Driving Innovation and Creativity through Nasdaq's Patent Program

The technology and exchange company’s legal team keeps ideas moving and has an important seat at the table

When it launched in 1971, Nasdaq was the world’s first electronic stock market. Over the years, it built a solid reputation as the desired destination for tech IPOs, including those of Apple, Microsoft, Facebook, and Amazon, while also cultivating a deep expertise in technology. In fact, not only does Nasdaq develop the software used to power its nearly 30 markets in-house, but it has evolved to become one of the world’s largest market technology providers to the capital markets and other non-financial industries. During the course of this evolution, Nasdaq has fostered a climate that promotes innovation and rewards the inventors behind its robust patent portfolio. In other words, the company’s legal department has an important seat at the innovation table.

Johnny Simonsson and Joe McNamara are experienced patent attorneys and run Nasdaq’s intellectual property practice. Both have witnessed the creativity coming from Nasdaq’s employees - including engineers, technology operations personnel, user interface / user experience designers, and product managers - the world over.

“Our colleagues are super sharp and incredibly tuned into the market and what clients need,” says McNamara. “The collaboration between product managers and engineers adds to that strength.”

Over the past 20 years, Nasdaq has secured more than 350 patents and more are being added to the queue all the time. McNamara says the company will file a patent application to protect a unique and potentially proprietary idea that has a sound business value.

“A patent enables Nasdaq to protect the investment in the research and development that went into the idea,” he says. “That’s one way that the Nasdaq intellectual property team supports the development of new technology.”

Nasdaq’s inventors typically start out by addressing a client requirement, a technology challenge, or by searching for a new way to provide value to clients.

“Typically our new patentable ideas come from our engineers or from product development colleagues,” says Simonsson. “There are a number of questions that we ask ourselves when deciding to file for protection of an idea: ‘Is this idea unique and compelling? Would it contribute to Nasdaq’s success if we can protect this idea?’”

As Simonsson and McNamara put patent applications together, they work closely with the Nasdaq inventors to see what they’ve developed and what aspects of the idea could qualify for patent protection. “We try to develop a deep understanding of our technology, to make sure that it’s accurately described and protected in our patent applications,” McNamara says. Once the application is in process, Nasdaq’s legal team is in the driver’s seat. If challenges arise during the application process, McNamara says he may reach out to confer with the inventors for assistance, but for the most part it is Nasdaq’s intellectual property team that manages the process.

Case study: the Midpoint Extended Life Order (M-ELO)

Nasdaq introduced its Midpoint Extended Life Order (M-ELO) solution in 2018. M-ELO is an order type that has been implemented on the Nasdaq Stock Market. Its purpose is to match like-minded investors with longer-term time horizons. A M-ELO order doesn’t match when it is first received; instead, once a M-ELO order is marketable, it “rests” on the order book for a given time period, and only then becomes eligible for execution. This delay, along with a few other special M-ELO behaviors, helps to protect M-ELO orders from negative price impacts.

Nasdaq has been successful in obtaining patent coverage for the technology underlying M-ELO. “When we started looking at patenting aspects of M-ELO, it was apparent very quickly that we had a lot of good stuff to work with,” McNamara says. “M-ELO is creative on a number of different levels. And when you look at how M-ELO’s behavior is brought to life with software, it’s very impressive. That is another example of great work by very smart Nasdaq engineers.”

The team filed its initial patent application related to M-ELO in June 2018 and received its patent approval in March 2020. “M-ELO has been very successful,” McNamara says. “It’s great that we were able to get protection on those ideas.”

One of M-ELO’s inventors is Andrew Oppenheimer. As the lead for product and business development for U.S. equities at Nasdaq, he says: “M-ELO represents a team effort from ideation to implementation. Our patent experts recognize the hard work it takes to build products, and it is their efforts that protect this hard work from imitation.”

Recognizing Nasdaq’s inventors

The patents in Nasdaq’s portfolio are brought there by the creativity and innovation of Nasdaq employees. To acknowledge those contributions, Nasdaq operates a Global Inventor Awards Program. The program has two goals: first, to recognize the internal inventors that are responsible for these new and innovative ideas; and second, to provide compensation to these inventors when a new patent application is filed.

“Maintaining our patent portfolio and ensuring that it aligns with where Nasdaq is from a technology perspective is important to us,” McNamara says. “It starts with our inventors. Without their great ideas, we wouldn’t have a patent portfolio. We’re very happy to make sure they are recognized for, amongst all of the other things they do, their innovations and their contributions to the portfolio.”

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Susan Caminiti

Susan is a writer and senior editor whose work covers a wide range of business and social topics including corporate profiles, personal investing, entrepreneurship, health and wellness, work/life issues, and wealth management for both editorial and corporate clients. She is a former staff writer for Fortune magazine and her work appears in Fortune, Fortune.com, CNBC.com and in a variety of other print magazines.

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