Making up only around 7% of post-grant trials at the PTAB (according to statistics released by the USPTO from February 2018), the number of petitions for Covered Business Method (“CBM”) reviews has experienced a decline every year since its peak in 2014. With 34 filings in 2017,[1] the 16 filed so far this year in roughly the first quarter of 2018, on first glance, might seem to indicate an upswing in filings. However, filings made by Miami International Holdings (“MIAX”) in the last weeks of March through early April make up nearly half of those filed so far in 2018, indicating that a small number of petitions (in this case, in response to one underlying district court litigation) can make up a large proportion of the CBM footprint at the PTAB.

Following the dispute from its beginning in court, Nasdaq filed a lawsuit in the District of New Jersey on September 1, 2017, alleging that MIAX and its subsidiary companies had infringed claims of seven U.S. patents and had also misappropriated trade secrets by hiring key Nasdaq employees.

MIAX (which runs the MIAX Options and MIAX PEARL exchanges) responded with a Motion to Dismiss on December 4, 2017, arguing, among other things, that the statute of limitations had expired for the trade secrets claims, that an asserted claim of U.S. Patent No. 6,618,707 (“the ’707 patent”) had previously been found invalid, and that all asserted patent claims are directed to the abstract concept of trading financial instruments and are not patent eligible under 35 U.S.C. § 101. A ruling on the Motion to Dismiss is still pending.

Beginning on March 23, 2018, MIAX filed its first petition for CBM review, CBM2018-00021, challenging all current claims of the ’707 patent (the petition notes that claim 4 was previously invalidated in District Court proceedings and as such was not challenged). This petition argues that the claims of the ’707 patent are directed to the abstract idea of “trading a financial instrument according to allocation rules,” which “may include order-type priority and/or size based allocation,” that is ultimately just automation of a process traditionally performed by human trading agents.

On March 27, 2018, MIAX filed CBM2018-00020, challenging all claims of U.S. Patent No. 8,386,371 (“the ’371 patent”). This petition argues that the challenged claims are directed to the abstract idea of “collecting marketing information, identifying the occurrence of an event from the collected market information, and cancelling pending orders,” in a way which is “nothing more than common financial practices implemented using generic computer components operating in a conventional way.” A second filing on March 27, CBM2018-00028, challenged all claims of U.S. Patent No. 7,599,875 (“the ’875 patent”), arguing that the challenged claims are directed to the abstract idea of “receiving, posting, and/or sending financial quote information, from a person to a destination.”

MIAX also filed CBM2018-00029 on March 27, challenging all claims of U.S. Patent No. 7,747,506 (“the ’506 patent”). This petition argues that the challenged claims are directed to the abstract idea of “monitoring the online status of a primary recipient” to allow redirection of a message regarding security trading to be redirected to a backup recipient. The petition further alleges that the claims are unpatentable under 35 U.S.C. § 112 for inadequate written description.

On March 29, MIAX filed CBM2018-00030, challenging all claims of U.S. Patent No. 7,921,051 (“the ’051 patent”). The petition argues that the claims are directed to the abstract idea of “routing information to an assigned destination using a lookup table.” On March 30, MIAX filed CBM2018-00031, challenging all claims of U.S. Patent No. 7,246,093 (“the ’093 patent”). The claims are argued to be directed to the abstract idea of “allocating an executing an order based on selected information and responses that are received within a predetermined time period.”

Finally, on April 2, MIAX filed CBM2018-00032, challenging the last of the seven asserted patents, U.S. Patent No. 7,933,827 (“the ’827 patent”). The petition challenged only those claims asserted in the underlying District Court litigation, arguing that the claims are directed to the abstract idea of “routing information to an assigned destination using generic computer technology.”

Of note is that MIAX is represented by both Reed Smith LLP and Fish & Richardson P.C. in the district court litigation. In the litigation, Fish & Richardson is indicated as having their representation exclude Counts III-VI, which refer to the infringement allegations of the ’875, ’506, ’051, and ’827 patents. The same firms are handling the CBM petitions and similarly follow these lines, with Reed Smith representing MIAX for the petitions challenging the above four patents, and  Fish & Richardson representing MIAX for the matters concerning the ’093, ’371, and ’707 patents.

In the district court litigation, Nasdaq has challenged Fish & Richardson’s representation of MIAX as to any claim, arguing in a Motion to Disqualify filed March 2, 2018, that the firm had served a prosecution counsel to Nasdaq for thirteen years and had prosecuted the four patents in suit from which Fish has excluded their representation. On April 2, 2018, Fish filed a brief in opposition, its arguments including that all prosecution representation ended six years previously, that screens were put in place regarding the four patents, and that the remaining counts presented no conflict.

It will be interesting to note how the District Court rules on the Motion and whether the ruling (or the underlying alleged conflict) might impact Fish’s representation of MIAX in the CBM reviews.

We will provide updates should there be any major developments in the CBM proceedings.

 

[1] These numbers based on available petitions as found in the PTAB End to End (E2E) System.