Trading Tech Patents Put To The Test

2008-1392 Trading Tech Int'l v. eSpeed
ND/IL 04-cv-5312

Judge James B. Moran

Trading Tech ("TT") brought several suits, including this one against eSpeed and Ecco, alleging infringement of 6,766,304 and 6,772,132, both similarly directed at software used in electronic trading in the futures market.  Events below were well covered, as usual, by David Donoghue at  Chicago IP Litigation. 

TT is appealing the district court's rulings that eSpeed's redesigned products, Dual Dynamic and eSpeedometer, do not infringe, and from the court's granting of eSpeed's JMOL that the infringement of its original products was not willful.  eSpeed cross-appeals the court's rulings that TT's patents are not invalid and not unenforceable based on alleged secret prior use.

Oral argument is scheduled for Tuesday, August 4, 2009 at 10:00 P.M., Courtroom 201.

Summary of Argument from plaintiff Trading Technologies International, Inc.  Paul H. Berghoff, Leif R. Sigmond, Jr., Matthew J. Sampson, Michael D. Gannon, S. Richard Carden, Jennifer M. Kurcz and Paul A. Kafadar of McDonnell Boehnen, Hulbert & Berghoff LLP, Chicago; and Steven F. Borsand of Trading Technologies International, Inc., on brief.

The heart of the dispute is the meaning of the claim term “static.” This term is explicitly and unambiguously defined in the patent specification as:

The values in the price column are static; that is, they do not normally change positions unless a re-centering command is received ...

Instead of simply adopting this clear definition, the court erred by construing “static” much more narrowly by requiring that the values in the price column:

never change positions [which the court interpreted as precluding “any movement”] unless by manual re-centering or repositioning.

There is no support in any of the intrinsic evidence (or extrinsic evidence for that matter) for such a narrow reading of static. As such, this Court should vacate the district court's construction and adopt the definition set forth in the patent.

The court also erred in ruling that Dual Dynamic and eSpeedometer do not literally infringe. This ruling was based solely on the court's improper construction of “static.” Under its construction, any product that has a risk of automatic re-centering (which cannot be turned off) does not literally infringe the patents-in-suit. However, the proper construction of static is not limited to any particular type of re-centering and thus encompasses both manual and automatic re-centering. Therefore, these products literally infringe the patents-in-suit.

Furthermore, the court improperly barred TT from asserting DOE against eSpeedometer¹⁷ by ruling that “static” was narrowed by amendment during prosecution.¹⁸ However, to reach this conclusion the court did not apply its narrow construction of “static” that it used to find no literal infringement. Rather, the court construed “static” broadly for purposes of its estoppel analysis - in conflict with its Markman ruling. This was error because once a claim term is construed, that same construction must be applied uniformly. Under the court's unduly narrow construction, there can be no narrowing amendment and thus no estoppel.

¹⁷ The court found that eSpeedometer infringed the “static” claim term under DOE, even under its unduly narrow construction of that term.

¹⁸ All of TT's DOE arguments are moot if this Court adopts TT's construction and finds literal infringement.

Moreover, the court improperly barred TT from asserting DOE against Dual Dynamic, ruling that doing so would vitiate the “static” claim term. Vitiation is not applicable because there is only a subtle difference of degree between the “static” claim element, as narrowly construed by the district court, and the operation of the price axis in Dual Dynamic. Thus, TT should not be barred from asserting DOE against Dual Dynamic.



Finally, the court erred by entering JMOL overturning the jury's verdict of willful infringement. The court did not and could not challenge the jury's finding that eSpeed knew or should have known that its product was infringing a valid patent. The court's ruling was based solely on its mistaken belief that there was no evidence that eSpeed sold its infringing products after the patents-in-suit issued. In fact, there is substantial undisputed evidence in the record that eSpeed continued selling its infringing product after the patents issued and that it had the ability to pull off the market existing infringing product. Accordingly, the JMOL ruling should be reversed.

Summary of Argument from defendant eSpeed, Inc.  Gary A. Rosen of the Law Offices of Gary A. Rosen, Philadelphia; and George C. Lombardi, Raymond C. Perkins, and James M. Hilmert of Winston & Strawn, LLP, Chicago, on brief.

TT states that it “commercialized the invention in a product called MD Trader, and began selling it around Labor Day of 2000 as part of TT's X_Trader software suite.” (TT-Br.8) In fact, however, TT first commercialized the invention of the Patents-in-Suit much earlier, selling custom software embodying it to Brumfield, then one of the world's busiest futures traders, who used it in his proprietary trading and kept it as the “toppest of toppest of secrets that you can imagine,” until, after investing millions of dollars in TT, he concluded that there might be bigger rewards in going the “patent route.”



Brumfield and TT's decision to exploit the invention as a trade secret until it became more financially advantageous to enter the patent system has critical implications for the validity and enforceability of the Patents-in-Suit.



First, more than one year passed between TT's commercial sale of the custom software embodying the invention to Brumfield and its filing of the Provisional on March 2, 2000, and the sale is therefore a §102(b) bar.



Second, TT has stipulated that the Patents-in-Suit are invalid due to Brumfield's intervening public use if they are not afforded the benefit of the Provisional filing date. Every Asserted Claim includes the limitation “single action of a user input device,” a term that does not appear and is not defined in the Provisional. The court construed it broadly, paraphrasing an ad hoc definition that was first set forth in the Non-Provisional expressly “for the purposes of the present invention.” This broad construction -“an action by a user within a short period of time that may comprise one or more clicks of a mouse button or other input device” is not supported by the narrow disclosure of single mouse click order entry in the Provisional and therefore, as TT stipulated, Brumfield's pre-June 9, 1999 commercial use is also a §102(b) bar.



And just as TT makes no mention of the existence, sale and use of Brumfield's custom software in its brief, so too did TT fail to disclose this information to the PTO during prosecution of the Patents-in-Suit. This information would have been highly material, as it would have prompted the PTO to consider in the first instance the on-sale and priority date issues now on appeal. The district court, however, found that this information was not material at all, and it did not go on to consider abundant evidence that its nondisclosure was deliberately deceptive.



The “single action of a user input device” limitation is also, as construed, indefinite, as it has no clear meaning to a person of ordinary skill in the art, but rather depends upon the subjective “perception” of each individual user.



Accordingly, this Court should reverse, mandate the entry of judgment declaring the Asserted Claims invalid, and remand for further proceedings on inequitable conduct.