Reuters slapped with $50 million software suit; Savvis moves to dismiss 'strip club' action
17 November 2005 | 8730 views | 0
Reuters is facing a $50 million patent lawsuit from a UK software house that threatens to derail the proposed $1.9 billion sale of its Instinet brokerage unit to Nasdaq.
The suit has been filed by Ariel Communications, a dealing software firm that claims to retain rights over the original code used to build the Instinet trading platform.
The code in question is already the subject of a patent infringement suit filed by Reuters against Bloomberg, after Ariel granted Bloomberg a licence to exploit the technology in 2004.
Ariel director Mike Little told UK broadsheet The Guardian that Bloomberg is in negotiations to acquire Ariel, further raising the legal stakes.
Little told the paper that Ariel signed a deal with the electronic brokerage in 1975 giving it perpetual rights over all future developments of the Instinet software. The deal was agreed, he says, after Ariel invested $175,000 in Instinet to help keep the business afloat.
"We want declaratory relief saying you can't go through with this merger until you recognise Ariel's continuing rights," he told the paper.
Reuters has dismissed the Ariel suit as being "without merit" and says it will defend itself vigorously against the claims.
The threat of litigation comes at an awkward time for Reuters, which agreed to sell Instinet to Nasdaq in April.
Nasdaq rival Nyse, meanwhile, appears to have cleared the last remaining hurdle to its proposed merger with all-electronic exchange ArcaEx after agreeing to revalue the deal in settlement of legal threats by rebel seatholders. The US stockmarket operator has been told by the courts that it must obtain an 'independent' valuation of the proposed deal after ten exchange members objected to the dual advisory role played by Goldman Sachs which brokered the marriage. Citigroup has been offered the role of independent expert.
Both Nyse/Archipelago and Nasdaq/Instinet received a boost yesterday when the US Department of Justice gave the mergers a green light.
In a separate legal case, telecomms firm Savvis has filed a motion to dismiss a complaint brought by American Express over disputed card charges made on an American Express card issued to Robert McCormick, Savvis Chairman and CEO.
McCormick was suspended from his post last month after American Express moved to sue the telecomms utility over an unpaid $241,000 bill allegedly racked up by the Savvis CEO in a Manhattan strip club.
Savvis says it has moved to dismiss the complaint on the grounds that "the alleged charges were not "business expenses".