TD Ameritrade is in a patent troll’s crosshairs.
Communication Interface Technologies, a patent assertion entity based in Atlantic City, N.J., filed a patent infringement complaint against TD Ameritrade in the Eastern District of Texas last Friday.
CIT asserted in the complaint that TD Ameritrade Advisor Client, which gives RIA clients the ability to readily review their assets custodied at TDA, infringed on three of its patents obtained between 2003 and 2012 for client-server communications. CIT claims that TDA infringed on its patents in four other mobile apps as well, including TD VR Kit, TD Ameritrade Mobile, TD Ameritrade Authenticator and thinkorswim Mobile.
Patent assertion entities, pejoratively nicknamed patent trolls, are individuals or companies that acquire patents from third-parties but do not produce any goods or services themselves. Instead, PAEs pursue or sue other companies they claim have infringed on the patents they own.
PAEs are not new in financial services either. In the space of a year between 2013 and 2014, a law firm following such cases found that one PAE had filed patent infringement suits against eight of the top U.S. banks.
There are different flavors of PAEs, says Matthew Bernstein, an intellectual property litigator and trial attorney at Perkins Coie LLP, based in Seattle. There are businesses that once sold products or services; businesses that have a product or service but, for whatever reason, no longer invest in research and development; and businesses that acquire patents to assert them.
Eric Dowling, the co-owner of CIT, has 48 pending or granted patents to his name. A handful are with partner Mark Anastasi, according to Justia, a legal information retrieval website. Through Dowling’s other entities, such as the Patent Monetization Association, he owns patents acquired from technology companies that were looking to liquidate their patent portfolios.
According to CIT’s complaint, one of its patents was used against Toshiba America in 2003 and 2004 when Dowling and Anastasi operated under the moniker East Texas Technology Partners. Both cases were settled before any pretrial hearings. Two other patents have been recently used to file infringement complaints in eight other cases, one of which involved Capital One Financial Corp.
CIT also filed a complaint against JP Morgan Chase on the same day as it did against TDA. CIT is seeking a jury trial and a monetary award for damages and its attorneys fees.
TD Ameritrade doesn’t comment on pending litigation, according to a company spokesperson, and CIT’s legal representation, the Devlin Law Group, did not respond in time for publication.
It’s been years since the latest patent litigation explosion in the mid-1990s using infringement as a means of monetization. And a shorter period since the U.S. Supreme Court slowed down this bustling industry with decisions that ended up mitigating their proliferation. For example, the Supreme Court found in 2017 that lawsuits must be filed in districts where the defendant firm was incorporated.
Prior to the ruling, PAEs often filed suit in the Eastern District of Texas where cases moved faster and claimants received favorable outcomes in the form of court rulings or settlements.
TD Ameritrade has several locations in Plano, Texas, which falls under the Eastern District, and CIT claims that TDA has committed acts of infringement there.
Since the U.S. Supreme Court’s review and findings of the patent venue statute in 2017, the top hot spot for PAE filings has become the District of Delaware, where many companies are incorporated. The Northern District of California has the third-highest volume of patent cases, according to Lex Machina’s 2019 Patent Litigation Report.