“eSpeed Patent Ruled Unenforceable”

On March 20, 2007, the Court of Appeals for the Federal Circuit (the “Federal Circuit”) affirmed the decision of the District Court of Delaware in eSpeed, Inc v. BrokerTec USA, LLC, Case No. 2006-1385 (Fed. Cir. 2007), holding eSpeed’s patent for its automated trading system unenforceable under the doctrine of inequitable conduct – ending (for now) a four-year battle closely watched by the financial industry. The eSpeed case, one of the first patent cases to affect the financial industry directly, joined a core group of patent cases decided after the 1998 decision in State Street v. Signature Financial that have fueled the perception that the U.S. Patent & Trademark Office (the “PTO”) has been issuing patents of “suspect validity” (to borrow Justice Kennedy’s phrase in the Mercexchange v. eBay case).

In State Street, the Federal Circuit stunned the financial industry and the patent community generally by upholding State Street Bank’s business methods patent for its “hub and spoke” mutual fund management system. Prior to State Street, it was commonly understood among patent professionals that methods of doing business were not patentable subject matter