A new lawsuit claims that the auto enrollment concept — as well as contribution acceleration and defaulting into target-date funds — has not only been patented, but the owner is seeking damages for its misappropriation by a major recordkeeping provider and money manager.
According to a June 9 report by The Wall Street Journal, T. Rowe Price has been named in the lawsuit filed on behalf of GRQ Investment Management of Plano, Texas, by the Dallas law firm Ni, Wang & Massand. That’s the same firm that filed suit against Financial Engines (free registration required) last summer, and whose website notes that it was “formed to monetize the inventions of the late Brian Tarbox and Mark Greenstein.”
Tarbox, an inventor, has been described as being instrumental in obtaining ERISA Advisory Opinion 2001-09A, more commonly referred to as the “SunAmerica Opinion,” which was issued late in 2001. Greenstein, an attorney, is a pension law specialist at the U.S. Department of Labor, according to the Journal report.
The 2014 lawsuit alleged that Financial Engines infringed on two different patents issued to Tarbox and Greenstein about the provision of objective financial advice in 401(k)s. That suit was dismissed in January, according to the Journal.
The report notes that two former colleagues of Tarbox who say they had a small financial interest in the patents and now have a financial stake in the legal efforts are ERISA attorney Marcia Wagner and Larry Medin, chairman of New York investment adviser Toroso Investments.
As for the success of this litigation, and its potential impact on the industry, time will tell.
