(Adds details on lawsuit, comments from Nasdaq, IEX)
NEW YORK, March 1 (Reuters) - Nasdaq Inc on Thursday filed a patent infringement lawsuit against rival IEX Group, accusing the newest U.S. exchange operator of copying several core aspects of its electronic trading platform.
The lawsuit seeks to stop IEX, which operates the Investors Exchange and was featured in author Michael Lewis's book "Flash Boys: A Wall Street Revolt," from continuing to use the technology without a license. The exchange is also seeking an unspecified amount of compensation for what it said was IEX's unauthorized use of its intellectual property.
Nasdaq, founded in 1971, has grown to be one of the world's largest exchange operators and suppliers of exchange technology. It accused IEX of violating seven of its patents related to four exchange processes, which it said represented millions of dollars in investment.
IEX was founded in 2012 and launched its first trading platform, an alternative trading system, in 2013, touting its market as a fairer place for investors to trade than the existing exchanges.
The New York-based company launched as a full-fledged stock exchange in August 2016 after getting regulatory approval despite opposition from Nasdaq and some other exchanges to one of the main aspects of its exchange design, which involves slowing down stock orders, similar to a speed bump.
IEX has said that its "speed-bump" helps prevent predatory trading practices. Other exchanges initially opposed the speed bump, but some later adopted or proposed versions of their own. NYSE's speed-bump is nearly identical to IEX's.
IEX now plans to compete against Nasdaq and Intercontinental Exchange Inc's New York Stock Exchange for corporate listings.
"Similar to our exchange application process, this is yet another attempt by Nasdaq to obstruct an innovative new competitor," IEX spokesman Gerald Lam said of the lawsuit.
The seven patents Nasdaq has accused IEX of infringing are related to the closing auction processes for stocks listed on the exchange, so-called multi-parallel order processing, matching engine performance, and data feed optimizations.
Nasdaq said that in 2012 and 2013, IEX hired at least four technology employees from Nasdaq to help build IEX's trading platform who would have been familiar with the intellectual property that is the focus of the lawsuit.
Nasdaq also said IEX has admitted in public filings that its closing auction process was "designed based on extensive review" of Nasdaq's process.
"These seven patents cover important innovations that we, and our customers, rely on for reliability, scalability, and transparency," Nasdaq's General Counsel Edward Knight said in a statement.
The lawsuit, Nasdaq v. IEX Group, Inc, was filed in the United States District Court for the District of New Jersey. (Reporting by John McCrank; Editing by Jonathan Oatis)