WisdomTree and Research Affiliates End Their Fight
Reported by Neil Anderson, Managing Editor
After years of rivalry, Rob Arnott [#41 on
MFWire's 2010 influencers list] and
Jonathan Steinberg have ended their legal battle.
Today the two fundamental indexers revealed that Newport Beach,
California-based Research Affiliates dropped its patent
infringement lawsuit against New York City-based WisdomTree Investments [profile]
and paid the latter $700,000. The two companies have settled all of
their claims against each and agreed to back off of their patent
infringement claims. The rest of the settlement is confidential,
though WisdomTree insisted that "the settlement will not affect the
current methodologies and fee schedules" for its ETFs [see release
"Research Affiliates can now acknowledge that WisdomTree's
fundamentally-weighted indexes and strategies were developed by
WisdomTree independently of Research Affiliates," stated Arnott,
chairman and CEO of Research Affiliates.
"The matter is resolved and our businesses will continue as usual,"
stated Steinberg, president and CEO of WisdomTree.
A spokesman for Research Affiliates told
MFWire that he "can't comment beyond the
Publicly-traded WisdomTree boasts 49 ETFs and a total of $16.8
billion in assets under management. Research Affiliates touches a
total of $110 billion between licensing out its indexes, subadvising
and directly managing assets. Both shops use fundamentals-based
indexing (in contrast with the predominant market capitalization-
Almost a year ago, Research Affiliates sued
WisdomTree (and WisdomTree allies ALPS and Mellon
Capital) in the U.S. District Court for the Central District of
California. Arnott and his team claimed that WisdomTree infringed
three Research Affiliates patents.
Company Press Release
Research Affiliates Withdraws Patent Infringement Lawsuit Against
Parties Mutually Dismiss all Claims and Counterclaims
Press Release: WisdomTree Investments, Inc. – 45 minutes ago
Symbol Price Change
NEWPORT BEACH, Calif. and NEW YORK, Nov. 8, 2012 -- Research
Affiliates, LLC, a global leader in innovative investing and asset
allocation strategies, and WisdomTree Investments, Inc. (WETF), a
leading exchange-traded fund ("ETF") sponsor and asset manager,
today announced Research Affiliates will withdraw its patent
infringement lawsuit brought in the United States District Court for
the Central District of California. As part of the settlement, all
claims and counterclaims will be dismissed with prejudice between
Research Affiliates, WisdomTree Investments, Inc., its subsidiaries,
WisdomTree Asset Management, Inc. and WisdomTree Retirements
Services, Inc., the WisdomTree Trust, as well as Mellon Capital
Management Corp. and ALPS Distributors, Inc. The settlement
agreement resolves all matters pertaining to the lawsuit.
Robert Arnott, Chairman and CEO of Research Affiliates, stated,
"Based on information that came to our attention during the lawsuit,
Research Affiliates can now acknowledge that WisdomTree's
fundamentally-weighted indexes and strategies were developed by
WisdomTree independently of Research Affiliates."
Jonathan Steinberg, CEO and President of WisdomTree, and Mr. Arnott
jointly stated "We are pleased the matter is resolved and our
businesses will continue as usual." Steinberg and Arnott believe
that each company's product suites represent important advances in
the world of indexing. Both parties agree to respect each other's
intellectual property and patents.
Under the settlement, all parties will exchange releases for all
existing claims. The material terms of the settlement are as
Research Affiliates has agreed not to sue WisdomTree for any
future claims arising under any current patents held by Research
Affiliates, as well as any future patents relating to
fundamentally-weighted indexes and strategies that may issue under
existing or future patent applications that may be filed by Research
Affiliates within the next eight years, subject to reduction by up
to three years in the event that Research Affiliates is acquired.
The covenant not to sue extends to service providers and customers
of WisdomTree in connection with WisdomTree's products and services.
WisdomTree has agreed not to sue Research Affiliates for any
future claims arising under any current patents held by WisdomTree,
as well as any future patents relating to fundamentally-weighted
indexes and strategies that may issue under existing or future
patent applications that may be filed by WisdomTree within the next
eight years, subject to reduction by up to three years in the event
that WisdomTree is acquired. The covenant not to sue extends to
service providers and customers of Research Affiliates in connection
with Research Affiliates' products and services.
Research Affiliates and WisdomTree have agreed that the
covenants not to sue do not include a right under each party's
patents to copy the other party's methodologies. They have further
agreed that it is not copying if Research Affiliates introduces an
index or strategy that uses at least three fundamental factors to
weight its indexes and they are not predominantly dividend- or
earnings-weighted, or if WisdomTree introduces an index or strategy
that is weighted by less than three fundamental factors.
The parties have also agreed not to challenge the other party's
patents or patent applications.
Research Affiliates has agreed to a one-time payment of $700,000
to WisdomTree. WisdomTree and the other defendants are not required
to make any current or future payments to Research Affiliates.
All other terms of the settlement are confidential.
WisdomTree further announces that the settlement will not affect the
current methodologies and fee schedules for its exchange-traded
About Research Affiliates, LLC
Research Affiliates, a global leader in innovative investing and
asset allocation strategies, operates worldwide from its base in
Newport Beach, Calif. Dedicated to solving complex investment
issues, the firm creates innovative strategies that respond to the
current needs of the market. Leveraging its strong research focus,
Research Affiliates distributes products in partnership with some of
the world's leading financial institutions. These affiliations take
the form of licensing agreements, sub-advisory services, and direct
asset management. Approximately $110 billion in assets are managed
worldwide using investment strategies developed by Research
Affiliates, as of September 30, 2012.
The Research Affiliates, LLC logo is available at
WisdomTree Investments, Inc. is a New York-based exchange-traded
fund ("ETF") sponsor and asset manager. WisdomTree currently offers
49 ETFs across Equities, Currency Income, Fixed Income and
Alternatives asset classes. WisdomTree also licenses its indexes to
third parties for proprietary products and promotes the use of
WisdomTree ETFs in 401(k) plans. At September 30, 2012, WisdomTree
had $16.8 billion in ETF assets under management.
WisdomTree(R) is the marketing name for WisdomTree Investments, Inc.
and its wholly owned subsidiaries WisdomTree Asset Management, Inc.
and WisdomTree Retirement Services, Inc. WisdomTree Asset
Management, Inc. is a registered investment advisor and is the
investment advisor to the WisdomTree Trust and the WisdomTree ETFs.
The WisdomTree Trust is a registered open-end investment company.
Each WisdomTree ETF is a series of the WisdomTree Trust. WisdomTree
Retirement Services, Inc. supports the use of the WisdomTree ETFs in
retirement plans by financial professionals.
The WisdomTree Investments, Inc. logo is available at