European derivatives exchange Euronext.Liffe is being sued by a former marketing employee who claims he owns the patent rights to electronic trading methods that he devised while working at the exchange.
According to a Financial Times report, the London-based futures and options mart is set to face its former employee Pavel Pinkava in the Court of Appeal in a challenge over who owns the right to systems that were developed to facilitate electronic trading of OTC instruments including credit default swaps, credit interest swaps, interest rate swaps and overnight index swaps.
A High Court judge has already ruled that the inventions Pinkava devised while working for Liffe between 2001 and 2005 were not made in the course of his "normal duties", says the report. Nonetheless, Justice Kitchen ruled that they were made after Pinkava was specially asked to develop an exchange-tradable credit derivative by his employer.
Pinkava had believed that the system he devised belonged to Liffe, but later applied for four patents in the US after receiving advice that it belonged to him
Justice Kitchen gave leave to appeal and the hearing is thought to be one of the first of such cases to reach the Court of Appeal and test the legal issues involved.
The case raises issues over creative work done by staff in the course of their employment but not related to their formal duties, says the FT. It also demonstrates the growing need for intellectual property protection in the financial services industry.