Intercurrency Software LLC v. Bitstamp Ltd

I. Executive Summary and Procedural Information

• Parties & Counsel:
  • Plaintiff: Intercurrency Software LLC (Texas)
  • Defendant: Bitstamp Ltd. (United Kingdom)
  • Plaintiff’s Counsel: Garteiser Honea, PLLC
• Case Identification: 2:24-cv-00216, E.D. Tex., 03/28/2024
• Venue Allegations: Plaintiff alleges venue is proper because Defendant is not a U.S. resident and is subject to personal jurisdiction in the district, allowing suit in any judicial district.
• Core Dispute: Plaintiff alleges that Defendant’s cryptocurrency trading platforms infringe three patents related to consolidated financial trading systems that display asset prices and settle transactions in a user's preferred currency.
• Technical Context: The technology addresses the complexities of cross-currency financial transactions by integrating asset and currency exchange data, aiming to provide traders with real-time price certainty in their local currency.
• Key Procedural History: The complaint notes that the patents-in-suit were allowed by the U.S. Patent and Trademark Office after examination, arguing this supports their validity and patent eligibility over the prior art.

Case Timeline

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

U.S. Patent No. 10,062,107 - Consolidated Trading Platform

(Issued August 28, 2018)

The Invention Explained

• Problem Addressed: The patent describes a problem for investors trading assets in a foreign currency, such as a Chinese investor trading U.S. stocks. Such investors faced uncertainty about their actual profit or loss because currency exchange rates could fluctuate between the time of the trade and the eventual conversion of funds back to their home currency (’107 Patent, col. 1:38-60). The patent identifies a need for a system that performs currency conversion "at a transactional level" to eliminate this uncertainty (’107 Patent, col. 1:61-64).
• The Patented Solution: The invention proposes a "three-tier architecture" that includes a brokerage, a market exchange for assets, and a currency exchange (’107 Patent, col. 2:25-33). This consolidated platform presents all prices, transaction data, and settlements to the user in their "preferred currency," thereby allowing a trader to know "exactly what he/she may end up with a transaction of an asset" in real time (’107 Patent, col. 2:33-35).
• Technical Importance: The technology aims to remove the cost and risk associated with currency conversion in international investing by integrating the processes and providing real-time pricing certainty to traders (’107 Patent, col. 2:50-55).

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 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, which involves determining a prevailing exchange rate and displaying all costs and fees in the preferred currency.
  • Conducting a transaction by transmitting a request to a market exchange server.
  • Receiving a settlement notification and calculating a prevailing exchange rate "right before the transaction takes place."
  • Performing a currency conversion of the transaction from the market currency to 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 September 15, 2020)

The Invention Explained

• Problem Addressed: As a continuation of the application leading to the ’107 Patent, the ’863 Patent addresses the same core problem: traditional systems do not perform currency conversion "at a transactional level," which introduces risk and uncertainty for traders operating across different currencies (’863 Patent, col. 1:61-64).
• The Patented Solution: The patent describes a method for displaying asset information on a client computer in a preferred currency. The system architecture unifies a brokerage, asset exchange, and currency exchange to present prices and transaction data to a user in their chosen currency, regardless of the asset's native market currency (’863 Patent, Abstract; col. 2:25-33). This ensures the user sees a single, all-inclusive price that accounts for real-time exchange rates (’863 Patent, col. 5:15-35).
• Technical Importance: This approach simplifies the trading process for international investors by abstracting away the complexities of separate currency conversion steps and providing a unified, real-time view of their financial position (’863 Patent, col. 2:50-55).

Key Claims at a Glance

• The complaint asserts independent Claim 1. (Compl. ¶51).
• Essential elements of Claim 1 include:
  • Coupling a trading server 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 the asset in the preferred currency.
  • A key aspect of the display step is that 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."
• The complaint does not explicitly reserve the right to assert dependent claims.

U.S. Patent No. 11,449,930 - Method and Apparatus for Trading Assets in Different Currencies

(Issued September 20, 2022)

The Invention Explained

• Technology Synopsis: Continuing the same patent family, this invention describes a method and system for trading assets across different currencies. The technology aims to solve the problem of price uncertainty in international finance by integrating a trading server with both market and currency exchanges, allowing a trader to view costs and execute transactions in a single preferred currency based on a dynamically updated exchange rate. (’930 Patent, Abstract).

Key Claims at a Glance

• Asserted Claims: The complaint asserts independent Claim 12. (Compl. ¶67).
• Accused Features: The complaint alleges that Defendant’s trading platform, specifically its "trading servers coupled to one or more currency exchange servers... and one or more market exchange servers," infringes the patent. (Compl. ¶67).

III. The Accused Instrumentality

Product Identification

The complaint identifies the "Bitstamp trading platforms and systems" as the "Accused Instrumentalities." (Compl. ¶30).

Functionality and Market Context

• The Accused Instrumentalities are described as a "consolidated trading platform" for "crypto trading" that is accessible via the internet and software applications. (Compl. ¶3, ¶30, ¶36). The complaint provides a screenshot of the "Bitstamp Pro" user interface, which shows a real-time price chart for a cryptocurrency pair (BTC/USD), an order book with buy and sell orders, and controls for executing market, limit, and stop orders. (Compl. p. 8). This visual, titled "screenshot Bitstamp's offering of Accused Instrumentalities," depicts a comprehensive trading environment. (Compl. p. 8).
• The complaint alleges that Defendant "manufactures, sells, offers for sale, owns, directs, and/or controls the operation of the Accused Instrumentalities and generates substantial financial revenues and benefits therefrom." (Compl. ¶34).

IV. Analysis of Infringement Allegations

’107 Patent Infringement Allegations

• Identified Points of Contention:
  • Scope Question: The patent’s examples focus on traditional securities like stocks and commodities (’107 Patent, col. 2:20-24). A central question will be whether the term "asset" can be construed to read on the "cryptocurrencies" traded on the accused platform.
  • Technical Question: Claim 1 requires calculating the prevailing exchange rate "right before the transaction takes place" to prevent "uncertainty in currency exchanges in another time." The complaint alleges this functionality but does not specify how the Bitstamp platform technically achieves this precise timing. The court may require evidence demonstrating that the accused platform’s operation matches this specific temporal and functional requirement.

’863 Patent Infringement Allegations

• Identified Points of Contention:
  • Evidentiary Question: The complaint's allegations for the ’863 Patent are conclusory, primarily reciting the first limitation of Claim 1 (Compl. ¶51). A key point of contention will be whether Plaintiff can produce evidence that the accused platform performs the specific function of having the displayed "valuation" of an asset change solely due to fluctuations in the exchange rate while the asset's market price remains static, as required by the claim.
  • Scope Question: As with the ’107 Patent, the scope of terms like "asset" and "trading server" will be critical in determining if the claims, written with traditional financial markets in mind, apply to a cryptocurrency exchange.

V. Key Claim Terms for Construction

For the ’107 and ’863 Patents:

• The Term: "asset"

• Context and Importance: This term is central because the patents’ background and examples describe traditional financial instruments like stocks, bonds, and oil (’107 Patent, col. 1:40-41; col. 2:22-23), while the accused platform trades cryptocurrencies (Compl. ¶3). The applicability of the patents to the accused technology hinges on whether "asset" is construed broadly enough to encompass digital currencies.

• Intrinsic Evidence for Interpretation:

  • Evidence for a Broader Interpretation: The specification lists examples of assets non-exclusively, stating they "include, but are not limited to, a wide array of electronically traded financial assets such as stocks, bonds, options, commodities..." (’107 Patent, col. 2:19-22). This "include, but are not limited to" language may support a construction that is not limited to the enumerated examples.
  • Evidence for a Narrower Interpretation: The entirety of the "Background" section is framed around the problem of an investor in China trading "securities listed on a US exchange" and "US dollar-denominated stock" (’107 Patent, col. 1:39-51). This context, focused on traditional, nationally-regulated securities, could support an interpretation that excludes novel instruments like cryptocurrencies.

• The Term: "trading server"

• Context and Importance: Practitioners may focus on this term because the infringement allegations depend on mapping the components of the Bitstamp platform to the claimed server architecture. The patent describes a "three-tier architecture" including a brokerage server, a market exchange server, and a currency exchange server (’107 Patent, Fig. 2B; col. 2:25-28). Whether Bitstamp's potentially more integrated or distributed system constitutes the claimed "trading server" will be a key issue.

• Intrinsic Evidence for Interpretation:

  • Evidence for a Broader Interpretation: The claims themselves do not require three separate physical servers, only that the "trading server" is "coupled to" currency and market exchange servers, which could describe a logical software architecture rather than a specific hardware configuration (’107 Patent, col. 8:46-51).
  • Evidence for a Narrower Interpretation: Figure 2A explicitly depicts three distinct servers (206, 208, 210) connected via a network, representing the currency exchange, brokerage, and market exchange, respectively (’107 Patent, Fig. 2A). A defendant may argue this exemplary embodiment limits the term to a similarly structured system.

VI. Other Allegations

• Indirect Infringement: The complaint alleges that Defendant induces infringement by its customers. The basis for this allegation is Defendant's advertising and provision of the infringing platform, which allegedly instructs and encourages users to operate the system in a manner that directly infringes the patents. (Compl. ¶40-43, ¶56-59).
• Willful Infringement: The complaint alleges willfulness on two grounds. First, it asserts that infringement will be willful post-suit, as the filing of the complaint serves as actual notice of the patents. (Compl. ¶39, ¶55, ¶71). Second, it alleges pre-suit willful blindness, claiming on information and belief that Defendant has a "practice of not performing a review of the patent rights of others first for clearance or to assess infringement thereof prior to launching products and services." (Compl. ¶44, ¶60, ¶76).

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

The resolution of this case may depend on the court's answers to several central questions:

1. A core issue will be one of definitional scope: Can terms like "asset" and "trading server", which are described in the patent in the context of traditional international securities trading, be construed to cover the "cryptocurrencies" and integrated system architecture of the accused trading platform?

2. A second key issue will be one of evidentiary proof: Can the Plaintiff provide sufficient technical evidence to demonstrate that the Accused Instrumentalities perform the specific, nuanced functions recited in the claims, such as calculating an exchange rate "right before the transaction takes place" (’107 Patent) or having an asset's displayed "valuation" change due to exchange rate fluctuations alone (’863 Patent)?

3. Finally, the case raises a question of technological evolution: Does the patented invention represent a specific solution to a problem in legacy financial systems, or is it a foundational concept for cross-currency trading that is broad enough to read on modern, decentralized, or crypto-native financial platforms?