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.

Continue Reading Trading Technologies v. eSpeed: The Appeals Begin

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 having been previously designated “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.

Continue Reading Trading Technologies v. eSpeed: Documents Confidential Despite Public Use During Bench Trial

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.

Continue Reading Trading Technologies v. eSpeed: Permanent Injunction

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.

Continue Reading Trading Technologies v. eSpeed: No Inequitable Conduct

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.

Continue Reading Trading Technologies v. eSpeed: Inequitable Conduct Post-Trial Update

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.

Continue Reading Trading Technologies v. eSpeed: Inequitable Conduct Update

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.

Continue Reading Trading Technologies v. eSpeed: Inequitable Conduct Hearing Scheduled

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.

Continue Reading Willfulness Post-Seagate

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.

Continue Reading Trading Technologies v. eSpeed: Damages Remittitur

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:
The letter requested a 2.5 cent fee for every transaction an exchange processed regardless of whether infringing software was used; and
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.

Continue Reading Trading Technologies v. eSpeed: Restrictive License Agreements are not Patent Misuse