DCT
2:24-cv-00118
Intercurrency Software LLC v. Bybit Fintech Ltd
I. Executive Summary and Procedural Information
- Parties & Counsel:
- Plaintiff: Intercurrency Software LLC (Texas)
- Defendant: Bybit Fintech Limited (British Virgin Islands)
- Plaintiff’s Counsel: Garteiser Honea, PLLC
- Case Identification: 2:24-cv-00118, E.D. Tex., 02/20/2024
- Venue Allegations: Plaintiff alleges venue is proper because Defendant is subject to personal jurisdiction in the district, has regularly conducted business there, and is not a U.S. resident, permitting suit in any judicial district.
- Core Dispute: Plaintiff alleges that Defendant’s Bybit cryptocurrency trading platform infringes three patents related to consolidated financial trading systems that display and settle transactions in a user's preferred currency.
- Technical Context: The technology addresses the uncertainty of cross-border financial transactions by integrating currency exchange functions directly into a trading platform, allowing users to see real-time prices and execute trades in their home currency.
- Key Procedural History: The complaint states that Plaintiff is the owner of the patents-in-suit by assignment. No prior litigation, licensing history, or post-grant proceedings are mentioned in the complaint.
Case Timeline
| Date | Event |
|---|---|
| 2007-04-18 | Earliest 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-XX | Alleged deadline for U.S. users to withdraw dollar deposits from Bybit |
| 2024-02-20 | Complaint Filed |
II. Technology and Patent(s)-in-Suit Analysis
U.S. Patent 10,062,107 - "Consolidated Trading Platform," issued August 28, 2018
The Invention Explained
- Problem Addressed: The patent describes a problem for investors trading assets denominated in a foreign currency. Because the asset trade and the currency conversion are separate events occurring at different times, the investor has "no certain knowledge of what profit or loss he was going to get" due to fluctuating exchange rates (’107 Patent, col. 1:55-60).
- The Patented Solution: The invention proposes a "three-tier architecture" that integrates a brokerage, a market exchange, and a currency exchange into a single platform (’107 Patent, col. 2:24-33). This platform displays asset prices in the user's "preferred currency" and performs the currency conversion at the transactional level, so the user "always knows exactly what he/she may end up with" (’107 Patent, col. 2:33-36). The system is designed to provide price certainty at the moment of the transaction.
- Technical Importance: The technology aimed to remove a significant point of friction and risk in the growing field of online, international securities trading by providing real-time, transactional currency conversion (’107 Patent, col. 1:63-65).
Key Claims at a Glance
- The complaint asserts independent claim 1 (Compl. ¶35).
- Essential elements of claim 1 include:
- Providing a trading server coupled to currency exchange and market exchange servers.
- Receiving an indicator of a preferred currency from a trader.
- Displaying an asset in the preferred currency, with costs that dynamically change based on a constantly updated exchange rate.
- Conducting a transaction by sending a request to the market exchange server.
- Receiving a settlement notification and executing the transaction with a prevailing exchange rate calculated "right before the transaction takes place."
- Performing a currency conversion of the transaction proceeds.
- The complaint does not explicitly reserve the right to assert dependent claims.
U.S. Patent 10,776,863 - "Method and Apparatus for Displaying Trading Assets in a Preferred Currency," issued September 15, 2020
The Invention Explained
- Problem Addressed: Similar to its parent, the ’863 Patent addresses the "cost and risk" incurred when a currency conversion is performed separately from an asset trade, which prevents traders from knowing their exact profit or loss at the time of execution (’863 Patent, col. 2:50-54).
- The Patented Solution: The patent describes a method where a consolidated platform displays assets to a trader in their chosen "preferred currency," even when the asset is priced in a different "market currency" (’863 Patent, col. 1:9-14). It achieves this by obtaining a prevailing exchange rate and presenting a unified price, thereby giving the trader certainty before committing to the transaction (’863 Patent, Abstract).
- Technical Importance: This approach offers a more user-centric and transparent model for global asset trading by abstracting away the complexities of separate foreign exchange operations (’863 Patent, col. 2:55-61).
Key Claims at a Glance
- The complaint asserts independent claim 1 (Compl. ¶51).
- 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.
- Displaying the asset in the preferred currency, with its valuation changing in accordance with the exchange rate.
- Conducting the asset transaction.
- Receiving a settlement notification, with the server configured to calculate the exchange rate "right before the transaction takes place" to prevent uncertainty.
- The complaint does not explicitly reserve the right to assert dependent claims.
Multi-Patent Capsule: U.S. Patent 11,449,930 - "Method and Apparatus for Trading Assets in Different Currencies," issued September 20, 2022
- Technology Synopsis: As part of the same patent family, the ’930 patent describes a system and method for trading assets across different currency environments. It focuses on providing a consolidated platform that integrates a market exchange and currency exchange to present prices, transactions, and settlements in a user's single preferred currency, thereby eliminating the uncertainty associated with subsequent currency conversions (’930 Patent, Abstract).
- Asserted Claims: The complaint asserts independent claim 12 (Compl. ¶67).
- Accused Features: The complaint alleges that Defendant’s provision of "a trading server, such as the Defendant trading servers coupled to one or more currency exchange servers... and one or more market exchange servers" infringes this patent (Compl. ¶67).
III. The Accused Instrumentality
Product Identification
- The "Bybit trading platforms and systems," collectively referred to as the "Accused Instrumentalities" (Compl. ¶30).
Functionality and Market Context
- The complaint identifies the accused instrumentalities as cryptocurrency trading platforms (Compl. ¶3). The functionality at issue involves allowing users to transact in cryptocurrencies using a preferred fiat currency. A screenshot from Bybit’s website shows a "One-Click Buy" interface where a user can spend a fiat currency (e.g., AED) to receive a cryptocurrency (e.g., BTC), with the system displaying the corresponding exchange rate (Compl. p. 8). The complaint alleges that Defendant’s platform allows U.S. and Texas users to trade, including through the use of VPNs (Compl. ¶4).
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 coupled to one or more currency exchange servers and one or more market exchange servers. | ¶35(i) | col. 4:65-68 |
| 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 a trader. | ¶35(ii) | col. 5:40-44 |
| 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 traded in a market currency. | ¶35(iii) | col. 6:53-57 |
| 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 trading server conducts a transaction by transmitting a request to a market exchange server when a trader proceeds with a trade. | ¶35(iv) | col. 9:4-8 |
| receiving a settlement notification... wherein 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 with the calculated prevailing exchange rate... | The trading server receives a settlement notification and is configured to calculate the prevailing exchange rate right before the transaction to execute it. | ¶35(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 system performs a currency conversion from the market currency to the preferred currency using the calculated exchange rate. | ¶35(vi) | col. 9:23-28 |
Identified Points of Contention
- Scope Questions: The patent family has a 2007 priority date and its specification describes "assets" and "securities" with examples from traditional finance like stocks, oil, and bonds (’107 Patent, col. 2:19-24). A central question may be whether claim terms such as "asset" and "market exchange server" can be construed to read on the accused cryptocurrencies and cryptocurrency exchanges.
- Technical Questions: Claim 1 requires the trading server to "calculate the prevailing exchange rate... right before the transaction takes place." The complaint alleges this occurs (Compl. ¶35(v)), but a factual dispute may arise over whether the accused Bybit platform performs this specific, just-in-time calculation or merely displays a fixed, all-inclusive price that is valid for a short duration.
'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 a trading server coupled to one or more currency exchange servers and market exchange servers. | ¶51 | col. 4:65-68 |
| receiving in the trading server an indicator of a preferred currency from a trader; | The complaint does not provide sufficient detail for analysis of this element. | col. 5:40-44 | |
| causing a client computer... to display the asset in the preferred currency while the asset is being traded in a market currency, wherein said causing... comprises... valuation of the asset in the preferred currency changes in accordance with the prevailing exchange rate... | The complaint does not provide sufficient detail for analysis of this element. | col. 8:51-58 | |
| conducting in the trading server a transaction of the asset...; | The complaint does not provide sufficient detail for analysis of this element. | col. 9:1-2 | |
| receiving a settlement notification in the trading server when the transaction of the asset is performed... wherein the trading server is configured to calculate the prevailing exchange rate... right before the transaction takes place... | The complaint does not provide sufficient detail for analysis of this element. | col. 9:7-14 |
Identified Points of Contention
- Pleading Sufficiency: The complaint's allegations for the ’863 patent are less detailed than for the ’107 patent, consisting of a high-level assertion that Defendant provides an infringing "trading server" (Compl. ¶51). This raises the procedural question of whether the complaint provides sufficient factual matter to state a plausible claim for infringement of each element of claim 1 of the ’863 patent.
- Technical Questions: As with the ’107 patent, a key technical question will surround the specific timing and mechanism of the exchange rate calculation and transaction execution, for which the complaint provides minimal detail.
V. Key Claim Terms for Construction
The Term: "asset"
- Context and Importance: This term is fundamental to the scope of all asserted patents. The specifications, with a 2007 priority date, provide examples of traditional financial assets like stocks, bonds, and commodities (’107 Patent, col. 2:21-23). The accused products, however, involve cryptocurrencies. The construction of "asset" will therefore be critical in determining whether the claims cover the accused technology domain.
- Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The specification states that securities "include, but are not limited to, a wide array of electronically traded financial assets" (’107 Patent, col. 2:19-21). Plaintiff may argue that the phrase "but are not limited to" indicates the inventors did not intend to restrict the term to the enumerated examples, allowing it to encompass new forms of electronically traded assets like cryptocurrency.
- Evidence for a Narrower Interpretation: Defendant may argue that a person of ordinary skill in the art in 2007 would have understood the term "asset" or "security" only in the context of the traditional, centralized financial instruments disclosed. The provided examples are all of this type, which could support an interpretation that excludes decentralized digital currencies that did not exist in a meaningful form at the time of filing.
The Term: "market exchange server"
- Context and Importance: The claims require coupling to a "market exchange server" where the asset is traded. The patent specification uses traditional examples like the NYSE (’107 Patent, col. 5:4-5). The accused platform is a cryptocurrency exchange. Whether a crypto exchange constitutes a "market exchange server" as understood by the patent is a key infringement question.
- Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The patent provides a functional description, defining a market exchange as a place "where securities/assets are traded" and an asset exchange where an asset "is caused to change hands" (’107 Patent, col. 2:25-26; col. 5:4-5). Plaintiff may argue this functional language is broad enough to cover any platform where assets are traded, including a modern crypto exchange.
- Evidence for a Narrower Interpretation: Defendant may point to the specific embodiment describing "server 210" as representing the NYSE to argue that the term implies a traditional, regulated, and centralized securities exchange. They may contend that the technical and regulatory structure of a cryptocurrency exchange is fundamentally different from what the patent discloses.
VI. Other Allegations
- Indirect Infringement: The complaint alleges that Defendant induces infringement by "advertising an infringing use" and providing its trading platforms, which allegedly encourages and enables its customers to directly infringe the patents (Compl. ¶¶ 41-43, 57-59, 73-75).
- Willful Infringement: Willfulness is alleged on two grounds. First, the complaint asserts that Defendant's infringement will be willful from the date of service of the complaint, establishing post-suit knowledge (Compl. ¶¶ 39, 55, 71). Second, it alleges pre-suit willful blindness, based on Defendant having "a practice of not performing a review of the patent rights of others first for clearance" before launching its products (Compl. ¶¶ 44, 60, 76).
VII. Analyst’s Conclusion: Key Questions for the Case
A core issue will be one of definitional scope: can claim terms such as "asset" and "market exchange server", which were defined in 2007-priority-date patents with examples from traditional finance (e.g., stocks, NYSE), be construed to cover modern cryptocurrencies and the cryptocurrency exchanges on which they are traded?
A second central question will be one of technical proof: what evidence will be required to demonstrate that the accused Bybit platform performs the specific, time-sensitive calculation and execution sequence recited in the claims—specifically, calculating a "prevailing exchange rate" from exchange servers "right before the transaction takes place"—as distinguished from providing a user with a fixed, all-inclusive quote?
Finally, a threshold procedural question may concern pleading sufficiency: particularly for the ’863 and ’930 patents, do the complaint's high-level infringement allegations contain enough specific factual detail to plausibly map the functionality of the accused platform onto each element of the asserted claims, as required by federal pleading standards?