Lutnick’s name appears on more than 800 patents and patent applications worldwide and more than 400 active or expired patents in the US alone, making the billionaire CEO of brokerage firm Cantor Fitzgerald among the most prolific US inventors in the modern era.
That sets him apart from previous appointees to the Commerce Department, which oversees the US Patent and Trademark Office—the government agency responsible for granting patents to companies seeking to protect their intellectual property that also houses a tribunal where the validity of those patents can be challenged.
“Mr. Lutnick obviously knows patents and the patent system,” said Andrei Iancu, who served as USPTO director during the first Trump administration. “It’s always good news when you have somebody who’s knowledgeable and interested in the issue.”
Lawyers who’ve sparred with Cantor entities over the years don’t necessarily share that assessment. And in the rough and tumble arena of patent litigation, Lutnick and his company have chalked up both wins and high-profile losses, including a finding that Cantor engaged in deceptive misconduct in obtaining a patent that it later used to sue a competitor.
Arnold & Porter patent lawyer Evan Rothstein said he gained familiarity with Cantor’s patents while defending gaming companies sued for or accused of patent infringement.
“Most of these patents were garbage,” said Rothstein, who claims Cantor inflated its role as a tech pioneer in the online gaming space where the company is linked to at least 11 infringement suits against companies like
Many Cantor gaming patents were issued in the early 2000s when the PTO more readily approved patents covering business methods—which fell into disfavor after the US Supreme Court’s 2014 opinion in Alice Corp. v. CLS Bank, Rothstein said.
“The portfolio contains a lot of fluff that’s not enforceable,” Rothstein said. “On a good day, I think people at Cantor would agree with that.”
But former Cantor IP lawyer David Boundy, who spent nearly a decade at the company from 2007 to 2014, said the ideas captured in Cantor’s patent portfolio are strong—and Alice is the problem.
“They’re bad under current law because the law is screwed up,” Boundy said.
Most of the company’s patents “are about really subtle sophisticated use of computers to achieve deals that can’t be done on a naïve trading system,” Boundy said.
A Cantor spokesperson didn’t respond to multiple requests for an interview, or written questions about the portfolio and Lutnick’s role in patent strategy at the company. The Trump transition previously referred questions to Cantor and the White House didn’t respond to Bloomberg Law’s request for comment Monday.
Lutnick’s confirmation hearing before the Senate Committee on Commerce, Science, and Transportation is scheduled for Wednesday.
Prolific Inventor
Lutnick is either the sole or a co-inventor on more than 400 active or expired US patents, according to a Bloomberg Law analysis.
Those numbers put Lutnick among the most productive modern-day inventors in the US, according to inventorship ranking website IDiyas.
The high number reflects an active CEO who is constantly pushing new ideas, Boundy said—not “just a busybody” but a “genuinely helpful contributor.”
“Every CEO comes up with ideas on how to do things,” Boundy continued. “Howard just always had it primed into him that the next phone call after a good idea is to call the patent attorneys.”
In the Trenches
Cantor successfully profited off its patent portfolio but has also been dealt defeats when asserting its patents against other finance and tech firms.
Cantor generated eight-figures by convincing companies to pay licensing fees to use a family of cap-and-trade emissions trading patents it acquired, Boundy cited as one example.
But a Cantor unit was also found to have deceived the USPTO—the very agency Lutnick’s slated to oversee—dooming a 2003 lawsuit it filed in Delaware.
Inventors typically can seek a patent on a novel machine, or commercialize it while keeping the related technological details secret—not both. But Cantor wanted to patent a securities trading system already in use within two of the company’s trading rooms.
Cantor’s eSpeed subsidiary later sued rival firm BrokerTec for allegedly copying the patented system.
BrokerTec convinced the judge hearing the case that Cantor lost its right to enforce the patent because it hadn’t flagged the product to the agency when it first filed its patent application and then later “made a material misrepresentation” to the patent examiner about how the system worked in a series of sworn statements.
The court said three Cantor declarations, including one signed by Lutnick, “misleadingly” described key features of its trading system in a way that strengthened its pending application.
The US Court of Appeals for the Federal Circuit affirmed in 2007, saying there’d been “an intent to deceive,” in an opinion authored by the specialized appeals court’s now-chief judge Kimberly A. Moore.
Boundy noted several evidentiary disputes Cantor lost during the case.
“Because of what evidence could be admitted and what couldn’t, we weren’t able to tell our side of the story,” he said.
Stakeholder to Policy Maker
The US Senate should “suss out if he has any preconceived notions about patent assertion entities or patent assertion in general,” said Jonathan Stroud, general counsel at Unified Patents, a membership organization that includes companies frequently sued for infringement, like
The Patent Trial and Appeal Board, which reviews challenges to patents’ validity, has canceled at least three patents listing Lutnick as an inventor. Given the experience, he may push to appoint a patent office director who’d try to reduce the tribunal’s authority, said Darius Gambino, a partner at Saul Ewing LLP.
Coke Morgan Stewart, who served as chief of staff to Iancu during Donald Trump’s first term, was sworn in as the agency’s deputy director on Jan. 20—Trump has yet to announce a nominee for the Senate-confirmed director position.
Boundy said Lutnick would look at all sides of policy matters impacting the patent community, but would also come into the job “with the knowledge of the little guy and the patent owner’s side of the issue.”
Jacob Babcock, CEO of technology company NuCurrent Inc., said he hopes Lutnick would use his influence to shutter the PTAB, which some patent-rights advocates derisively call a “death squad” based on its invalidation rates.
But short of that, Babcock said he thinks Lutnick will push for greater predictability.
“He can understand the complexities that are actually very inefficient for innovators at all scales,” he said, “because we’re all playing with loose guidelines now. We don’t know which patents are valid and which aren’t.”
Russ Slifer, principal at Schwegman Lundberg & Woessner PA, inventor, and former deputy director of the PTO, said policy shouldn’t ebb and flow as directors change.
“The inventor community would obviously like to see a rollback or elimination of the PTAB, and I understand their positions, but be careful what they wish for,” he said.
One of the most recent insights into Cantor’s views on patent policy is a 2013 amicus brief submitted while the Alice case was still at the Federal Circuit, arguing for an expansive vision of what kind of ideas deserve patent protection.
Patent-Minded Secretary
Commerce secretaries don’t run day-to-day PTO operations, and whoever is selected as the next director will have independence, Iancu said. But a patent-minded secretary could exert power.
“The boss obviously always has influence if they want to exercise it,” Iancu said. “It depends a lot on the particular individuals involved.”
Adam Mossoff, a professor at George Mason University Antonin Scalia Law School, said Lutnick could work with the director to “bring much needed reform,” which may include more stringent requirements for who can challenge a patent at the PTAB or, more radically, eliminating the PTAB in its entirety. Such reform topics should be on the table, Mossoff said, and “will hopefully happen with Lutnick.”
And Slifer, the former deputy director of the PTO, expressed optimism that a patent owner leading the Commerce Department would be good for stakeholders with opposing views of how the patent system should work.
“Both sides can draw the conclusion that he’s at least not coming into this role without an idea of issues facing this community,” Slifer said.
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