Chicago IP Attorney & Lawyer : R. David Donoghue : Chicago IP Litigation Blog

Rosenthal Collins Group, LLC v. Trading Technologies Int'l, Inc., No. 05 C 4088, Slip Op. (N.D. Ill. Nov. 23, 2010) (Coleman, J.).

Judge Coleman denied plaintiff Trading Technologies' ("TT") Local Rule 40.4 motion to consolidate TT's sixteen pending patent cases,* involving nine patents. Initially, the Court noted that TT did not seek consolidation of all sixteen cases in a single case, but consolidation of the four remaining cases that TT filed in 2005, and separately the twelve cases TT filed in 2010. LR 40.4 requires that a motion to consolidate be filed in the lowest number case. So, while the instant case was the lowest number of the 2005 cases, it was not the lowest number 2010 case. As to the 2010 cases, therefore, the Court did not address consolidation. As to the 2005 cases, TT failed to show that the cases were sufficiently related -- while they involved common patents, the accused products operated in "very different manner[s]." Furthermore, while Judge Moran previously coordinated discovery of all of the 2005 cases before the cases were reassigned, TT did not demonstrate that consolidating the 2005 cases would conserve resources.
 

*  Click here for much more on these cases in the Blog's archives.

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Rosenthal Collins Group, LLC v. Trading Techs. Int'l, Inc., No. 05 C 4088, Slip Op. (N.D. Ill. Feb. 23, 2011) (Coleman, J.).*

Judge Coleman granted defendant/counter-plaintiff Trading Technologies' ("TT") motion for evidentiary sanctions and default judgment.  Judge Moran previously dismissed plaintiff/counter-defendant Rosenthal Collins Group's ("RCG") motion for summary judgment regarding the alleged prior art Buist trading program for discovery abuse, ordered RCG to produce additional documents and things related to the Buist program, and ordered RCG to pay certain of TT's attorney's -- click here for the Blog's post on that decision.  Initially, the Court the severity of a default judgment as a sanction, calling it "extreme," and noted that the Seventh Circuit required a showing of willfulness, bad faith or fault by a preponderance of the evidence in order to justify dismissing a case.

The Court held that the high standard was met in this case, for at least the following reasons:

• During his deposition, Buist admitted modifying and overwriting source code in 2006 that he and by extension RCG held out as having been created in 1998 or 1999.  And in the face of clear evidence of these facts, RCG continued to deny them, even calling the claims "libelous," "audacious," and "Oliver Stone-esque."
   
• Buist later admitted "wiping" or erasing six of seven zip disks that originally contained the relevant source code and that were later produced by RCG because they allegedly contained the code.  The seventh was also wiped, although there was a dispute regarding whether Buist or others had access to it when it was wiped.  But the Court held that it was "impossible to believe that it is merely coincidence that the seventh disk happened to be wiped on May 2, 2006, which just happened to be the same day that TT was scheduled to inspect it."
   
• There was evidence that "virtually every piece of media ordered produced by the Court in May 2007 and July 2008 was wiped, altered, or destroyed after those orders were entered . . . ." (emphasis in original).
   
• Even if RCG and its counsel had no knowledge of the destruction of the evidence, the destruction might have been avoided if RCG had timely complied with the Court's orders to produce the materials.  And regardless, RCG and its counsel should have preserved the evidence by taking custody of it.
   
• Buist was RCG's agent and, therefore, RCG was bound by Buist's behavior and actions.

Based upon these determinations, the Court found clear and convincing evidence that "RCG, and its counsel, acted in bad faith and with willful disregard for the rules of discovery and this Court's orders."  And because a monetary sanction alone was not sufficient, the Court entered a default judgment in favor of TT and dismissed RCG's complaint and struck its defenses to TT's counterclaim.  The Court also fined RCG $1,000,000 for "egregious conduct before the Court" and ordered RCG's counsel to pay TT the attorney's fees and costs related to TT's motion for default judgment.

*  I have a few earlier opinions from the Trading Technologies cases, but this one was significant enough that I moved it up.  Click here for more on the case in the Blog's archives.

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Rosenthal Collins Group, LLC v. Trading Techs. Int'l, Inc., No. 95 C 4088, Slip Op. (N.D. Ill. Jun. 29, 2010) (Kim, Mag. J.).

Judge Kim granted declaratory judgment defendant Trading Technologies ("TT") approximately $290,000 of $375,000 requested in fees and costs pursuant to Fed. R. Civ. P. 37(b)(2) in this patent case.* On March 14, 2007, the Court held that declaratory judgment plaintiff Rosenthal Collins Group's ("RCG") summary judgment motion was "misleading," "disingenuous" and "prematurely filed" – click here to read more about the opinion in the Blog's archives. The Court, therefore, found RCG's conduct sanctionable, struck the motion without prejudice, struck the supporting Buist declaration, and ordered RCG to pay costs for TT's software consultants, and attorney's fees and costs related to the sanction motion.

On July 17, 2008, the Court denied RCG's motion to vacate the sanction order and again ordered RCG to pay: 1) TT's consultant; 2) TT's deposition of the Buists; and 3) TT's prosecution of the sanctions motions. The Court also ordered the parties to comply with Local Rule 54.3 by trying to come to agreement on the issues.

Initially, the Court observed that "contentiousness and obvious material distrust" demonstrated by both sides had "leached" into the parties briefing. The Court awarded TT the full amount of its expert fees and costs because those fees and costs were specifically awarded by Judge Moran and because TT showed that all of the expert's work was impacted by or resulted from the misconduct. Those fees were approximately $52,000.

The Court also awarded TT's attorney's fees and costs of approximately $157,000 related to the depositions of the experts at issue. The only reduction was for a series of identical, cryptic time entries for "preparation of Buist witness kit". The court could not determine whether the fees were justified. The Court awarded TT its actual costs, instead of limiting the costs to the Fed. R. Civ. P. 54(d) limits because this sanction award was pursuant to Fed. R. Civ. P. 37 and, therefore, was not limited by Rule 54(d). The Court finally awarded $86,000 in fees and costs related to TT's sanctions motion. The Court generally found TT's fees and expenses reasonable, with limited exceptions. The Court limited fees for writing a "simple" two-page motion to two hours. The Court also deleted approximately $11,000 in apparently duplicative time entries.

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Rosenthal Collins Group, LLC v. Trading Techs. Int'l., Inc., No. 05 C 4088, Slip Op. (N.D. Ill. Sept. 18, 2009) (Dow, J.). 

Judge Dow denied the parties' cross-motions for summary judgment in this patent dispute regarding software for electronic futures trading using a static price axis.* Although the other related cases are stayed pending an appeal of the related eSpeed case to the Federal Circuit, declaratory judgment defendant Trading Technologies ("TT") sought and Judge Moran agreed to allow this case to proceed based upon TT's agreement that declaratory judgment plaintiff Rosenthal Collins Group ("RCG") infringed even under the Court's allegedly narrow construction of a "common static price axis" and "static display of prices." TT sought to broaden the constructions on appeal. The parties agreed on how the accused Onyx software operated. The price axis was generally dynamic. But if a user pointed a cursor in the window containing the axis, the axis became static until the cursor was removed or after thirty seconds, whichever came first. TT identified this as Onyx's order entry mode. And because Onyx has a static axis in order entry mode, TT argued that Onyx infringed based upon the order entry mode, even if it did not infringe in other modes. RCG argued that Onyx only had a single mode, and because the price axis was not consistently static, without manual recentering, there was no infringement. The Court held that whether Onyx operated in three modes and, therefore, infringed, or operated in a single mode and, therefore, did not was a question of fact. The case, therefore, was not appropriate for summary judgment.

The Court also stayed the case pending appeal of the eSpeed case, except for TT's motion for default and sanctions. 

*  Click here for much more on this case and its related cases in the Blog's archives.

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Rosenthal Collins Group, LLC v. Trading Techs. Int'l, Inc., No. 05 C 4088, Min. Order (N.D. Ill. Feb. 2, 2009) (Moran, Sen. J.).*

In this pair of entries, Judge Moran denied plaintiff Trading Technologies' motions for fees and costs related to a discovery motion and referred another fees motion to Magistrate Judge Schenkier.  In the first entry, the Court noted that it was time to end "unnecessary [discovery] battles" in the case and that it might not be as forgiving with the next fees motion.  In the other entry, the Court transferred a fees motion to Judge Schenkier, but questioned how "a single discovery dispute could blossom into a claim for over $300,000.

*  Click here to read much more about this case and the related cases in the Blog's archives.

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Rosenthal Collins Group, LLC v. Trading Techs. Int'l, Inc., No. 05 C 4088, Slip Op. (N.D. Ill. Jul. 17, 2008) (Moran, Sen. J.).

Judge Moran denied declaratory judgment plaintiff Rosenthal Collins Group's ("RCG") motion to vacate the Court's March 14, 2007 order awarding declaratory judgment defendant Trading Technologies' ("TT") Fed. R. Civ. P. 37 sanctions – click here to read the Blog's post about that opinion and click here to read much more about this case and the related cases. In that earlier order, the Court held that RCG's motion for summary judgment of invalidity was "somewhat misleading" and possibly "disingenuous." Instead of dismissing the case as TT requested, the Court struck the declaration underlying RCG's motion, denied RCG's summary judgment motion with leave to refile a motion "supported by proper evidence" and awarded TT its costs and attorneys fees associated with the Rule 37 motion, as well as its software expert's fees.

In this motion, RCG argued that the Court should vacate that sanctions order because the Court held that TT had not proved by clear and convincing evidence that RCG acted willfully or with bad faith. But the Court held that Rule 37 sanctions could be based upon willfulness, bad faith or fault. Fault went to the reasonableness of the party's content, not necessarily intent. And the Court held that RCG's actions met the standard for fault. Furthermore, while clear and convincing was the burden of proof for dismissal, clear and convincing proof is not required for lesser sanctions.

Finally, the Court held that the categories of fees and costs sought by TT were within the scope of the Court's order, but ordered the parties to brief the reasonableness of the specific fees sought by TT, using the Local Rule 54.3 requirements (a rule usually used for post-judgment fees and costs).

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Judge Moran denied declaratory judgment defendant Trading Technologies' ("TT") contempt motion and, instead, provided declaratory judgment plaintiff Rosenthal Collins Group's ("RCG") two weeks to produce the previously compelled documents and to schedule the ordered deposition of third party declarant Walter Buist, the creator of the alleged prior art trading software Wit DSM. RCG previously filed a motion for summary judgment of invalidity of TT's patents based upon a declaration by Buist regarding his Wit DSM software that he developed, at least partially, more than a year before TT filed its patent applications. In a previous opinion, the Court held that RCG's motion was "somewhat misleading" and possibly "disingenuous," but refused to dismiss the case (you can read the Blog's discussion of that opinion here, as well as more on this case generally in the Blog's archives). 

During a deposition after RCG filed its summary judgment motion, Buist stated, among other things, that various drafts of his declaration were created, that he created a "differences" list and provided it to RCG's counsel and that he had used various computers during his work related to the case.  TT sought all drafts of the declaration, a list of any destroyed drafts, the differences list, any drives or computers used by Buist and all documents reflecting communications between Buist or his associates and RCG and its counsel or associates.  And the Court ordered RCG to:

1. reproduce all such documents;
   
   
2. produce any remaining responsive documents (including the computers requested);
   
   
3. produce documents reflecting relationships between Buist and RCG or its counsel, so long as such documents are not privileged; and
   
   
4. produce Buist for an additional deposition to answer questions related to the compelled documents, as well as Buist's relationship with RCG and its counsel.

(Click here to read the Blog's post about that opinion). RCG, however, never produced the compelled documents or Buist for another deposition. RCG explained that it thought the Court stayed the compelled discovery when it stayed all other discovery pending the Federal Circuit's resolution of the cross-appeals of the TT v. eSpeed case. Additionally, RCG noted that during a hearing four days before the start of the TT v. eSpeed trial the Court told the parties to put the Buist deposition on the “back burner.” The Court explained that its “back burner” comment was not intended to stay its order, just to delay resolution of the issue until after the looming trial. And as for the stay pending the Federal Circuit appeals, the Court held that the Wit DSM-related discovery was not relevant to the appealed issues and would not be affected by them. Furthermore, the Court had already ordered their production, a production that would be required regardless of the outcome of the Federal Circuit appeal. But the Court gave RCG the benefit of the doubt that it had misinterpreted the Court's orders and instructions, and gave RCG two weeks to complete the compelled production.

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Rosenthal Collins Group, LLC v. Trading Techs. Int'l, Inc., No. 05 C 4088, 2007 WL 1597928 (N.D. Ill. May 16, 2007) (Moran, Sen. J.).

Judge Moran granted declaratory judgment defendant Trading Technologies' ("TT") motion to compel documents and things identified by third party declarant Walter Buist during his deposition, despite declaratory judgment plaintiff Rosenthal Collins Group's ("RCG") assurances that the documents and things had already been produced.  RCG previously filed a motion for summary judgment of invalidity of TT's patents based upon a declaration by Buist regarding software that he developed, at least partially, more than a year before TT filed its patent applications.  In a previous opinion, the Court held that RCG's motion was "somewhat misleading" and possibly "disingenuous," but refused to dismiss the case (you can read the Blog's discussion of that opinion here, as well as more on this case generally in the Blog's archives). 

After RCG filed its motion, TT deposed Buist regarding, among other things, the creation of his declaration and his interactions with RCG's counsel related thereto.  During that deposition, Buist stated, among other things, that various drafts of his declaration were created, that he created a "differences" list and provided it to RCG's counsel and that he had used various computers during his work related to the case.  TT sought all drafts of the declaration, a list of any destroyed drafts, the differences list, any drives or computers used by Buist and all documents reflecting communications between Buist or his associates and RCG and its counsel or associates. 

In light of RCG's statements that it had already produced many of the requested documents and things, the Court ordered RCG to:  1) reproduce all such documents; 2) produce any remaining responsive documents (including the computers requested); and 3) produce documents reflecting relationships between Buist and RCG or its counsel, so long as such documents are not privileged.  The Court also required that RCG produce Buist for an additional deposition to answer questions related to the compelled documents, as well as Buist's relationship with RCG and its counsel, so long as the questioning does not violate Buist's attorney-client privilege.

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Trading Techs. Int'l., Inc. v. GL Consultants, No. 05 C 4120, Slip Op. (N.D. Ill. May 17, 2007) (Gottschall, J.).*

Judge Gottschall denied defendant GL Trade SA's ("GL SA") motion to dismiss for lack of personal jurisdiction, with leave to refile after completion of jurisdictional discovery.  GL SA is a French company located in Paris.  GL SA does not have an office or any assets in Illinois, but it does have a subsidiary, defendant GL Americas, Inc. ("GL Americas").  GL Americas maintains a regional office in Chicago.  The Court noted that despite three rounds of briefing on jurisdiction, neither party "provided anything of substance to the court."  Plaintiff Trading Technologies ("TT") treated GL SA's subsidiary GL Americas as GL SA, and had not submitted evidence of GL SA's specific contacts with Illinois.  GL SA submitted several declarations, but none sufficiently clarified that GL SA did not have minimum contacts with Illinois.  As a result, the Court held that it lacked sufficient evidence to rule upon the motion, and granted TT's motion for jurisdictional discovery.

After ruling on the motions, the Court offered its jurisdictional analysis as a "framework" for the issues the parties should address through the discovery process.  First, the Court pointed out that neither party had detailed GL SA's specific contacts with Illinois.  Neither party identified which software products were GL SA products and which were GL Americas products.  Furthermore, neither party identified any sales of GL SA or GL Americas products to Illinois consumers.  The Court noted that if none of the GL SA products at issue were sold in Illinois, the Court would not have specific jurisdiction over GL SA.  And if there were sales to Illinois consumers, discovery was still required to show whether GL SA had a purpose and intent to serve the Illinois market.  Finally, the Court noted that TT must make its case for the Court's jurisdiction over GL SA based upon GL SA's actions, without imputing GL America's actions or contacts to GL SA.

*More analysis of opinions from this case and the various related TT cases, can be found in the Blog's archives. 

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Trading Techs. Int'l., Inc. v. eSpeed, Inc., No. 04 C 5312, Slip Op. (N.D. Ill. May 17, 2007) (Moran, Sen. J.).

Judge Moran denied plaintiff Trading Technologies' ("TT") motion to compel additional production from third party Chicago Mercantile Exchange ("CME").  TT served CME with a subpoena seeking, among other things, anything referring or relating to potential prior art to the patents at issue and communications between CME and any other entity regarding the patents at issue, including any joint defense agreement between CME and such parties.  After TT filed the motion to compel, CME produced thousands of pages, including what it stated were all documents in its possession regarding possible prior art.  Because all prior art documents had been produced, the Court denied TT's motion to compel additional prior art-related documents.

The Court also denied TT's motion to the extent it sought communications regarding the possible prior art.  First, the Court considered any communications CME might have had with defendants in the currently pending cases.  The Court referred to its May 1, 2007, order which required defendants to produce a list of all members in their joint defense agreement (that opinion and order, as well as numerous other opinions from this and its related cases, are in the Blog's archives).  The Court held that defendants' list would allow TT to discover whether CME was involved in a joint defense and that no further discovery from CME was necessary. 

Second, the Court considered CME's communications, including potential joint defense agreements, with any parties not involved in TT's pending suits.  The Court held that the common interest doctrine could attach to communications even before the filing of a suit, so long as the parties anticipated litigation.  Furthermore, the Court held that regardless of whether CME's communications with other third parties were part of a joint defense, they were not discoverable because they were "irrelevant" to this case.  The Court explained that while relevance is broadly defined, it does have boundaries and TT's motion ran "up against such a boundary."

*  Because Westlaw has not published this opinion yet, here is a copy of Judge Moran's original, signed opinion.

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Trading Techs. Int'l., Inc. v. eSpeed, Inc., No. 05 C 4120, (N.D. Ill. May 16, 2007) (Moran, Sen. J.).

Judge Moran granted in part and denied in part plaintiff Trading Technologies' ("TT") motion to compel additional production from defendants GL Consultants, Inc. and GL Trade SA (collectively "GL").  The Court required GL to update certain interrogatory responses and to produce documents based upon an earlier priority date that GL had argued for, as opposed to stopping at the later priorit date alleged by TT.  The Court also required GL to provide TT access to original source code and certain electronic archives, without regard to whether TT had provided GL similar access.  Finally, the Court denied TT's request to lower the confidentiality designation of the source code for GL's "GL Tradepad" software.  But what is most interesting about the Court's opinion is its reminder to the parties about how the Court expects them to conduct discovery:

At the outset, we reiterate some of the points regarding discovery that we have stressed throughout this complicated and contentious litigation. First, parties should err on the side of over-production; relevance should be argued sparingly. Second, counsel are officers of the court and their word is generally sufficient. Third, there will always be additional persons to interview, additional documents to discover, and alleged prior art to be found; we must, however, put an end to discovery at some point. . . . With such guidelines in mind, we address the current dispute.

* Because Westlaw has not published this opinion yet, here is a copy of Judge Moran's original, signed opinion.

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Trading Techs. Int'l., Inc. v. eSpeed, Inc., No 04 C 5312, 05 C 1079, 05 C 4088, 05 C 4120, 05 C 4811 & 05 C 5164, 2007 WL 1302765 (N.D. Ill. May 1, 2007) (Moran, Sen. J.).

Judge Moran granted in part and denied in part plaintiff Trading Technologies' ("TT") motion to compel production of defendants' communications between themselves (more on this case in the Blog's archives).  Defendants asserted claims of attorney-client and work product privileges regarding various communications and information exchanged as part of a joint defense agreement among, at least, the various defendants and DJ-plaintiff (collectively "defendants") in the patent suits regarding TT's patents.  The Court explained that the joint defense privilege protects communications and exchange of information between parties that have expressly decided to cooperate in a litigation -- with or without a written agreement.  The Court held that defendants had expressed a sufficient intent to cooperate in their respective litigations against TT and, therefore, held that defendants need not produce communications made in relation to their joint defense.  The Court required that defendants produce any written joint defense agreement or, in the absence of a written agreement, the identities of all members of the joint defense.  The Court further held that third parties need not be identified to the extent that their identities are protected as work product, but that third parties should be identified if defendants' communications with them are allegedly protected by attorney-client privilege.  The Court also required that defendants produce all prior art in their possession, regardless of how it was located.  And finally, the Court noted that "it must rely on the integrity of counsel to determine what is and is not privileged."  As a result, the Court required that defendants produce "any communications not protected by a legitimate privilege . . . ."

You can download the opinion here.

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Rosenthal Collins Group, LLC v. Trading Techs. Int'l, Inc., No. 05 C 4088, 2007 WL 844610 (N.D. Ill. Mar. 14, 2007) (Moran, Sen. J.).*

Judge Moran denied in part and granted in part declaratory judgment defendant Trading Technologies' ("TT") Rule 37 motion for sanctions.  The Court held that declaratory judgment plaintiff Rosenthal Collins Group's ("RCG") motion for summary judgment of invalidity was "somewhat misleading" and possibly "disingenuous," but refused to dismiss the case.  Instead the Court struck the declaration underlying RCG's motion, denied RCG's summary judgment motion with leave to refile a motion "supported by proper evidence" and awarded TT its costs and attorneys fees associated with the Rule 37 motion, as well as its software expert's fees.  RCG filed a summary judgment motion arguing that TT's patents covering "double click" methods for executing an electronic trade were anticipated by the alleged prior art system "Wit DSM" as embodied in a software package RCG presented to the Court and TT on a laptop and claimed was essentially the software as it is existed more than one year prior to TT's patent filing.  TT's software expert identified that several lines of code had been added to the software by RCG's declarant, and that the added code performed certain functionalities required for anticipation.  When RCG's declarant was deposed, he stated that he had not written the "double click" portion of the original code and could not be sure that it was in the alleged prior art version of the WIT DSM.  These facts did not warrant dismissal of the case or barring of any evidence because RCG and its declarant had not made any false statements, although they had made deliberately vague statements.  Furthermore, while RCG did not identify that the software package included added code which the Court found disturbing, it did include a comparison program on the laptop it provided to TT and the Court which would have identified the added code.

This case involves the several of the same patents as the other TT case before Judge Moran.

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