Nasdaq Sues IEX for Trading, Data Patent Infringements

The suit alleges that IEX hired four Nasdaq technology staff with knowledge of Nasdaq’s technology and patents, who then used that knowledge to create IEX’s trading platform and closing auction process, which is “substantially similar” to Nasdaq’s own closing auction. The lawsuit also alleges that IEX acknowledges its Auction Information is substantially similar to the Net Imbalance Order Indicator. It also cites IEX statements that the startup created its own processes after reviewing those of Nasdaq and other exchanges, suggesting that in doing so, IEX was copying the processes of other exchanges.

Overall, the lawsuit claims infringement of a number of patents covering Nasdaq’s processes and products, including the method by which it updates datasets. Nasdaq says the lawsuit aims to “stop, and obtain fair compensation for, IEX’s unauthorized reliance on Nasdaq’s technology.”

The move follows IEX receiving approval to operate as an exchange and list companies for trading, and the introduction of its own auction process, placing it in direct competition with Nasdaq and other primary exchanges.