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The U.S. Patent and Trademark Office’s Patent Trial and Appeal Board (PTAB) has instituted postgrant reviews of three patents owned by the Chicago Board Options Exchange Inc. that are at the center of a $525 million suit it filed against the International Securities Exchange LLC. The move could result in the invalidation of the patents.

Winston & Strawn partner Michael Murray, who represents the ISE, petitioned the PTAB to review the patents under the “covered business method” review procedure established under the America Invents Act. The review allows an accused infringer to challenge patents in a minitrial before the PTO’s board, which must decide the question of validity within a year. Before agreeing to institute a full review, the PTAB analyzes arguments presented by both sides and decides to hear a case only if it concludes that the asserted patents are “more likely than not” invalid.

“The question remains whether the claims merely recite an abstract idea and, therefore, fall under the abstract idea exception,” the PTAB wrote in one of its three decisions granting the CBM review. “Based on the record before us, petitioner has persuaded us that it is more likely than not that they do.” (The other two decisions are here and here.)

The PTAB decision, issued Tuesday, stems from a complaint filed by CBOE in U.S. district court in 2012 alleging that rival ISE infringed its patents related to an automated options trading system that monitors quote risk and automatically adjusts quotes when risk exposure gets too high. The case was initially filed in Chicago, but Murray succeeded in having it transferred to the Southern District of New York in February 2013. The district court case has been stayed pending the outcome at the PTO.

Murray told the Litigation Daily he could not comment on the case. Joseph Hynds of Rothewell, Figg, Ernst & Manbeck, who represents the CBOE, could not be reached.

To date, most of the completed postgrant reviews have resulted in the invalidation of the challenged patents. But because the reviews are relatively new, only a small percentage of petitions filed have so far been completed. While statistics favor the challenger, the board’s decision to hear this case is by no means a guarantee that the patents will be invalidated.

If ISE is successful in its patent challenge, the CBOE could appeal to the U.S. Court of Appeals for the Federal Circuit.

The case is being closely watched by the financial services industry.