Nasdaq Private Market (NPM), a secondary US market that allows traders to buy and sell private company stocks, is suing private stock marketplace Hiive, accusing the Vancouver-based company of patent infringement.
The news: In documents filed in the US District Court for the state of Delaware on May 6, NPM accused Hiive of violating its patent for its secondary sale settlement and clearance program.
NPM provides liquidity for pre-IPO companies through what it claims is a proprietary platform to standardize and settle private shares, since there’s no industry-wide standard for secondary markets. NPM filed its patent in 2023, and it was approved this March. The company was founded in 2013 within Nasdaq and spun out to become independent in 2021. Hiive was founded in 2022. In an email to BetaKit, a Hiive spokesperson called the lawsuit a “tactical and meritless claim based on a newly filed patent.”
From the source: Emily Zheng, senior VC research analyst with Pitchbook, wrote in an investor note last week that NPM faces an uphill battle to prove market automation is a patentable process, but that the result will be consequential. “The race to build efficient infrastructure for closing trades has now become a legal battleground…. This case will settle more than a patent dispute. The outcome will decide who holds the keys to an essential component of venture secondaries trading.â
Following the thread: The secondary market has heated up in recent years as fewer companies choose to go public, causing employees at those companies to search for ways to get liquidity. Global transaction volumes for secondary sales hit $226 billion USD ($312 billion CAD) last year, up 41 percent from 2024.
Despite some private companies, like Anthropic, cautioning against using âunauthorizedâ secondary markets like Hiive, the company has now facilitated more than $2 billion USD ($2.8 billion CAD) in secondary transactions. More than 60 percent of decacorns in the US (private companies valued at more than $10 billion) have seen at least one trade on Hiive, the company claims. NPM says as of this spring, it has processed over $1.5 billion USD in total transactions across 2,000 trades, 1,200 of which were executed last year alone.
âFinal thought: NPMâs allegations have yet to be tested in court, but if successful, Hiive could have to pay costly damages or possibly stop doing business in the US.
Image courtesy Julien G on Flickr, shared under Creative Commons licence BY 2.0.