May 7 (Bloomberg) -- CBOE Holdings Inc.’s Chicago Board Options Exchange must face patent-infringement claims brought by International Securities Exchange over an automated system for trading options contracts, a U.S. appeals court said.
The U.S. Court of Appeals for the Federal Circuit said today a trial judge erred in interpreting key aspects of the ISE patent, and remanded the case for further proceedings. The lower court had ruled that CBOE’s Hybrid Trading System didn’t infringe the patent.
CBOE sued ISE in 2007 after it received a letter from ISE demanding that it pay patent royalties and was sued by ISE in New York. Chicago-based CBOE sought a court ruling that cleared its system of any infringement claims.
The Hybrid system blends a traditional calling of trades with electronic execution, according to the ruling. CBOE, the oldest U.S. options exchange, is the biggest operator of U.S. options markets by volume.
ISE is owned by Frankfurt-based Deutsche Boerse AG’s Eurex subsidiary. In March, the company said it may introduce a second platform for U.S. equity options.
The case is Chicago Board Options Exchange Inc. v. International Securities Exchange LLC, 2011-1267, U.S. Court of Appeals for the Federal Circuit (Washington). The lower court case is Chicago Board Options Exchange v. International Securities Exchange LLC, 07cv623, U.S. District Court for the Northern District of Illinois (Chicago).