ESpeed shares plummet as BrokerTec beats patent claim

ESpeed shares plummet as BrokerTec beats patent claim

A US judge has ruled that electronic trading technology used by Icap subsidiary BrokerTec does not infringe a patent held by its rival eSpeed.

Shares in eSpeed fell more than 11% to close at $10.55 following confirmation of the ruling, which came in a pretrial motion by Judge Kent Jordan just before the start of a jury trial in Delaware.

ESpeed, which is owned by Cantor Fitzgerald, filed a patent-infringement lawsuit in July 2003 alleging that BrokerTec's electronic trading system infringed its "580" patent which protects its own dealing system.

In January last year eSpeed failed to secure a preliminary injunction against BrokerTec. At the time, the US District Court for the District of Delaware ruled that "BrokerTec has raised a substantial question as to the validity of the 580 patent" and that if proven BrokerTec's "claim of inequitable conduct would invalidate the entire patent".

Espeed failed to convince the judge to reconsider this ruling ahead of pre-trial proceeding, and was forced to admit in court yesterday that it couldn't prove that BrokerTec infringed its 580 patent.

A jury will still hear testimony on the second issue bought to trial concerning Icap's counter suit challenging the validity of the eSpeed patent.

Scandinavian trading technology vendor OM Technology was also named in the suit against BrokerTec. ESpeed later filed for damages of up to $64 million against OM Technology for infringement of its patent. In a statement issued last year, OM said it believed the eSpeed patent is invalid and that it would contest the damages claim.

A claim bought by eSpeed against Garban, another Icap unit, is still set to go ahead.

ESpeed has previously secured multi-million dollar pay-outs from US derivatives exchanges for infringements of the Wagner patent, which describes the matching of bids and offers in electronic futures and options trading.

Separately, eSpeed is one of the firms targeted by Trading Technologies which has filed its own technology patent infringement lawsuit against the bond trading network.

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