the complexities of cross-currency asset trading by integrating currency exchange functions directly into the transaction process to provide price certainty.
  • Key Procedural History: The current filing is a First Amended Complaint, indicating a prior version of the complaint was served on the Defendant. The three patents-in-suit share a common priority date and form a single family, with the '863 and '930 patents being continuations of the original application.

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
2024-04-19 First Amended 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 describes the problem faced by investors trading securities in a foreign currency. Prior systems required these investors to perform bulk currency conversions before and after trading, creating significant uncertainty about the final profit or loss because exchange rates could fluctuate in the interim. The patent notes that in these systems, "the currency conversion is not at a transactional level." (’107 Patent, col. 1:61-63).
  • The Patented Solution: The invention claims a "consolidated trading platform" that integrates a "three-tier architecture" comprising a brokerage, a market exchange, and a currency exchange (’107 Patent, col. 2:25-27). This system displays all prices, quotes, and settlements in a trader's "preferred currency." By performing the currency conversion automatically and in real-time as part of the transaction, the platform ensures that "a trader always knows exactly what he/she may end up with." (’107 Patent, col. 2:32-35).
  • Technical Importance: The described technical approach sought to eliminate the currency exchange rate risk and price uncertainty inherent in cross-border trading by embedding the currency conversion function directly into the financial transaction workflow. (’107 Patent, col. 1:61-col. 2:3).

Key Claims at a Glance

  • The complaint asserts independent claim 1 as exemplary (Compl. ¶45).
  • The essential elements of independent claim 1 include:
    • Providing a trading server coupled to currency and market exchange servers.
    • Receiving an indicator of a "preferred currency" from a trader.
    • Displaying an asset in the preferred currency by determining and applying a prevailing exchange rate, such that costs and fees are dynamically changed with the exchange rate.
    • Conducting a transaction by sending a request to the market exchange server.
    • Receiving a settlement notification and executing the transaction using 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 as part of the transaction.
  • The complaint does not explicitly reserve the right to assert dependent claims, though this is standard practice.

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 of the '107 patent's application, the '863 Patent addresses the same core problem of exchange rate risk and price uncertainty for investors conducting transactions in a currency other than their own. (’863 Patent, col. 1:55-64).
  • The Patented Solution: The '863 patent also discloses a consolidated trading platform that integrates brokerage, market, and currency exchange functionalities. It specifically claims a method where the "valuation of the asset in the preferred currency changes in accordance with the prevailing exchange rate updated constantly even when a market value of the asset remains unchanged." (’863 Patent, col. 8:58-63). This dynamic display ensures the trader is always aware of the real-time cost in their own currency.
  • Technical Importance: This invention builds on the parent application by further detailing the technical mechanism for providing real-time price certainty to investors, focusing on the dynamic valuation of assets in the user's preferred currency. (’863 Patent, col. 2:31-34).

Key Claims at a Glance

  • The complaint asserts independent claim 1 as exemplary (Compl. ¶61).
  • The essential elements of independent claim 1 include:
    • Coupling a trading server to currency and market exchange servers.
    • Receiving an indicator of a preferred currency.
    • Causing a client computer to display the asset in the preferred currency, where the asset's "valuation" changes with the exchange rate even if the market value is static.
    • Displaying all associated costs and fees, also dynamically changed with the exchange rate.
    • Conducting a transaction and receiving a settlement notification, using a prevailing exchange rate calculated immediately before the transaction.
  • The complaint does not explicitly reserve the right to assert dependent claims.

Multi-Patent Capsule: U.S. Patent No. 11,449,930

  • Patent Identification: U.S. Patent 11,449,930, "Method and Apparatus for Trading Assets in Different Currencies", issued Sep. 20, 2022.
  • Technology Synopsis: This patent, a further continuation in the same family, also describes a consolidated trading platform for mitigating currency exchange risk. The invention focuses on a system that calculates and displays an asset's price and associated fees in a trader's preferred currency. It adds further specificity to the transaction and settlement process, with claim 12 reciting that "costs and fees in the settlement are not identical to the displayed costs and fees before the transaction of the asset took place." (Compl. ¶17; ’930 Patent, col. 10:63-66).
  • Asserted Claims: The complaint asserts independent claim 12 as exemplary (Compl. ¶77).
  • Accused Features: The complaint alleges that Defendant's trading platform infringes by providing "trading servers coupled to one or more currency exchange servers...and one or more market exchange servers." (Compl. ¶77).

III. The Accused Instrumentality

Product Identification

  • The "Blockchain.com trading platforms and systems," which include mobile applications and web-based exchanges, are collectively identified as the "Accused Instrumentalities." (Compl. ¶39).

Functionality and Market Context

  • The complaint alleges that the Accused Instrumentalities function as a "consolidated trading platform" for cryptocurrencies. (Compl. ¶39). A screenshot from the Blockchain.com mobile application shows an interface for purchasing Bitcoin in a user-selected dollar amount (e.g., '$100'), illustrating the offering of crypto assets for sale. (Compl. p. 11). Another screenshot of the 'Blockchain Exchange' web interface displays a detailed trading view for a BTC-USD pair, including an order book, price chart, and trade execution options, which the complaint alleges constitutes a trading server. (Compl. p. 12). The platform allegedly allows users to buy, sell, and swap crypto assets like BTC and ETH using fiat currency from a card or bank account. (Compl. p. 11).

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 trading servers that are allegedly coupled to one or more currency exchange servers and market exchange servers as part of its platform. ¶45(i) col. 8:46-51
receiving in the trading server an indicator of a preferred currency from a trader The platform allegedly receives an indicator of a preferred currency from a trader, for example, when a user funds an account or initiates a trade using a fiat currency like USD. ¶45(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 platform allegedly causes the user's device to display a crypto asset (e.g., Bitcoin) priced in a preferred currency (e.g., USD). ¶45(iii) col. 8:54-58
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 The platform allegedly conducts a transaction by transmitting a request to a market exchange server when a user initiates a trade. ¶45(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...right before the transaction takes place...and executes the transaction with the calculated prevailing exchange rate...to prevent uncertainty... The platform allegedly receives a settlement notification and executes the transaction by calculating a prevailing exchange rate just before the transaction to finalize the price in the user's preferred currency. ¶45(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 when the preferred currency is not identical to the market currency... The platform allegedly performs a currency conversion from the market currency of the asset to the user's preferred currency. ¶45(vi) col. 9:23-28
  • Identified Points of Contention:
    • Scope Questions: A central question may be whether the term "currency", as used in the patent’s disclosure (which focuses on fiat currencies like the U.S. Dollar and Japanese Yen), can be construed to encompass both the cryptocurrencies (e.g., Bitcoin) and fiat currencies (e.g., USD) used on the accused platform.
    • Technical Questions: The complaint alleges the use of distinct "currency exchange servers" and "market exchange servers". (Compl. ¶45(i)). A key technical question will be what evidence demonstrates that the accused platform utilizes this specific "three-tier architecture" (’107 Patent, col. 2:25) rather than a more integrated system where fiat-to-crypto conversion is an inherent part of the market transaction itself.

'863 Patent Infringement Allegations

The complaint alleges infringement of at least Claim 1 of the ’863 Patent. (Compl. ¶61). The infringement theory largely incorporates the allegations made for the ’107 Patent, asserting that the Defendant's platform operates as a "trading server" coupled to "currency exchange servers" and "market exchange servers." (Compl. ¶¶57, 61). The complaint does not, however, provide a specific, element-by-element breakdown of its infringement theory for any claim of the ’863 Patent.

  • Identified Points of Contention:
    • In addition to the scope and technical questions applicable to the '107 Patent, a further question for the '863 Patent arises from its distinct claim language: What evidence shows that the accused platform's display of a crypto asset's price in a fiat currency meets the limitation that the "valuation of the asset...changes in accordance with the prevailing exchange rate...even when a market value of the asset remains unchanged"? (’863 Patent, cl. 1).

V. Key Claim Terms for Construction

For the '107 Patent:

  • The Term: "currency exchange server"
  • Context and Importance: This term is fundamental to the patent's claimed "three-tier architecture." The infringement analysis will depend heavily on whether the accused platform, which facilitates fiat-to-crypto trading, can be shown to possess a component that meets the definition of a "currency exchange server" separate from a "market exchange server". Practitioners may focus on this term because the patent's diagrams depict these as distinct entities, while modern crypto exchanges may use a more integrated architecture.
  • Intrinsic Evidence for Interpretation:
    • Evidence for a Broader Interpretation: The specification describes this component functionally as an "agency, a multibank portal or a matching service providing a currency exchange rate." (’107 Patent, col. 5:1-3). This language could support an interpretation where the "server" is a logical software module rather than a physically distinct piece of hardware.
    • Evidence for a Narrower Interpretation: Figure 2A of the patent explicitly shows the "currency exchange" (206), "brokerage" (208), and "market exchange" (210) as separate servers connected via a network. This figure may be used to argue for a narrower construction requiring structural separation.

For the '863 Patent:

  • The Term: "valuation of the asset"
  • Context and Importance: This term is part of a key limitation that distinguishes the '863 patent from its parent. The dispute may turn on whether displaying a cryptocurrency's price in a fiat currency (e.g., the market price of BTC shown in USD) constitutes a "valuation" that changes based on an "exchange rate" as claimed. A defendant may argue that on its platform, USD is the direct market currency, meaning no separate "valuation" or "exchange rate" calculation occurs.
  • Intrinsic Evidence for Interpretation:
    • Evidence for a Broader Interpretation: The patent's objective is to give the trader certainty by showing prices in their preferred currency. (’863 Patent, col. 2:31-34). This purpose could support defining any such price display as a "valuation" that fulfills the claim's function.
    • Evidence for a Narrower Interpretation: The specification provides an example of oil priced in USD being "valued" in EUR by applying a EUR/USD exchange rate. (’863 Patent, col. 5:15-31). This may support an argument that the term requires a two-step calculation (price in market currency -> value in preferred currency) that may not be present if the accused platform treats a fiat currency like USD as the direct pricing currency for a crypto asset.

VI. Other Allegations

  • Indirect Infringement: The complaint alleges inducement of infringement, asserting that Defendant's advertising and provision of the accused platforms encourage and instruct users to operate them in an infringing manner. (Compl. ¶¶53, 69, 85).
  • Willful Infringement: Willfulness is alleged based on both post-suit knowledge and pre-suit willful blindness. The complaint asserts that infringement became willful upon service of the original complaint (Compl. ¶¶49, 65, 81) and that Defendant was willfully blind by having an alleged "practice of not performing a review of the patent rights of others" before launching its products (Compl. ¶¶54, 70, 86).

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

  1. A core issue will be one of definitional scope: can claim terms such as "currency" and "currency exchange server", which are described in the 2007-priority-date patents within the context of traditional finance and fiat currencies, be construed to read on the cryptocurrencies and integrated functionalities of a modern digital asset exchange?
  2. A key evidentiary question will be one of architectural correspondence: does the accused Blockchain.com platform implement the distinct three-tiered architecture of a "trading server," "market exchange server," and "currency exchange server" as depicted and claimed in the patents, or does its operational structure represent a fundamental technical departure from the patented invention?
  3. A third point of contention, specific to the ’930 patent, will raise a question of temporal functionality: does the accused platform demonstrate the claimed behavior where final settlement costs are "not identical" to the pre-transaction displayed costs, and if so, is this attributable to the patented currency conversion mechanism or to general market volatility and slippage inherent in such trading systems?