* "We are vindicated": CBOE CEO William Brodsky
* Decision allows CBOE to keep its lucrative franchise in
* CBOE shares near all-time high
By Lawrence Hurley
WASHINGTON, May 13 CBOE Holdings Inc
won a long-running legal battle to prevent rival International
Securities Exchange from listing options on two key U.S.
stock-market indexes, after the U.S. Supreme Court on Monday
declined to consider their dispute.
The court's refusal to intervene leaves intact a lower court
ruling that allows CBOE, the operator of the oldest and biggest
U.S. stock market, to remain the sole market for options on the
Standard & Poor's 500 Index and the Dow Jones Industrial
CBOE's exclusive franchise on stock-index options is a
lucrative one, generating 60 percent of CBOE's transaction fees,
although they account for less than 40 percent of its trading
"We are vindicated after more than six years of lengthy and
unnecessary litigation that the highest court in the land has
validated our position and the intellectual property rights of
index providers," CBOE's chief executive and chairman, William
Brodsky, said in a statement.
An ISE spokeswoman had no immediate comment. CBOE shares
were up about 0.7 percent on the Nasdaq stock market, to $39.57,
after earlier touching an all-time high.
International Securities Exchange LLC (ISE) was fighting an
injunction that prevented it from listing S&P 500 and Dow Jones
options, which are licensed exclusively to S&P Dow Jones Indices
LLC, a joint venture of McGraw-Hill Companies Inc. and
CME Group Inc..
S&P Dow Jones has exclusive licensing agreements with the
Chicago Board Options Exchange. In March this year, CBOE
extended its contract until 2033.
ISE, a unit of Deutsche Boerse AG, claimed that
CBOE effectively had a monopoly on what ISE's lawyers describe
as "widely disseminated facts and ideas" that are not protected
under the Copyright Act.
In 2006, ISE said it would start offering its own index
options based on the two indexes without obtaining a license,
prompting CBOE, CME and McGraw-Hill to sue.
In a 2012 decision, an Illinois appeals court upheld a lower
court ruling against ISE.
The appeals court decided the case under Illinois state law,
rejecting ISE's claims that the dispute should be decided under
the federal Copyright Act.
The case is International Securities Exchange v. Chicago
Board Options Exchange, U.S. Supreme Court, No. 12-940.