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`"‘
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`Cieyk's File Copy
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`3561
`
`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF ILLINOIS
`
`EASTERN DIVISION
`
`TRADING TECHNOLOGIES INTERNATIONAL,)
`INC.,
`)
`)
`
`
`
`,
`
`v.
`
`Plaintiff,
`
`'
`
`‘
`
`)
`)
`) No. 04 C 5312
`
`)
`.
`eSPEED INTERNATIONAL, )
`,
`INC .
`eSPEED ,
`LTD., ECCO LLC, and ECCOWARE, LTD.,) Chicago, Illinois
`.
`‘
`) October 4, 2007
`Defendants.
`)
`10:30 o‘clock a.m.
`
`VOLUME 17—A
`TRIAL TRANSCRIPT OF PROCEEDINGS
`
`BEFORE THE HONORABLE JAMES B. MORAN, and a JURY
`
`APPEARANCES:
`
`Trading Technologies
`International, Inc., by:
`'
`
`TRADING TECHNOLOGIES
`INTERNATIONAL,
`INC.,
`MR. STEVEN F. BORSAND
`
`and
`
`'
`
`'
`
`222 South Riverside Drive
`Chicago, Illinois 60606
`312-476-1000
`steve.borsand@
`
`tradingtechnologies.com
`
`McDONNELL, BOEHNEN, HULBERT &
`BERGHOFF, LTD.
`MR. PAUL H . BERGHOFF
`MR. S. RICHARD CARDEN
`
`MR. CHRISTOPHER M. CAVAN
`
`MR. MICHAEL D. GANNON
`
`E3
`
`g % L E
`3 0 2038 TC
`
`MNY
`mcHAELW-gggggoum‘
`SHREJLSJMS
`
`5
`
`0001
`0001
`
`MR. LEIF R. SIGMOND
`
`JENNIFER M. KURCZ
`MS.
`MR. MATTHEW J. SAMPSON
`300 South Wacker Drive
`Chicago, Illinois 60606
`312—913—0001
`berghoff@mbhb . com
`kurchmbhb.com
`TDA 1048
`
`TDA 1048
`TD Ameritrade v. TT
`TD Ameritrade v. TT
`CBM2014-00131
`CBM2014-00131
`
`\
`/
`
`6‘
`
`_
`
`.
`
`_
`
`,
`
`
`
`eSpeed, Inc., eSpeed
`International, Inc.,
`Ecco LLC, Eccoware,
`LTD., by:
`
`3562
`
`WINSTON & STRAWN
`
`MR. GEORGE C. LOMBARDI
`MR. RAYMOND C. PERKINS
`MR.
`IMRON T. ALY
`MR. KEVIN BANASIK
`MS. ELIZABETH HARTFORD ERICKSON
`MR. ANDREW M.
`JOHNSTONE
`MS. TRACEY J. ALLEN
`MR.
`JAMES M. HILMERT
`35 West Wacker Drive
`
`Chicago, Illinois 60601
`312—558—5600
`
`glombardiGwinston.com
`rperkinsGwinston.com
`
`LAW OFFICES OF
`
`GARY A. ROSEN, P.C.
`MR. GARY A. ROSEN
`
`1831 Chestnut Street, Suite 802
`Philadelphia, Pennsylvania
`191
`215—972—0600
`
`Rosenthal Collins Group,
`
`DOWELL BAKER
`
`LLC, by:
`
`MR. GEOFFREY A. BAKER
`201 Main Street
`
`IN 47901
`Lafayette,
`765-429—4004
`
`gabaker@dowellbaker.com
`
`Court Reporter:
`
`CAROLYN COX, CSR, RPR, CRR
`MS.
`Official Court Reporter
`219 S. Dearborn Street, Suite 1854—B
`60604
`
`Chicago, Illinois
`(312) 435—5639
`
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`MR. BERGHOFF,
`
`CLOSING ARGUMENT
`
`MR. LOMBARDI,
`
`CLOSING ARGUMENT
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`basically what their testimony was.
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`They had the TT
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`patent and the TT claims in front of them, and they
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`said, Oh,
`
`I find this part in the prior art. Oh,
`
`I find
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`this part over here.
`
`That is hindsight. That is not what Judge
`
`Moran is going to tell you you need to do when you look
`
`at obviousness.
`
`Then the other thing that they were fond of
`
`doing in their testimony is that they took the patent,
`
`TT's own patent, and used it as a road map to argue
`
`that, Well, once I know what the invention is,
`
`I would
`
`know how to build it. Well,
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`that is right,
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`that is
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`TT, once Harris Brumfield came up with the
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`idea for the combination, was able to build it for him,
`
`although it took many months to work out the software
`
`kinks. But that is legally improper to say, Once I know
`
`about
`
`the invention,
`
`I can build it. That is the wrong
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`approach.
`
`eSpeed's expert also just want to ignore
`
`the many disadvantages with Mr. Brumfield‘s proposal:
`
`Might miss the market, slower than the conventional grid
`
`screen,
`
`less accurate for orders at the market, you are
`
`using up a lot of screen real estate.
`
`They want
`
`to ignore those disadvantages
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`because they undercut the obviousness argument we are
`
`trying to make here and they want to minimize the
`
`benefits.
`
`These are all benefits that they enjoy in
`
`their product that they copied from MD Trader:
`
`The
`
`user has a better view of the market place, what it is
`
`doing.
`
`The user,
`
`trader, has increased confidence
`
`that he or she is going to get the right price, and
`
`overall, it is a faster trading tool, a more profitable
`
`trading tool.
`
`They want to ignore that real world
`
`evidence, and instead,
`
`they want you to focus on four
`
`things that have a static price axis —- and they do, we
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`../‘\y
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`never disputed that. But what they don't have,
`
`these
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`four things,
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`is single—action order entry;
`
`they don‘t
`
`have working orders in alignment;
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`they don't have
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`single-action cancellation; and two of them, Midas
`
`Kapiti and Trade Pad, aren‘t even prior art.
`
`They also want to ignore what happened in
`
`the Patent Office.
`
`.Mr. Godici had to agree.
`
`The Patent
`
`Office considered the combination of static and
`
`single—action. Not only considered it, but found that
`
`this was the closest prior art.
`
`The first patent was one that showed static
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`prices.
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`The second, X_Trader had single-action order
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`entry. Talk about hindsight,
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`they are making the same
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`argument that the Patent Office already ruled on in
`
`granting our patents.
`
`The Patent Office knew there were static
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`prices.
`
`The Patent Office knew that there was
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`single-action order entry. And they granted the patent.
`
`Talk about hindsight,
`
`this is the case. But we don't
`
`have to stop there, we have real world examples of why
`
`this is hindsight.
`
`eSpeed first. Here is the screen they had
`
`before they copied MD Trader.
`
`It was a conventional
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`screen,
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`the inside market always stayed focused on the
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`The testimony from Mr. Noviello is their
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`customers shut them out.
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`They did not want that screen.
`
`Why?
`
`MD Trader was already on the market. What
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`they
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`wanted was MD Trader.
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`They wanted a copy of MD Trader.
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`So what eSpeed had was the conventional, and what
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`they
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`needed and then copied from TT was MD Trader.
`
`Now,
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`in 2004 -— so MD Trader has been on the
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`market for more than two years —— this is from Bill Gill
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`to Joe Noviello. Mr. Lombardi said I was going to make
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`fun of eSpeed and that they were dumb for not seeing the
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`invention when it was right in front of their faces.
`
`0006
`0006
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`That is not my point at all.
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`These are
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`extremely bright people.
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`These are the best of the best
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`and one of our arch competitors.
`
`But even with MD Trader on the market for a
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`couple years,
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`this memo makes it clear that Mr. Gill
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`didn't understand static price, what the advantage was.
`
`He said, This is maybe why the TT view
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`requires a specific user —- instead, moves the center
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`line of prices up and down with the market.
`
`Maybe.
`
`He didn't get it yet.
`
`Is he dumb?
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`No, he is very bright, he is very bright. But if there
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`is any evidence -- and you will have this E—mail when
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`you are back deliberating, and you can take a look at
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`it —— but if there is any evidence that makes it that
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`this invention was not obvious in 1998 and 1999,
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`this is
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`it. ESpeed‘s best and brightest in 2003.
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`About the Tokyo Stock Exchange,
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`they had
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`supposedly a static screen in the scroll mode, we will
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`talk about that in a second.
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`They don't have static
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`action.
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`They didn't have it then,
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`they don't have it
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`today.
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`So, if it is so obvious to combine it, why
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`didn't they do it?
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`It is pretty simple.
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`And let‘s not forget, single—actions have
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`been everywhere since 1990.
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`So the Tokyo Stock Exchange
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`0007
`0007
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`knew about static prices, knew about single-action, and
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`they never combined it. Why is this obvious?
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`It is
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`not. This is real world. This is common sense.
`
`GL Trade Pad,
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`the window they devised, 4.31,
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`that had a single click, wait, another single click,
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`that Mr. Ferraro clearly said is not a single action,
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`their best relationship with CME said it was useless, it
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`was useless.
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`And indeed,
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`their own product history shows
`
`that.
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`They moved away from single—action,
`
`they never
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`had it in the first place,
`
`they moved away from it. And
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`then when they finally came out with a product to
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`compete in the market place —— Trade Pad was never a
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`problem. That was just some developmental software they
`
`were playing with, it was rejected by the CME.
`
`When they came out with a product in 2001 ~—
`
`actually,
`
`they came out with it in 2002, what did they
`
`copy?
`
`TT.
`
`Why has GL Quick Trade been developed?
`
`To
`
`compete with the innovative competition. We know who it
`
`is.
`
`It is right in their own document. And what is
`
`part of this new window,
`
`this new development?
`
`It is
`
`the vertical display of prices.
`
`It offers an
`
`alternative visual layout.
`
`Now for the first time, GL Quick Trade -—
`
`0008
`0008
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`and we are in 2001 —— will send an order with one click.
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`In 2002, for the first time now GL Trade
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`says, We are going to add two new columns for order,
`
`location, and monitoring and cancellation. And in an
`
`internal document in 2002 they refer to one-click order
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`cancellation for fast trading as the sought—after
`
`one—click order cancellation. This wasn‘t obvious to
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`GL.
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`I am not going to spend a lot of time on
`
`these, you have heard a lot about it.
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`These are
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`indicia, secondary considerations, but they must be
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`considered by you. That is what Judge Moran is going to
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`tell you:
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`Because this is certainly not a clear case,
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`because this is clearly not in eSpeed's case a clear
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`case where they win on obviousness, if anything the
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`wrong way.
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`Copying? Everybody copied MD Trader when it
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`came out,
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`including Ecco and eSpeed and the industry.
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`Initial skepticism? We heard about that
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`from Mr. Feltes.
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`He said his traders, at first, were
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`reluctant to try it.
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`TT‘s salespeople were reluctant to
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`sell it.
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`It has been a commercial success.
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`It had
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`unexpected benefits, and it had acceptance by licensees.
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`One other thing,
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`I want
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`to focus on one
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`0009
`0009
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`3680
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`thing.
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`It was like a scientific experiment.
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`Do you remember the testimony of David
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`Martin?
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`No connection to the case, he was using
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`conventional software, and all of a sudden, he started
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`losing money, and he didn't know what was going on.
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`He
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`was entering trades as quickly as he was before, his
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`strategy hadn't changed, and he wasn't getting —- he
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`wasn't getting the orders he wanted.
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`Then he changed to MD Trader, and within
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`three days, within three days it had a material impact
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`on his results. And as soon as he started use the new
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`software, All of a sudden, my profit and loss went up
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`and I started to make money consistently.
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`The only thing that changed it was he used
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`MD Trader.
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`Stunning evidence of the effect of MD Trader
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`in the real world.
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`eSpeed has been told this by TT in the past,
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`but I will tell them again in your presence:
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`They are
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`welcome to use a multiple-action order entry system, it
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`is not covered by our patents.
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`They are welcome to use
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`the Trade Pad system, go ahead, it is not covered by our
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`patents.
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`It doesn‘t infringe, go ahead, use the TSE
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`system, Midas Midas Kapiti, TIFFE.
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`Go ahead, use those
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`systems, sell those systems, fine with us. But they
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`don't want to do that.
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`They want to sell a copy of
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`0010
`0010
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`come up.
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`On the prior art,
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`they didn't consider that
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`issue here.
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`They didn't have TSE, TIFFE, Midas Kapiti,
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`GL Win.
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`They didn't have them.
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`So you are here operating on a clean slate,
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`and you have spent four weeks looking at this stuff.
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`If
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`you were here to be a rubber stamp for the Patent and
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`Trademark Office,
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`I hope you would have done it a lot
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`faster than that.
`
`The Patent and Trademark Office does
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`its job and you should do your job.
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`But there is another thing, and I wanted to
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`point this out to you because I think this is just
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`another example of what happens when lawyers try to
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`explain away too much.
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`Remember,
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`they have now said that the Patent
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`and Trademark Office considered art that had a static
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`price axis in it.
`
`Do you remember that? Notice of
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`allowance? And they say, actually,
`
`I am wrong, Lombardi
`
`is wrong.
`
`The Patent and Trademark Office considered
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`art with a static price axis.
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`Let's look at the document, and this is from
`
`that notice of allowance.
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`Do you remember the notice of
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`allowance warning?
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`It was the thing that the Patent and
`
`Trademark Office sent out at the end and they said, This
`
`is why we are going to allow —— this is why we are going
`
`0011
`0011
`
`