Independent US stock exchange IEX said it filed a motion in the US District Court for the District of New Jersey seeking to dismiss Nasdaq’s patent infringement claims.
IEX was made famous by Michael Lewis’ 2014 best-selling book Flash Boys.
IEX pioneered technology such as its “speed bump” — a 38-mile fiber optic coil it says “is designed to negate the high-speed data and technology advantages exploited by predatory traders on Nasdaq and other exchanges for profit.”
In its motion, IEX contends “that Nasdaq’s lawsuit is baseless and that Nasdaq’s patents claim unpatentable abstract ideas.”
IEX further contends “that Nasdaq fails to identify where or how key elements of its alleged inventions appear in IEX’s exchange, or to allege specific facts supporting its claims of indirect and willful infringement.”
Sophia Lee, general counsel at IEX, said in a statement: “We built our own technology with the explicit purpose of being a fundamentally different kind of exchange.
“As we emphasize in our motion to dismiss, IEX is a threat to Nasdaq’s conflicted and lucrative sale of systemic data and technology advantages to high-speed trading firms.
“The timing of Nasdaq’s claims also coincides with IEX’s approval and announced intention to launch a corporate listing business, a business in which Nasdaq has enjoyed a 40+ year duopoly.
“This lawsuit is just the latest in a series of baseless attempts by Nasdaq to stop the march of progress toward a fairer and more transparent market for companies, investors, and brokers.”
Nasdaq, Inc. said in early March it filed its patent infringement lawsuit “aiming to protect Nasdaq’s electronic trading technology from unauthorized use by IEX Group, Inc. and Investors Exchange LLC (IEX).”
Nasdaq said the seven patents asserted in the lawsuit “represent millions of dollars in investment over decades, and cover several industry-leading innovations.”
Nasdaq said: “These patents contribute to the performance of Nasdaq’s trading platforms related to closing auction processes, multi-parallel order processing, matching engine performance, and data feed optimizations.
“The lawsuit asserts IEX knowingly violated this series of Nasdaq patents in the development of its trading platform.”