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.

Continue Reading Trading Technologies v. eSpeed: Final Judgment

Trading Techs. Int’l, Inc. v. eSpeed, Inc., No. 04 C 5312, Slip Op. (N.D. Ill. May 22, 2008) (Moran, Sen. J.).*
Judge Moran denied the party’s cross motions for attorney’s fees. Plaintiff Trading Technologies (“TT”) argued that the case was exceptional. But the Court held that it was not for the following reasons:
eSpeed’s refusal to admit infringement was reasonable. A defendant requiring plaintiff to make its proofs does not alone make a case exceptional.
eSpeed’s decision not to agree to an interlocutory appeal of claim construction and noninfringement decision was not grounds to make the case exceptional. Although eSpeed argued against an interlocutory appeal, the Court made the ultimate determination.
eSpeed’s pursuit of its inequitable conduct claim, which it lost after a bench trial, did not make the case exceptional. In the Court’s opinion regarding inequitable conduct, the Court ruled for TT, but noted that eSpeed’s case was not frivolous – click here to read the Blog’s post about that opinion.
The jury’s willfulness finding did not make the case exceptional. This was especially true because the Court overturned the jury’s willfulness decision based upon In re Seagate – click here to read the Blog’s post about that case.
The Court noted that neither party in this case acted more outrageously than the other. Counsel for both parties were zealous advocates that pushed, but did not go beyond, the envelope.
eSpeed argued that the Court should award it attorney’s fees, pursuant to Fed. R. Civ. P. 37(e)(2), for proving that a particular use of a software package was commercial and not experimental, a fact that TT denied in a request for admission. The Court chose not to rule on TT’s and eSpeed’s respective procedural arguments regarding whether TT was required to admit the use was commercial. Instead, the Court denied attorney’s fees because of the Court’s earlier ruling that failure to disclose the commercial use in question to the Patent Office was not inequitable conduct because the use occurred before the critical date. And, as with eSpeed’s decision to hold TT to its proofs, the Court would not punish TT for holding eSpeed to its proofs on inequitable conduct.
* Click here to read this opinion and click here to read much more about this case in the Blog’s archives.

Continue Reading Trading Technologies v. eSpeed: No Attorney’s Fees

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

RRK Holding Co. v. Sears, Roebuck & Co., No. 04 C 3944, Slip Op (N.D. Ill. May 27, 2007) (Coar, J.).
Judge Coar denied defendant Sears, Roebuck & Co.’s (“Sears”) Fed. R. Civ. P. 50(b) motion for judgment as a matter of law and Fed. R. Civ. P. 59(a) motion for a new trial or a remittitur. And the Court granted plaintiff RRK Holding Co.’s (“RRK”) motion for pre-judgment and post-judgment interest. A jury previously returned a verdict finding Sears liable for breach of a nondisclosure agreement and misappropriation of RRK’s trade secret related to its spiral saw – click here for much more on this case in the Blog’s archives. The jury awarded RRK approximately $21M, including $11.6M in actual damages, $1.6M for unjust enrichment and $8M in punitive damages.
First, Sears argued that RRK offered insufficient evidence showing that Sears’ alleged misappropriation caused RRK’s damages. But the Court held that there was sufficient evidence to support the jury’s verdict. The fact that Sears’s price for its spiral saw was lower than RRK’s explained why customers purchased Sears’s saws over RRK’s, but the trade secret causation was shown by the fact that Sears sold the combination tool instead of selling the components separately.
Second, Sears argued that RRK’s damages should be limited to the traditional “head start” period (an estimate of the time it would take for defendant to develop the trade secret on its own). But the Court held that Illinois law limits injunctive relief to a head start period, but not monetary relief.
Third, the Court held that RRK’s damages expert was sufficiently credible and held that Sears had sufficient opportunity to challenge the expert’s methodologies during cross examination.
Fourth, Sears argued that the jury’s award was in error because it awarded damages based on the entire sales price of the spiral saws, instead of apportioning just that portion of the sales price related to RRK’s trade secrets. But the Court held that a rational jury could have determined that the reason the spiral saw was a success was because of the trade secret and that, therefore, apportionment was not required.
Fifth, Sears argued that RRK’s lost profits damages should have been cut-off when third party competitor Dremel entered the market with a competing spiral saw. But the Court held that it was unclear whether Dremel’s tool was similar enough to RRK’s trade secret to be a substitute for it.
The Court also held that the jury’s award was not excessive. But the Court did find that the jury erred in by using the wrong figure from RRK’s expert for actual lost profits. RRK also conceded that the jury used the wrong number. The Court, therefore, reduced the jury’s actual damages award from $11.6M (the incorrect figure) to $11.2M (the correct figure).
Finally, the Court awarded RRK both pre-judgment and post-judgment interest. Pre-judgment interest, which is awarded on equitable grounds, was appropriate because of the intentional nature of trade secret misappropriation. Additionally, the Court held that pre-judgment interest was appropriate even though RRK was also awarded punitive damages. The Court did, however, suggest that had the punitive damages award been multiples of the actual damages, pre-judgment interest might not have been appropriate. Sears did not challenge RRK’s motion for post-judgment interest.
The Court added $3.7M in pre-judgment interest to the $21M award and assessed post-judgment interest of $1,931.50 per day until the award was paid.

Continue Reading RRK v. Sears: Judge Adds Interest to Jury Award

Lorillard Tobacco Co. v. Montrose Wholesale Candies & Sundries, Inc., No. 03 C 5311 & 0844, 2008 WL 954161 (N.D. Ill. Apr. 8, 2008) (Cole, Mag. J.).
Judge Cole denied plaintiff’s motion for inspection and seizure of assets in its trademark counterfeiting case. The Court previously entered judgment for plaintiff – click here for more about this case in the Blog’s archives. Plaintiff brought this motion seeking to identify and seize cash, checks and other financial instruments to satisfy the judgment. The Court held that the motion essentially sought a search warrant directed by plaintiff and utilizing Federal Marshals:
The reality is that the motion is tantamount to a request for a search warrant for Lorillard to enter and search the home of Ray and Sandra Hazemi and the business premises of Montrose Wholesale Candies and Sundries, Inc. (which is owned by them) and for permission to seize any cash, checks or other negotiable instruments belonging to the Hazemis and Montrose and to seize or at least copy all of their financial and accounting records. Nothing in the Motion, itself, suggests that the search and seizure will be accomplished by anyone other than Lorillard. It is not until one looks at the Proposed Order granting the motion that there is even a motion of United States Marshals. But even then, it is Lorillard, through its counsel of record, who is to carry out the search and seizure. The Marshals are merely to accompany Lorillard.
The Court held that the Federal Rules of Civil Procedure did not authorize search warrants. The Court further held that the request was not like a seizure of counterfeit goods, which was authorized by 15 U.S.C. § 1116(d)(1)(A), because it sought a post-judgment search to satisfy a judgment.

Continue Reading Federal Rules Do Not Authorize Civil Search and Seizure

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

Hickory Farms, Inc. v. SnackmastersSnackmasters, Inc., No. 05 C 4541, Slip Op. (N.D. Ill. Apr. 2, 2008) (Kennelly, J.).
Judge Kennelly awarded defendant approximately $350,000 in attorney’s fees, costs and interest, based upon defendant’s fee petition. The Court previously held that plaintiff’s “Beef Stick” and “Turkey Stick” marks were generic and ordered their cancellation — click here for more on this case in the Blog’s archives. The Court also denied plaintiff’s motion for reconsideration of the genericness decision and held that defendant had a right to its reasonable attorney’s fees and costs because the case was exceptional. There were several noteworthy rulings in the opinion:
* The Court held that defendant was owned not just its fees from the litigation, but also from the related TTAB because the substantive work and research in the earlier TTAB proceeding formed the core of defendant’s successful motion for summary judgment of genericness. It did not matter that defendant initiated the TTAB proceeding.
* The Court awarded defendant its attorney’s fees for time spent searching the internet for third party uses of “Beef Stick” and “Turkey Stick.” Internet searching was not clerical work because review of each use of the marks required legal analysis. Furthermore, the Court relied on the fruits of that research in granting summary judgment.
* The Court denied attorney’s fees for work related to the Seventh Circuit’s mediation program. The Seventh Circuit appeal was a separate proceeding and, therefore, it was not appropriate for the Court to award fees for work done that did not further this case, as the work in the TTAB proceeding did.
* The Court held that an administrative charge of 4% of an attorney’s billings was reasonable and awarded it as part of attorney’s fees, as opposed to costs. Defendant’s counsel used the 4% administrative charge as a standard billing practice, instead of tracking long-distance telephone, copying, faxing and other incidental charges for each client and case. The Court held that 4% was a modest amount and was an “appropriate device” for estimating fees without incurring substantial overhead for monitoring those fees precisely.

Continue Reading Court Awards Exceptional Case Fees for Related TTAB Proceeding

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

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.

Continue Reading Trading Technologies v. eSpeed: Ambiguous Term Not Indefinite Because it can be Construed