Zeptonics Hit By Legal Ruling; Cannot Sell Ultra-Low-Latency Products

Blog entry

Australian financial trading technology vendor Zeptonics has been directed by the Federal Court of Australia to assign the ownership of certain of its products - including its ZeptoLink fanout device and ZeptoMatch matching engine - to proprietary trading firm Zomojo, which claimed ownership of them. It is considering appealing the decision, but for now it cannot sell them or support any companies using or evaluating them.

Zomojo claimed - and the court ruled - that ownership of ZeptoLink, ZeptoMatch (a matching engine), ZeptoNIC (a network interface card) and ZeptoAccess KRX (a trading gateway for the Korean Stock Exchange) resided with itself. As such, Zeptonics is not allowed to sell or support the use of those products. Zeptonics previously announced sales of ZeptoLink and its ZeptoMux switch to a Chicago-based trading firm, and say that "around half of the world’s top ten proprietary trading firms, have been in the process of trialing" its technology.

ZeptoMux - a many-to-one multiplexer with latency of 130 nanoseconds - is not covered by the ruling.

Without getting into all of the background and detail - the court ruling runs to 183 pages - at the heart of the dispute is Zeptonics founder Matthew Hurd, who worked at Zomojo for several years as its co-managing director and head of IT development.

Essentially, Hurd became unhappy working at Zomojo and left the company early in 2011, founding Zeptonics around the same time. Zomojo claims that Zeptonics' technology is based on that developed by Hurd while he worked for it.

Zeptonics says that it believes it has "substantial grounds for appeal," but has not determined whether to take that route. For its part, Zomojo does not seem interested in becoming a technology vendor, and is seeking the return of ZeptoLink devices installed at other trading firms.

The moral of the story: considerable due diligence is required when buying technology, especially when it is cutting edge from niche vendors, and likely to provide a real advantage.