ISE loses motion to dismiss Cboe lawsuit
16 May 2007 | 1634 views | 0
Today, CBOE, Dow Jones, and McGraw-Hill/Standard & Poor's (S&P) won the right to maintain their lawsuit against the International Securities Exchange (ISE) in Illinois state court.
The court denied ISE's motion to dismiss the lawsuit, which was filed to prevent ISE from misappropriating CBOE's exclusive rights to list and trade index options on the S&P 500 and Dow Jones Industrial Average.
"It has been CBOE's firm view that Illinois state court is the appropriate forum in which to litigate this dispute, and we are gratified by today's decision. Further, we believe the attempt to trade these products without a license - essentially to free ride on CBOE's enormous investment in creating these products - is a disincentive to innovation. We are prepared to vigorously defend our contractual rights with the owners of these indexes, Standard & Poor's and Dow Jones," said CBOE Chairman and CEO William J. Brodsky.
This lawsuit was originally filed in Illinois state court, and ISE subsequently removed the case to Illinois federal court. The Illinois federal court agreed with CBOE and the index providers to return the case to Illinois state court on the basis that there is no federal jurisdiction to consider these state law claims (including misappropriation and unfair competition) and that these claims are not preempted by federal law. The Illinois Supreme Court has recognized that state law forbids the use of proprietary indexes in trading without a license from the index provider.