Intercurrency Software LLC v. Huobi Global Ltd

I. Executive Summary and Procedural Information

• Parties & Counsel:
  • Plaintiff: Intercurrency Software LLC (Texas)
  • Defendant: Huobi Global Limited (a/k/a HTX) (Seychelles) and About Capital Management (HK) Co., Limited (Hong Kong)
  • Plaintiff’s Counsel: Garteiser Honea, PLLC
• Case Identification: 2:24-cv-00119, E.D. Tex., 02/20/2024
• Venue Allegations: Plaintiff alleges venue is proper because Defendant is subject to personal jurisdiction, regularly conducts business in the district, committed acts of infringement in the district, and is not a U.S. resident.
• Core Dispute: Plaintiff alleges that Defendant’s cryptocurrency trading platform infringes three patents related to systems for conducting financial transactions in a user-selected preferred currency.
• Technical Context: The patents address online financial trading platforms, specifically technology for displaying prices and settling transactions in a trader’s local or preferred currency, which differs from the asset's market currency, to provide cost certainty.
• Key Procedural History: The complaint notes that the asserted patents are part of a family sharing a common priority date and that patent examiners considered art in financial data processing classifications. The complaint does not mention any prior litigation or post-grant proceedings involving the patents.

Case Timeline

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 a problem in prior art financial trading systems where foreign investors wishing to trade assets (e.g., U.S. stocks) had to transact in the asset's market currency (e.g., U.S. Dollars) (Compl. ¶16). This required separate currency exchange steps before and after the trade, creating uncertainty about the final profit or loss due to exchange rate fluctuations that occurred at a different time from the asset transaction (’107 Patent, col. 1:53-60).
• The Patented Solution: The invention proposes a "consolidated trading platform" with a "three-tier architecture" that integrates a brokerage, a market exchange, and a currency exchange (’107 Patent, col. 2:24-29). This system allows a trader to view prices and conduct transactions entirely in a "preferred currency." It does so by obtaining a "prevailing exchange rate" and applying it at the transactional level, so the trader "always knows exactly what he/she may end up with" (’107 Patent, col. 2:31-35).
• Technical Importance: This approach aimed to remove the risk and uncertainty of currency fluctuations inherent in cross-border securities trading by integrating the currency conversion directly into the trading workflow (Compl. ¶17; ’107 Patent, col. 1:61-67).

Key Claims at a Glance

• The complaint asserts independent claim 1 (Compl. ¶36).
• Essential elements of independent 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.
  • Causing a client computer to display an asset in the preferred currency, with costs and fees dynamically changed based on a constantly updated prevailing exchange rate.
  • 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.
  • Performing a currency conversion of the transaction proceeds into the preferred currency.
• The complaint does not explicitly reserve the right to assert dependent claims.

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 application leading to the ’107 Patent, this patent addresses the same core problem: the "cost and risk" incurred when a currency conversion is performed separately from an asset transaction in a different currency (’863 Patent, col. 1:50-54).
• The Patented Solution: The invention provides a method where a trading server, coupled to currency and market exchanges, displays asset values in a trader's preferred currency by reference to a prevailing exchange rate (’863 Patent, Abstract). The system is configured to calculate this rate "right before an transaction pertaining to the asset happens" to ensure the trader has "certain knowledge of what to pay for the asset, or profit or loss" (’863 Patent, col. 10:9-15).
• Technical Importance: The technology focuses on providing a real-time, or near-real-time, valuation of an asset in the user's currency, thereby abstracting away the complexities and risks of manual or delayed currency conversion (Compl. ¶18; ’863 Patent, col. 2:1-3).

Key Claims at a Glance

• The complaint asserts independent claim 1 (Compl. ¶52).
• 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, with its valuation changing in accordance with a constantly updated prevailing exchange rate.
  • Conducting a transaction on the market exchange.
  • Receiving a settlement notification where the transaction is executed with a calculated prevailing exchange rate.
• 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 No. 11,449,930, “Method and Apparatus for Trading Assets in Different Currencies,” Issued Sep. 20, 2022.
• Technology Synopsis: This patent, a continuation in the same family, describes a system for trading assets across different currencies. It focuses on a trading server that calculates and displays costs in a trader’s selected currency by using a "prevailing exchange rate" determined in reference to at least one currency exchange server, and then executes the transaction based on a newly calculated rate to ensure transactional certainty (’930 Patent, col. 8:1-3; Claim 1).
• Asserted Claims: The complaint asserts independent system claim 12 (Compl. ¶68).
• Accused Features: The complaint alleges that the system comprising Defendant's trading servers, which are coupled to currency and market exchange servers, infringes this patent (Compl. ¶68).

III. The Accused Instrumentality

• Product Identification: The "HTX trading platforms and systems," including the HTX App and associated backend infrastructure, collectively referred to as the "Accused Instrumentalities" (Compl. ¶31).
• Functionality and Market Context: The Accused Instrumentalities constitute a cryptocurrency trading platform that allows users to buy and sell digital assets (Compl. ¶31). The complaint provides a screenshot from an HTX support page showing the user interface for trading the BTC/USDT pair, which includes fields for limit order price, amount, and a "Buy BTC" button (Compl. p. 8). Plaintiff alleges these platforms are available to U.S. users via the internet and application stores and have been since late 2020 (Compl. ¶5).

IV. Analysis of Infringement Allegations

’107 Patent Infringement Allegations

’863 Patent Infringement Allegations

• Identified Points of Contention:
  • Scope Questions: A question may arise as to whether the term "asset" as used in the patents, which provides examples like stocks, oil, and bonds, can be construed to cover cryptocurrencies (’107 Patent, col. 2:21-23). Further, it may be disputed whether the "three-tier architecture" described in the specification maps onto the potentially more integrated or decentralized architecture of a cryptocurrency exchange.
  • Technical Questions: The complaint alleges the accused platform calculates a "prevailing exchange rate... right before the transaction takes place" as required by the claims (Compl. ¶36(v)). A key technical question will be what evidence demonstrates that the HTX platform performs this specific, timed calculation to achieve transactional certainty, rather than merely displaying a price converted using a periodically updated, but not necessarily transaction-specific, rate.

V. Key Claim Terms for Construction

Terms from the ’107 Patent

• The Term: "trading server"

• Context and Importance: This is the central component of the claimed system. Its construction will be critical to determining if Defendant's distributed, cloud-based infrastructure constitutes the claimed "server." Practitioners may focus on this term because the nature of a "server" in 2007, when the application was filed, may differ from modern cryptocurrency platform architectures.

• Intrinsic Evidence for Interpretation:

  • Evidence for a Broader Interpretation: The specification describes the computing machine as potentially being a "server or servers provided by a financial institution," suggesting it is not limited to a single physical machine (’107 Patent, col. 3:21-23).
  • Evidence for a Narrower Interpretation: The figures depict distinct servers for the brokerage (208), currency exchange (206), and market exchange (210), which could suggest the "trading server" is the specific brokerage component, distinct from the others (’107 Patent, Fig. 2A).

• The Term: "prevailing exchange rate... obtained from the one or more currency exchange servers right before the transaction takes place"

• Context and Importance: This limitation defines the core technical mechanism for providing price certainty. The dispute will likely center on what "right before" means and whether the accused system's rate calculations meet this temporal requirement.

• Intrinsic Evidence for Interpretation:

  • Evidence for a Broader Interpretation: The claim language requires the rate to be calculated from "all exchange rates obtained," which could be interpreted as any rate available to the system at the time of the transaction (’107 Patent, cl. 1).
  • Evidence for a Narrower Interpretation: The patent's objective is to "prevent uncertainty in currency exchanges in another time" (’107 Patent, cl. 1). This purpose could support a narrow construction requiring a rate that is locked in for the specific transaction, as opposed to a mere displayed rate that could change between order placement and execution.

VI. Other Allegations

• Indirect Infringement: The complaint alleges inducement of infringement by asserting that Defendant provides the HTX platform and advertises its use, thereby encouraging and instructing its users to perform the steps of the claimed methods (Compl. ¶¶41-44, 57-60, 73-76).
• Willful Infringement: Willfulness is alleged based on two theories. First, that Defendant will have post-suit knowledge of the patents upon service of the complaint (Compl. ¶¶40, 56, 72). Second, that Defendant was willfully blind pre-suit due to an alleged "practice of not performing a review of the patent rights of others first for clearance" before launching its services (Compl. ¶¶45, 61, 77).

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

• A core issue will be one of definitional scope: can the patents’ claims, written with traditional financial instruments like stocks and commodities in mind and describing a "three-tier" server architecture, be construed to cover the technology and structure of a modern cryptocurrency exchange?
• A key evidentiary question will be one of functional proof: what evidence will be presented to show that the accused HTX platform performs the specific, temporally-defined function of calculating a "prevailing exchange rate... right before the transaction" for the express purpose of settlement certainty, as the claims require, versus simply displaying converted prices based on periodically updated market data feeds?
• A third question will relate to patentability: given the subject matter, and notwithstanding the complaint's arguments regarding the patent office's review, the case may involve scrutiny of whether the claims are directed to patent-eligible subject matter under 35 U.S.C. § 101 or are merely an abstract idea of performing currency conversion implemented on a generic computer system.