I personally think TT is making room for Spooz. A little reading about TT's attempts to corner the market with it's patents, and what Spooz has done to go around those patents is real food for thought. If Spooz has indeed come to terms with TT and is in talks with brokerages, IMO, the revenues from value added fees will far outstrip individual subscriber fees. Is Spooz in a position to offer everything and more at a fraction of the cost? I think so. I hope so. If so, they absolutely can not be brushed aside. It reminds me of the Microsoft-Open Source battle. A few articles in chronological order. The first two articles are exclusively about TT and it's apparent choke hold on the markets via it's proprietary software patents. The third is about a little software startup claiming to have found a way around the patents. The fourth describes how the start up company will be offering connectivity through TT. Who is that little company? :
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Patent roulette: technology patent threatens status quo.
By Collins, Daniel P.
Publication: Futures (Cedar Falls, Iowa)
Date: Wednesday, December 1 2004
Subject: Software industry (Intellectual property), Software industry (Cases), Patent infringement (Cases)
Company: Trading Technologies Inc. (Intellectual property), Trading Technologies Inc. (Cases)
Location: United States
There was a nervous undercurrent at the recent Futures Industry Conference in Chicago stemming from the breadth of market patents awarded to Trading Technologies and the subsequent settlements of two infringement lawsuits TT initially filed. Just when competition has reduced exchange fees, licensing
fees loom as a possible new tax on brokerage firms.
TT's suit against fellow technology firm E-Speed is pending a December court hearing, but the quick settlement of suits filed against Goldenberg Hehmeyer and Kingstree Trading could establish a user-fee benchmark. Goldenberg Hehmeyer agreed to pay TT a $0.05 per contract user fee for one year and $0.10 in subsequent years, and Kingstree agreed to a $0.10 fee. Both firms acknowledged in their settlements that they had violated the TT patent.
"It seems to me that they got these patents, and then they seem to be selectively going around with firms they have a close relationship with to get them to acknowledge the patent and the proprietary nature of the software and agree to some kind of settlement," says one senior industry executive. "That smells a little bit to me--that there is some kind of quid pro quo going on between TT and its close allies."
The settlements appear out of the ordinary even to long-time observers of patent law.
"I have never been involved in a patent suit that was filed and settled in two days," said patent attorney Joseph Laughon with Clifford Chance US. Laughon said it is atypical for a defendant even in settling to admit to infringement.
CHANGING THE MODEL
While at first glance the TT patents seem to doom its fellow independent software vendors--a majority of whom have failed to make a profit and would now face the possibility of litigation--it could be a catalyst for changing a market model biased against the ISVs.
A source close to TT acknowledges that the ISV approached the Chicago Board of Trade (CBOT) and Chicago Mercantile Exchange (CME) asking the exchanges to compensate TT 2.5 cents for each electronic contract executed, the basis of the fee being TT's intellectual property and distribution network. The source says if the exchanges agreed to the fee, TT would not take further legal action against the brokerage community over its intellectual property and would void the current settlements with Goldenberg Hehmeyer and Kingstree.
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Patent this!
By Collins, Daniel P.
Publication: Futures (Cedar Falls, Iowa)
Date: Saturday, January 1 2005
Subject: Securities industry (Intellectual property), Software, Futures markets
Product: Securities & Commodities Services, Computer Software
When technology firm Trading Technologies was awarded patents for its depth of market order entry software, it sent a shudder through the industry. What does it mean for other software firms whose front-ends look similar to TTs? And with few profitable software firms, would TT turn to the deeper
pockets of brokerages and exchanges to cash in on its patents?
Harris Brumfield. CEO of independent software vendor Trading Technologies, estimates that 50% of the electronic trading volume at the world's four largest futures exchanges is executed through TT front-end software. And of the remaining 50%, TT contends much of it is executed through systems that are infringing on TT's patents. Thus, TT is attempting to extract a 2.5 cents fee per every electronic contract executed at all four of the major exchanges. Indeed, a source close to TT says there have been substantive discussions between TT and the Chicago exchanges regarding TT's request.
Since TT was awarded two patents for "click-based trading with intuitive display of market depth" by the U.S. Patent Office in August it has been awarded a similar patent in the United Kingdom and the European Patent Office has issued an intent to grant a patent relating to the same technology. The widening of the patents to a global arena allows TT to approach Eurex and Euronext.Liffe with its plan.
However, TT is not suing the exchanges, and no one has suggested that the company would have any grounds to sue the exchanges, but the fees ostensibly would help TT distribute exchange products and would be less disruptive to the industry than a 10 cents per contract fee charged to all FCMs using front-end software that TT says infringes on its patents. TT would be willing to drop current litigation and void service fee agreements stemming from settled litigation if the exchanges would agree to the subsidy, according to sources close to TT.
"They will drop all litigation against people and firms infringing, and they will open up all intellectual property for everyone to use not only on this but on patents pending forever," the TT source says, adding that if TT gets a subsidy from the exchanges, the company would lower the price of its software or possibly eliminate it.
Still many feel the exchanges are an odd target because they are not users of the software, though TT argues the exchanges benefit from it.
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Out on a technicality? Firm claims loophole in TT patents.
By Collins, Daniel P.
Publication: Futures (Cedar Falls, Iowa)
Date: Tuesday, March 1 2005
Subject: Software industry (Intellectual property), Software industry (Contracts)
Company: Trading Technologies Inc. (Contracts), Trading Technologies Inc. (Intellectual property)
Location: United States
When Paul Strickland, the CEO of the trading software firm Spooz Inc., asked someone to broker a deal between Spooz and Trading Technologies, he was told that "you don't tug on superman's cape." The reference was apt because Spooz is offering what it claims to be a type of kryptonite that will
repel liability to TT's intellectual property.
Spooz, a former introducing broker that went public, moved from Austin to Chicago and expanded to provide electronic trading tools. It announced in January that it had filed provisional patents for its Ticket Toolz software package. Spooz claims that Ticket Toolz, which will be available in March, offers independent software vendors, futures commission merchants and institutional trading operations a work around solution to TT's patents.
The software, which was originally developed to aid Spooz brokerage customers with their hedges, allows end users to create trading screens using Microsoft Excel.
"It is a tool to develop custom trading screens, including anything that may be under patent protection by TT's patents," Strickland says.
Spooz claims it also will provide a Web-based platform for the free exchange of trading screen templates developed by the private sector. Customers would be able to select templates off the platform and through Ticket Toolz create their own front end. Strickland claims that if you build your own product based on patented material and use it for yourself, the patents don't apply.
Patent attorney Joseph Laughon with Clifford Chance US disagrees and says Strickland's claims are not well grounded in patent law. Laughon says that under the statute, anyone making, using, selling or offering to sell an infringing apparatus is liable.
Whether or not Spooz's claims have merit, if Spooz effectively transfers patent infringement liability downstream to end users, it may make TT's job of protecting its intellectual property more difficult.
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SpoozToolz to Increase Connectivity to Over Twenty Derivatives Exchanges and 110 Brokers Worldwide Via Trading Technologies'...
Publication: Business Wire
Date: Monday, June 11 2007
Subject: Derivatives (Financial instruments), Brokers
CHICAGO -- Spooz, Inc. announced today their plan to provide SpoozToolz[TM] customers with order routing and trade execution through exchange gateways from Trading Technologies International, Inc. (TT). Access to TT's high-performance gateways will enable SpoozToolz customers to connect to over
20 derivatives exchanges around the world and to access the transaction and clearing services of over 110 brokers in the United States, Europe, Hong Kong, Singapore, Japan, China, Australia and Dubai.
"SpoozToolz connectivity to Trading Technologies' gateways provides us with a dynamic marketing advantage because it dramatically increases the number of brokers with potential to distribute our products to millions of their existing customers," stated Paul Strickland Jr. CEO of Spooz, Inc. "An increased number of execution and clearing providers gives customers the flexibility to select the broker of their choice. Offering SpoozToolz at disruptive price points completes the marketing equation and should prove to be very compelling in the market place."
About Spooz, Inc.
Spooz, Inc., (OTC:SPZI) (www.Spooz.com) a publicly traded company based in Chicago, provides a suite of trading solutions designed to simplify financial analysis and order-entry for professional and active traders. Its flagship middleware product, SpoozToolz[TM] and its modules, add built-in trading capabilities to the popular Microsoft[R] Excel[R] software application, combining a customizable interface, streaming quotes, charts, technical analysis, back testing, and electronic trade execution into a simple add-in that becomes part of the Excel tool bar.
About Trading Technologies
Trading Technologies (www.tradingtechnologies.com) develops high-performance trading software for derivatives professionals, including the world's premier exchanges, money-center banks, proprietary traders, securities brokers, Futures Commission Merchants (FCMs), hedge funds and other trading institutions. The company's X_TRADER([R]) software and related services provide direct access to the world's major derivatives exchanges. TTNET[TM], TT's fully managed hosting solution, delivers maximum system stability and fast trade execution via hubs located close to the major exchanges in Chicago, New Jersey, London, Frankfurt, Singapore and Tokyo. Headquartered in Chicago, Trading Technologies maintains a worldwide presence with offices in New York, Houston, London, Frankfurt, Geneva, Singapore, Hong Kong, Tokyo and Sydney. In 2004, Trading Technologies was named the best technology company to work for in Chicago by Chicago magazine and ranked third among all Chicago area employers. In 2006, TT received the prestigious Lighthouse Award from the Illinois Information Technology Association (ITA) as the leading technology company in Illinois.
