A claim brought against T.Rowe Price alleging patent infringement on several automated components of its managed accounts and target date funds has been voluntary dropped by the plaintiffs.
GRQ Investment Management, a Plano, Texas-based LLC formed “to monetize the inventions of the late Brian Tarbox and Mark Greenstein,” alleged T.Rowe Price infringed on two patents issued in 2009.
The threadbare 10-page complaint, originally filed in February 2015 in U.S. District Court for the Eastern District of Texas, offered little detail as to exactly how T.Rowe Price’s software was infringing on GRQ’s proprietary software.
T.Rowe Price “provides a system for automatically reallocating funds within a retirement investor’s investment vehicle, providing automatic enrollment in a retirement plan, and using a least one computer to automatically reallocate funds within an investment vehicle in response to a change of age of the retirement investor,” claimed language in the original complaint.
While the claim did not expressly say so, the implication GRQ seemed to be making is that it owned the concepts of automatic enrollment, automatic deferral of payroll assets, and the automatic rebalancing of portfolios relative to an age-based investment glide path.
In January 2015, a similar claim against Financial Engines was dismissed in the same U.S. District Court.
Brian Tarbox was a retirement plan advisor who died in 2005.
After his death, his business partner, Mark Greenstein, who is currently a pension law specialist at the Department of Labor, worked to finish the software Tarbox designed that automatically enrolls participants in 401(k) plans and reallocates assets in accord with a glide path.
Tarbox’s work was instrumental in the so-called “Sun America” advisory opinion issued in 2001 by the DOL, which paved the way for automated rebalancing of participants’ assets in workplace retirement accounts.
He also consulted with William Sharpe, a Nobel laureate who also co-founded Financial Engines in the mid-1990s.
Reporting in the Wall Street Journal said the dismissal of the claim against Financial Engines involved some financial settlement.
A representative from T.Rowe Price confirmed that no settlement or payment was made to GRQ.
In a statement regarding the dismissal of the claim against T.Rowe Price, David Oestreicher, chief legal counsel for the Baltimore-based provider brokerage and retirement plan provider, said the company was “pleased” with the case’s outcome.
“We’ll continue with business as usual offering these automatic services, which are important tools that help many 401(k) plan participants save more for retirement,” said Oestreicher in a statement.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
