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

Rosenthal Collins Group, LLC v. Trading Techs. Int’l, Inc, No. 05 C 4088, Slip Op. (N.D. Ill. Aug. 15, 2008) (Moran, Sen. J.).*

Judge Moran granted declaratory judgment plaintiff Rosenthal Collins Group’s (“RCG”) motion for leave to use an expert witness that declaratory judgment defendant Trading Technologies (“TT”) previously met with. TT met the first prong of the test for expert disqualification. TT had established a confidential relationship with the expert, as proven by the non-disclosure (“NDA”) agreement entered into by TT and the expert. 
 

But the NDA was not enough to meet the second prong of the test, that confidential information requiring disqualification was exchanged. The expert stated that he had two meetings with TT approximately four years before the issuance of this opinion. One meeting was held before the NDA was executed and one after. TT alleged that there were additional meetings, but only had supporting evidence of two meetings. TT also alleged that it discussed litigation strategy, prior art and a relevant court decision with the expert. But based upon an in camera review of TT’s evidence, the Court held that there was not sufficient evidence of an exchange of confidential information. The emails TT provided were one or two lines each and contained no confidential or work product information. And TT did not provide attorney notes or other evidence of confidential or work product information. The Court did acknowledge that one email discussion of a court opinion could have been work product, but the expert’s response was so brief and vague that the Court did not consider it advice. 
 

Finally, TT did not offer evidence that it retained the expert or paid him any fees. TT did argue that it compensated the expert by having TT’s president speak to a trading group the expert owned. But there was no evidence that the speaking engagement was intended to be or was accepted as payment for the expert’s work.

* Click here to read much more about this case in the Blog’s archives and click here for a copy of this opinion.

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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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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 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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Trading Techs. Int’l, Inc. v. eSpeed, Inc., No. 04 C 5312 (N.D. Ill. Jun. 13, 2008).

The Court held that its May 22 permanent injunction against defendant eSpeed (click here for the Blog's post on the injunction) was a final judgment, which allowed for appeal to the Federal Circuit.  Anyone reading the Blog's recent posts regarding the Court's permanent injunction against eSpeed, and eSpeed's appeal of the injunction as well as plaintiff Trading Technologies' ("TT") cross-appeal, might have assumed that the Court had entered a final judgment.  eSpeed apparently did because it filed an appeal of the permanent injunction to the Federal Circuit (click here for the Blog's post on the issues on appeal).  TT filed its broader appeal shortly thereafter (which eSpeed objected to as untimely because the Court had not entered a final judgment on anything beyond the permanent injunction), but disagreed that the Court had entered a final judgment on any issue.  TT, therefore, also filed an emergency motion requesting that the Court vacate its permanent injunction, rule on the parties' cross-motions for attorney's fees (the Court now has ruled on those motions, click here for the Blog's post about that decision) and then reenter the permanent injunction along with final judgment.*

This may seem like irrelevant procedural posturing, but TT explains the appellate rules implications in its emergency motion:

The rules state that the first-filed notice of appeal is the appellant, but when both parties file an appeal on the same day, the plaintiff is deemed the appellant. F.R.A.P. 28.1. Where there is a cross-appeal, the appellant has the advantage of having higher word limits in its briefs and also files the first brief focused solely on the issues it seeks to appeal. The general rule is that a plaintiff, like TT here, has the right to be an appellant if it wants to appeal an issue.

The Court did not directly rule on TT's motion, but effectively decided it by entering this Minute Order stating that its May 22 permanent injunction was a final judgment effective May 22.  The Clerk, who subsequently entered final judgment on all issues effective May 22, and the parties -- eSpeed filed a notice of appeal of all issues rather than its initial appeal of just the injunction -- treated the final judgment as relating to all matters before the Court, which makes both parties' appeals timely.  According to TT's above analysis, because TT filed its appeal after but on the same day as eSpeed, TT will be appellant and eSpeed will be the cross-appellant.

For those concerned that the Blog might be silent about this case for months, have no fear.  The related cases continue and I will continue blogging about both the related cases and the appeal.

*  Click here for TT's emergency motion, click here for eSpeed's response, and click here for TT's reply. Also, click here for much more on this case in the Blog's archives.

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Trading Techs. Int’l, Inc. v. eSpeed, Inc., No. 2008-1392 & 1393 (Fed. Cir.).*

As Judge Moran predicted, the parties have appealed this case to the Federal Circuit.* The parties’ appeals were consolidated, leaving a single appeal with a substantial number of issues. The great, new Patent Appeal Tracer* reported that plaintiff Trading Technologies (“TT”) is appealing at least the following decisions (click here to read Tracer’s post on the cross-appeals):

Claim constructions, specifically constructions of "static price axis" and "order entry region"  (click here and here and here for the Blog’s posts regarding claim construction opinions);

• Summary judgment of noninfringement of most of defendant eSpeed’s software packages, including the following titles: Dual Dynamic, eSpeedometer, and modified eSpeedometer programs (click here for the Blog’s post regarding this opinion);
  
• Partial summary judgment for TT regarding prior use (click here for the Blog’s post regarding this opinion); and
  
• Judgment as a matter of law overturning the jury’s willfulness finding (click here for the Blog’s post regarding this opinion).

And eSpeed is appealing, at least, the following decisions:

• The permanent injunction regarding certain of eSpeed’s software packages (click here for the Blog’s post regarding the Court’s permanent injunction).

* Thanks to Patent Tracer for linking to the Blog’s TT v. eSpeed coverage. Click here to read much more about this case in the Blog’s archives.

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Trading Techs. Int’l, Inc. v. eSpeed, Inc., No. 04 C 5312, 1079, 4088, 4120, 4811 & 5164, Slip Op. (N.D. Ill. May 23, 2008) (Moran, Sen. J.).*

Judge Moran granted plaintiff Trading Technologies' (“TT”) motion for a protective order, but denied its request for its fees related to the motion. TT used two videos of third part Walter Brumfield's trading screen and a portion of one of Brumfield's daily trading records (collectively the “Evidence”) as evidence during the Court's inequitable conduct bench trial. Despite prior designation as “Attorneys' Eyes Only” pursuant to a protective order and having been sealed in the parties' previous filings, the Evidence was presented in open court without any protections. Additionally, it was designated on exhibit lists submitted in connection with the bench trial without any confidentiality designation.

The first business day after the bench trial, TT contacted defendant eSpeed to confirm that the Evidence was to be treated as confidential. But eSpeed, and the other defendants in the related cases, objected arguing that by using the Evidence at trial without any protections or designations, TT waived confidentiality.

The Court acknowledged a “strong presumption of public access to court proceedings and records . . . .” But noting that the presumption is not absolute and that the parties seeking disclosure here were defendants not the press or public, the Court held that the Evidence retained its confidential status for the following reasons:

• The videos showing Brumfield's custom-designed computer screen configuration was a trade secret and its disclosure could harm Brumfield's competitive trading advantage;

• TT's public disclosure of the Evidence was inadvertent as evidenced by the numerous times the Evidence was previously treated as confidential; and

• To the extent the Court relied on the Evidence in its opinion (click here to read the Blog's post about the opinion), it did not do so in sufficient technical detail to disclose the confidential elements of the Evidence.

Additionally, the Court noted that while Brumfield's attorney did receive copies of the exhibit list showing the Evidence without confidentiality designations and TT had periodically represented Brumfield's interest throughout the case, neither Brumfield nor his counsel were in attendance to object when the Evidence was used during the bench trial. The Court does not specifically say whether or how these facts played into its decision. But the facts were included in the Court's description of the facts and, therefore, the Court appears to have considered them relevant.

* Click here to read much more about this case in the Blog’s archives and click here for this opinion.

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Trading Techs. Int’l, Inc. v. eSpeed, Inc., No. 04 C 5312, Slip Op. (N.D. Ill. May 22, 2008) (Moran, Sen. J.).*

After a jury held that certain of defendants' (collectively "eSpeed") products willfuly infringed two of plaintiff Trading Technologies' (“TT”) futures trading software patents (the Court previously reversed the willfulness finding), the Court entered a permanent injunction preventing future sales of the infringing software -- a previous opinion granted summary judgment of noninfringement of eSpeed's current software and all software except that sold during a six month period shortly after TT's patents issued.  The Court looked at each of the four standard injunction elements, as required by the Supreme Court in eBay Inc. v. MercExchange, LLC.

Irreparable Harm

The Court held that TT would be irreparably harmed by any continued sales of infringing product because TT's successful business was built around its patented technology and, therefore, direct competitors with infringing products irreparably harmed TT.    The Court agreed with eSpeed that general claims of competition were insufficient pursuant to eBay, but the Court held that TT's direct competition assertions were supported by trial testimony.

Inadequate Remedy at Law

eSpeed argued that TT's numerous licenses proved that monetary damages could compensate TT, as the eBay district court held after remand.  but the Court distinguished eBay.  eBay was premised upon a combination of plaintiff MercExchange's:

• willingness to license;
  
• choice not to practice the patent;
  
• failure to seek preliminary injuctive relief; and
  
• consistent, clear statements that it desired monetary damages.

In contrast, TT manufactured a patented product and only licensed as an alternative to litigation.  And the Court acknowledged TT's concern that providing monetary damages after trial without an injuction would force a compulsory license on TT.

Balance of Hardships

The Court held that TT would be more harmed without an injunction than eSpeed would be harmed by an injunction.  eSpeed no longer made or sold the infringing software, so an injunction would cause eSpeed little or no harm.  Furthermore, eSpeed manufactured numerous non-infringing products.  So, the extent of any harm was further minimized.

Public Interest

eSpeed argued that the public interest weighed against granting injunctions regarding patents in reexamination.  But TT's patents had since been upheld in the reexam.  So, the only public interest factor was enforcement of TT's patent rights.

For these reasons, the Court entered a permanent injunction.  Click here to read the Permanent Injunction Order.

* Click here to read much more about this case in the Blog’s archives and click here for this opinion.

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Trading Techs. Int’l, Inc. v. eSpeed, Inc., No. 04 C 5312, Slip Op. (N.D. Ill. May 6, 2008) (Moran, Sen. J.).*

After a two-day hearing and two rounds of briefing, Judge Moran held that defendants (collectively “eSpeed”) had not met their burden of proving that plaintiff Trading Technologies (“TT”) engaged in inequitable conduct before the Patent & Trademark Office (“PTO”). The Court held that one of the TT patent's inventors engaged in commercial use between the priority dates for the patent's provisional and parent applications. But the Court held that TT was not required to disclose the commercial use to the PTO because it was not material to patentability. First, TT sought priority from its provisional application in good faith and had a reasonable belief that priority from the provisional was warranted. The reasonableness of the belief was born out when both the jury and the Court determined that the patent could claim priority from the provisional application. Because the commercial use happened after the patent's critical date (based upon the provisional application), it was not material.**

Additionally, TT did not commit inequitable conduct when it responded to the Examiner's request for, among other things, “any use of the claimed invention” with a series of brochures and presentations that described the software's features, but without identifying the inventor's commercial use. TT argued that the Examiner was seeking an explanation of all of the features of TT's software because it had identified anticipatory prior art from TT's website in a prior Office Action. The Court held that this was a reasonable reading of the Examiner's request because the Examiner accepted TT's response which did not address whether the software had been in use. Had the Examiner wanted an answer to that question, he could have asked again, instead of allowing the patent to issue.

Many readers will be wondering what is next. The Court has a few more pending motions, and a motion for reconsideration would not be surprising in this case. But for the most part, I suspect that this case is now on a fast track to the Federal Circuit, where the Court predicted it was going months ago. As always, I will keep you updated as the case develops, both in the Northern District and at the Federal Circuit.

* Click here to read much more about this case in the Blog’s archives and click here for this opinion.

** Click here and here for more on the determination of the appropriate priority date in the Blog's archives.

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Trading Techs. Int’l, Inc. v. eSpeed, Inc., No. 04 C 5312, Min. Order (N.D. Ill. Feb. 20, 2008) (Moran, Sen. J.).*

I have received several emails asking about the status of this case and, specifically, when the inequitable conduct portion of the case will be decided.  The post-trial inequitable conduct briefing appears to be complete -- if you want to read the briefs, they are largely available on Pacer.  So, unless the Court asks for further briefing or an additional hearing either of which seem unlikely, the Court will consider the evidence and the parties' post-trial papers, and then write an opinion deciding the inequitable conduct issues.  There is not any way to accurately predict when the opinion will issue.  The timing is governed by numerous factors, including the complexity of the case and the size of the Court's current docket. 

Additionally, the parties have filed other motions which the Court will also have to decide.  For example, Trading Technologies ("TT") filed a motion for a protective order sealing certain evidence that was produced as "Highly Confidential," but which was put into evidence and used without immediate restriction or objection, as to confidentiality, during the public trial.  I will keep you updated as the Court issues any decisions regarding inequitable conduct or any other issues in the case.

* Click here to read much more about this case in the Blog’s archives.

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Trading Techs. Int’l, Inc. v. eSpeed, Inc., No. 04 C 5312, Min. Order (N.D. Ill. Feb. 20, 2008) (Moran, Sen. J.).*

Judge Moran is scheduled to begin a two-day inequitable conduct bench trial this morning, and everything appears to be ready.  The deposition designations, exhibit lists and motions in limine have all been filed.  The eSpeed defendants have also filed motions to preclude Trading Technologies' counsel from testifying and to enforce eSpeed's understanding  of a stipulation (not surprisingly, the parties disagree as to what was stipulated) regarding the critical date.

Trial is scheduled to begin this morning at 10:30 am CDT.  Unfortunately, client obligations will prevent me from attending.  But I will continue to keep you updated based upon the Court's rulings.

* Click here to read much more about this case in the Blog’s archives.

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Trading Techs. Int’l, Inc. v. eSpeed, Inc., No. 04 C 5312, Min. Order (N.D. Ill. Feb. 20, 2008) (Moran, Sen. J.).*

Judge Moran scheduled a two-day inequitable conduct hearing Wednesday and Thursday, April 2 and 3, thereby granting by implication defendant eSpeed's motion for such a hearing.  The Court also set a March 21 status hearing to discuss witness and privilege issues, presumably related to the inequitable conduct hearing.  So, there is at least one more round of argument and possibly briefing before the Court's judgment is complete and final.  I hope to attend the inequitable conduct hearing and will blog about it if I do.

* Click here to read much more about this case in the Blog’s archives.

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Brian Higgins at the Maryland IP Law Blog posted an analysis of significant willfulness decisions post-In re Seagate, 497 F.3d 1360 (Fed. Cir. 2007) -- click here for the post and click here for a subsequent post discussing Se-Kure Controls, Inc. v. Diam USA, Inc., No. 06 C 4857, 2008 WL 169029 (N.D. Ill. Jan. 17, 2008) (Cox, Mag. J.).  Of the eleven decisions Higgins identified, three were Northern District decisions and one was a Federal Circuit decision analyzing a Northern District case.  Here are my posts on the Northern District decisions:

• Abbott Labs. v. Sandoz, Inc., No. 05 C 5373, 2007 WL 4287503 (N.D. Ill. Dec. 4, 2007) (Coar, J.).
  
• Se-Kure Controls, Inc v. Diam USA, Inc.
  
• Trading Techs. Int’l, Inc. v. eSpeed, Inc., No. 04 C 5312, Slip Op. (N.D. Ill. Jan. 3, 2007) (Moran, Sen. J.).
  

As you can infer from the relatively small number of cases identified by Higgins, there remains a lot of law to be written about Seagate before the standard is well settled.  I suspect that within 18-24 months there will be a relatively large body of law, including numerous Federal Circuit decisions exploring the new standard's outlines.  Until then, patent litigants will face a degree of uncertainty regarding willfulness.  Of course, defendants will generally be glad to have some uncertainty in exchange for plaintiffs's higher willfulness hurdle.

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Trading Techs. Int’l, Inc. v. eSpeed, Inc., No. 04 C 5312, Slip Op. (N.D. Ill. Feb. 5, 2008) (Moran, Sen. J.).*

Judge Moran denied defendants’ Fed. R. Civ. P. 59 motion for a new trial of damages on the condition that plaintiff Trading Technologies (“TT”) accepted a remittitur of defendant eSpeed’s portion of the damages. After a trial, the jury returned a verdict for TT and awarded $3.5M in compensatory damages, split $2M against defendant Ecco and $1.5M against defendant eSpeed. At trial, TT’s damages model was based upon a proposed reasonable royalty of between $.15 and $.25 per trade and a total of approximately 18M to 23M trades for a damages range of about $3.5M to $4.6M. TT argued that the apportionment of damages was irrelevant because the total award was within the argued range and because eSpeed purchased Ecco and, therefore, would be paying the full amount. But the Court noted that Ecco’s award would be paid from an escrow account set up for because of TT’s patent claims when eSpeed purchased Ecco. Additionally, eSpeed’s $1.5M judgment was well beyond the highest award that could be supported by TT’s evidence. The evidence showed that during the relevant time, eSpeed completed approximately 2.1M trades. Even at $.25 per trade, TT’s highest proposed royalty, the possible damages were only $539,468. The Court, therefore, offered TT a remittitur of $539,468 or a new trial on damages.

The Court also awarded TT prejudgment interest set at the average prime rate for the period compounded monthly, because TT collected license fees monthly.

* Click here to read much more about this case in the Blog’s archives and click here for a copy of this opinion.

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Trading Techs. Int’l, Inc. v. eSpeed, Inc., No. 04 C 5312, Slip Op. (N.D. Ill. Jan. 18, 2008) (Moran, Sen. J.).*

Judge Moran denied defendants’ (collectively “eSpeed”) motion for judgment as a matter of law that plaintiff Trading Technologies’ (“TT”) patents were unenforceable because of patent misuse. TT’s open letter to the futures market was not patent misuse despite the facts that:

1. The letter requested a 2.5 cent fee for every transaction an exchange processed regardless of whether infringing software was used; and
   
2. The fees did not end when the patents expired. 

Had such a license been entered, it would have been per se patent misuse. But because no exchange ever accepted the offer or even entered serious negotiations with TT based upon the offer, there was no patent misuse.

Terms in certain license agreements that prevented licensees from using eSpeed software, regardless of whether the eSpeed software infringed, were improper. But the terms did not rise to the level of patent misuse because the effect of the clauses was not anti-competitive. The clauses were only in two of TT’s fifteen settlement agreements. And TT argued that the intent of the parties in the two agreements was only to restrict the use of infringing eSpeed products. Furthermore, the other thirteen agreements only restrict use of infringing software. 

Terms in the agreements requiring royalties on any trade for which licensed software could be used, as opposed to just those for which patented software was actually used, were not patent misuse. The agreements required only that royalties be paid on trades made using licensed products or any software when licensed and unlicensed software was linked such that either could be used to make the trade. If unlicensed software that was not linked to the licensed software was used, no royalty was due.

Finally, the provisions preventing licensees from assisting third parties to invalidate the TT patents were not patent misuse. Licensees that had not agreed to a consent judgment as part of a settlement were free to challenge the validity of the patents on their own. Furthermore, no licensee was prevented from participating in court-ordered invalidity proceedings or from assisting a government entity, such as the PTO, that was considering the validity of the patents.

* Click here to read much more about this case in the Blog’s archives and click here for a copy of the opinion.

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Trading Techs. Int’l, Inc. v. eSpeed, Inc., No. 04 C 5312, Slip Op. (N.D. Ill. Jan. 2, 2007) (Moran, Sen. J.).*

Judge Moran denied defendants’ (collectively “eSpeed”) motion for judgment as a matter of law that plaintiff Trading Technologies’ (“TT”) patent was invalid for indefiniteness based upon the claim term “single action of a user input device” (“Single Action”). The Court previously construed Single Action as “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.” Before trial, the Court used the definition to exclude evidence regarding a Tokyo Stock Exchange (“TSE”) software package that required double clicking, entering a quantity and pressing “enter” – click here for the Blog’s discussion of that opinion.

TT argued that the phrases “one or more clicks” and “short period of time” in the Court’s construction were indefinite because they did not sufficiently delineate the scope of the term. The Court noted that it did not need absolute clarity to define a claim term and held that the Single Action was sufficiently definite. The Court reasoned that it had been able to construe the term based largely upon the specification. And neither “one or more clicks” nor “short period of time” rendered the claim indefinite because the phrases are part of the definition, not the claim language. 

 

Additionally, the terms were designed to be less than precise because Single Action is defined from the perspective of the individual user, not objectively for all users. The Court gave the example that an experienced trader might set a double click as two clicks occurring within .3 seconds of each other – which would be a Single Action – while a novice trader might set a double click as any two clicks within one second of each other – which would be a Single Action for the novice, but not the experienced trader. Creating a more fixed definition based on an average user would import limitations into the claim.

Finally, the fact that the Court was able to determine that the TSE software did not require only a Single Action further proved that Single Action was sufficiently definite.

*  Click here to read much more about this case in the Blog’s archives and click here for a copy of this opinion.

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Trading Techs. Int’l, Inc. v. eSpeed, Inc., No. 04 C 5312, Min. Orders (N.D. Ill. Jan. 3, 2007) (Moran, Sen. J.).*

In addition to the willfulness decision discussed earlier today (click here for the post) and the invalidity decision that I will blog about early next week, Judge Moran also issued two minute orders deciding several of the outstanding post-trial motions.  The Court denied defendant eSpeed's motion for a new trial and its combined motion for judgment as a matter of law that: 1) the claims are invalid because of anticipation, obviousness, prior sale; and 2) because the claims have a June 9, 2000 priority date they were not infringed.

There are still several pending motions, including various motions regarding damages and interest on the jury's award and eSpeed's motion for an evidentiary hearing regarding inequitable conduct.  I will keep you posted as those are decided.

*  Click here to read much more about this case 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. Jan. 3, 2007) (Moran, Sen. J.).*

Judge Moran granted defendants’ (collectively “eSpeed”) motion for judgment as a matter of law that their infringement was no willful. The Court instructed the jury using the objective recklessness standard from In re Seagate Techs., LLC, 497 F.3d 1360 (Fed. Cir. 2007), but when the Court reviewed the totality of the circumstances it found no support for the willfulness verdict and, more specifically that plaintiff Trading Technologies (“TT”) had not met its burden of proving that there was an objectively high likelihood of infringement when eSpeed sold its infringing product, Futures View. When eSpeed launched Futures View, TT’s patent had not issued. And while eSpeed was aware of the application, knowledge of an application does not prove willfulness. Furthermore, TT produced no evidence of post-issuance willfulness. TT submitted two internal eSpeed emails, but both were sent before TT’s patent issued and the emails only suggested that eSpeed should mimic certain features of the TT software. And upon learning of TT’s issued patent, eSpeed immediately began a redesign of Futures View, resulting in new software products that the Court granted summary judgment of noninfringement. As a result of the redesign, the infringing Futures View was only on the market for five months after TT’s patent issued. 

TT also argued that eSpeed’s failure to make noninfringement arguments in preliminary injunction proceedings showed willfulness. But the Court held that eSpeed denied infringement in its answer and that there was no need to argue noninfringement of Future View in preliminary injunction proceedings because eSpeed was not selling Future View. There was no danger of an injunction over a product eSpeed was not selling. 

Finally, TT argued that eSpeed’s creation of a $4M escrow account related to potential infringement of the TT patent when it purchased defendant Ecco was proof of willfulness. The Court, however, held that the escrow account was merely assignment of risk in a business deal. When eSpeed purchased Ecco, TT had already sued eSpeed and to the extent that there was any risk that Ecco products could infringe the TT patent, the escrow account was not an admission, but a “shrewd business practice.”

Expect to see more on TT v. eSpeed this week. The Court has issued its first few post-trial opinions and I am sure others are on their way before this case heads, presumably, to the Federal Circuit.

*  Click here to read much more about this case in the Blog’s archives and click here for a copy of this opinion.

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Lots of blogs have been doing top ten lists or posts pondering their past year or resolving to do more in 2008. That is not my style.* But Wired’s top ten list of startups to watch in 2008 caught my eye because of a Chicago connection – click here for the entire list. Second on the list (alphabetically) is Chicago company 37Signals, a company that makes a suite of personal and business management software. I am trying out their web-based calendar and organization tool Backpack and, so far, I have been impressed.  Here is what Wired says about 37Signals:

There's a reason nobody ever uses the phrase, "It's as simple as computer programming." But Chicago's 37Signals has made life simpler for programmers and small businesses alike with products such as Basecamp (project management software) and an increasingly popular open source web framework called Ruby on Rails. The company ditches the philosophy of "more features, more better" in favor of simplicity and accessibility: Focus only on the most important features and make things easier to use. The company itself embodies its keep-it-simple philosophy: Fewer than 10 staffers, working from humble offices, create programs quickly and nimbly adapt them based on user feedback. 37Signals released version 2.0 of Ruby on Rails in December, which should give many programmers a happy new year.

Founders: Jason Fried, Ernest Kim, Carlos Segura

Funding: Undisclosed sum from Bezos Expeditions

Employees: 8

For some other good IP-related top ten or end of the year lists, check out:

• Patent Docs (Top fifteen Patent Docs stories of the year, 11-15, 6-10 and 1-5)
  
• Patently-O (Hal Wegner's top ten 2008 patent cases)
  
• TinyTech IP (Top ten nanotechnology patents)

* I will say that the Blog’s top two stories of the year were without question the Patent Reform Act and Trading Technologies v. eSpeed.

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I have not been able to fulfill my promised additional coverage of the inequitable conduct portion of the Trading Technologies v. eSpeed case, but it is not my fault.*  The Court decided to consider eSpeed's inequitable conduct and patent misuse defenses on the papers.  The Court ordered a briefing schedule that will complete briefing by early December for eSpeed's inequitable conduct and patent misuse defenses , as well as eSpeed's post-trial motions regarding willfulness and damages remittitur and TT's motions for its attorneys' fees and costs.  The Court has scheduled a status conference for December 20th.  Perhaps the parties will have rulings by the end of the year.

Practice tip:  In my experience, one of the dangers of doing inequitable conduct after the conclusion of the jury trial is that both the Court and the parties are exhausted and emotionally drained at the end of the jury trial (particularly after a multi-week trial like this one).  So, when it is time to try inequitable conduct, either the Court no longer wants the trial or the parties and the Court are so exhausted that they have trouble keeping their focus and energy level where it was for the jury trial despite the importance of the issues.  I do not know why the parties or the Court decided that inequitable conduct should be decided on the papers in this case.  But any time that inequitable conduct is to be tried after a jury trial, you run the risk that no live evidence will come in on inequitable conduct.

*  Click here to read much more about this case and Trading Technologies' ("TT") related cases in the Blog's archives

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I have already posted on the verdict generally, but the jury's completed verdict form is now available and provides some more detailed information -- click here for a copy.  The jury found infringement, either literal, contributory or induced, for every accused product on every asserted claim.  The $3.5M damages award was split $1.5M against eSpeed and $2M against Ecco.  And both eSpeed and Ecco were found to have willfully infringed the patents.

Additionally, click here for the final jury instructions.  Of particular interest, the willfulness instruction, at page 35, is likely one of the first that used the new objective recklessness standard from In re Seagate.

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As I posted yesterday afternoon, the jury came back for Trading Technologies ("TT").  The jury found that eSpeed willfully infringed TT's patents for a six month period in 2004, found the patents valid and awarded $3.5M in damages.  The parties have not completed their bench trial on inequitable conduct.  So, the Court may still hold the patents invalid based upon inequitable conduct, which would render the $3.5M damages award moot.  But unless and until that happens, the award stands and has the potential to be as much as trebled based upon the willfulness finding. 

There has been some press coverage already.  Here is some of the best:

• Crain's Chicago Business
  
• Wall Street Journal (subscription required)
  
• Ad Hoc News
  
• CNN Money (AP story)
  
• Futures Magazine
  
• Reuters

You can read much more about this case and its related cases in the Blog's archives by clicking here.

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The jury returned a verdict for Trading Technologies, finding infringement and awarding $3.5M for software sold by eSpeed over six months in 2004.  The Court previously granted summary judgment of noninfringement for eSpeed's software from 2005 to the present.  I will provide more particulars as soon as I can get them.  And I will continue posting about a few of Judge Moran's opinions from the case, in addition to his opinions regarding the post-trial motions that I am sure will be filed.

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The jury continued its deliberations yesterday and reconvened this morning.  That is not a very informative update, but based on the Blog's traffic this week people are looking for updates on the case.  And that is all there is right now.

A relative who is a criminal defense attorney, often said that longer jury deliberations benefited the defense.  Of course, when he had a close case and a fast jury, he sometimes thought that benefited the defense also.  It is difficult to read the tea leaves with a jury.  But I will let you know as soon as I learn the jury's verdict.  For more on the case and Trading Technologies' related cases click here for the Blog's archives.

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Trading Techs. Int’l, Inc. v. eSpeed, Inc., No. 04C 5312, Slip Op. (N.D. Ill. Sep. 25, 2007) (Moran, Sen. J.). 

Judge Moran denied plaintiff Trading Technologies’ (“TT”) supplemental summary judgment motion. The Court previously denied the original motions regarding the priority dates of the patents in suit.* In that opinion, the Court held that whether the patents could claim priority from their provisional application was a question of fact for the jury. The issue was whether disclosing the species of a single mouse click in the provisional application was sufficient support for the genus – a single action by the user – claimed in the patents in suit.

TT argued that eSpeed’s expert’s statement that the art – software engineering and user interface design – was predictable, was sufficient to take the patents out of the In re Curtis, 354 F.3d 1347 (Fed. Cir. 2004), exception (unpredictability of a species prevents support of a genus). The Court agreed that the factual issue was predictability of the art. But the Court held that eSpeed’s expert’s statement did not resolve the dispute. A generally predictable art does not mean that one of ordinary skill would understand the patentee’s description of the particular species (one-click) was necessarily in possession of the genus (one action). So the issue went to the jury.

As of this post, the jury still has this case.  I will let you know as soon as I learn the jury's verdict.  For more on this case and Trading Technologies' related cases click here for the Blog's archives.  And keep watching the Blog, while the jury deliberates and the parties try inequitable conduct to Judge Moran this week, I will continue catching up with some prior opinions from the case.

*  To read about the original summary judgment motions click here or for a copy of this opinion click here.

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Trading Technologies (“TT”) and eSpeed rested on the issues of infringement, validity and damages last week, and the jury now has the case.  I attended closings last Thursday. Both sides made strong, persuasive arguments for their desired outcomes. What I thought was most interesting about the closings, from a trial standpoint, was the use of themes. TT’s theme was a story of a boy who eats cookies knowing he is not supposed to and, when his Mom returns and asks him about it, tries repeated lies and distractions to avoid punishment. The story was simple and compelling. Also, it fit well with TT’s case theory, that eSpeed copied its patented software and was simply trying to avoid payment for it. The only problem I saw with the theme, putting aside whether it was supported by the evidence since I did not attend the entire trial, was that it was introduced in the middle of the closing and only referred to sporadically. As a result, even though it was likely a stronger choice of theme than eSpeed’s, it was distracting instead of being integrated into TT’s and, hopefully for TT, the jury’s thinking about the case.

eSpeed’s theme was that TT engaged in a pattern of overreaching, evidenced by exaggerations and partial truths. With each TT witness discussed during its closing, eSpeed identified an alleged exaggeration or partial truth from that witness. eSpeed’s consistent use of the theme was compelling and, although I cannot comment on whether it was supported by the facts at trial, likely resonated well with the jury.

There were a couple of other items worth mentioning from the closings. First, both parties barely touched upon damages. TT explained to the jury that it did not care what amount the jury awarded (either above or below TT’s proposed $3.5M - $4.5M range. TT explained that its main interest was in maintaining the validity of its patents. eSpeed also appeared unconcerned with damages. It explained that the alleged infringement period was only about six months, noted the number eSpeed’s expert gave, assuming infringement -- $500,000 – and noted that TT chose not to cross examine eSpeed’s damages expert. 

Second, both parties used a substantial number of demonstratives during closings and largely used them effectively. But eSpeed used them slightly better. TT had a PowerPoint presentation including title and summary slides integrated into its closing, in addition to showing relevant pieces of evidence and testimony. In contrast, eSpeed went five or ten minutes into its closing before turning to demonstratives. And when it did, they consisted largely of evidence and testimony, without the summary PowerPoint slides. The effect of TT’s largely constant use of the slides was that the jury focused on the slides more than counsel (although they listened attentively throughout). Some would argue that because the slides made TT’s points in simple, pre-selected statements, TT wanted the jury’s focus on the slides. But I am a fan of old-fashioned human connection and eye contact. I think the jury will take more away from focusing on counsel than on his slides.

I will let you know as soon as I learn the jury's verdict.  For more on this case and Trading Technologies' related cases click here for the Blog's archives

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The parties have rested on the issues of infringement, validity and damages.  Closings were Thursday and the jury now has the case.  I attended the closings.  Look for my thoughts on them Monday morning -- unlike the Northern District, other government offices, the Post Office and many schools, the Blog will be working on Columbus Day.  Judge Moran will hear the inequitable conduct case beginning next week. 

I will let you know as soon as I learn the jury's verdict.  For more on this case and Trading Technologies' related cases in the Blog's archives click here.

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Trading Techs. Int’l., Inc. v. eSpeed, Inc., No. 04 C 5312, 2007 WL 2713335 (N.D. Ill. Sep. 12, 2007) (Moran, Sen. J.).

Judge Moran granted in part plaintiff Trading Technologies’ (“TT”) motion in limine, precluding defendant eSpeed from arguing to the jury that any feature requiring the specific sequence – a double mouse click, keying in a value and pressing the enter key – fell within the Court’s construction of a “single action.”* The Court reasoned that it defined single action from the perspective of the software end-user. And from the user prospective the double-click/quantity/enter sequence was clearly more than a single action.

The Court acknowledged that taking this decision from the jury was “unusual,” but the Court believed its decision was warranted because of the complexity of the case and how clearly outside the construction of single action the double-click/quantity/enter sequence was: 

The parties have no lack of theories, especially when it comes to invalidity and prior art. Therefore, as we are convinced that it would be impossible for a reasonable jury to find that the three steps described by eSpeed’s attorney could fit into our definition of single action, we grant TT’s motion to exclude evidence that it does. Rather than throw a non-starter at the jury or deal with this issue during post-trial motion practice, we exclude the evidence from the start. Although our decision is nearly akin to a partial summary judgment ruling, we are convinced that it is correct, it will save precious judicial resources, and simplify the case for the jury.  (Citations and footnotes omitt