throbber
UNITED STATES PATENT AND TRADEMARK OFFICE
`
`
`
`
`
`
`
`
`
`
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`TD AMERITRADE HOLDING CORPORATION, TD AMERITRADE, INC., and
`TD AMERITRADE ONLINE HOLDINGS CORP.,
`Petitioner
`
`v.
`
`TRADING TECHNOLOGIES INTERNATIONAL, INC.,
`Patent Owner
`
`
`
`
`
`
`CBM2014-00137 (Patent 7,685,055)1
`
`
`
`Before SALLY C. MEDLEY, MEREDITH C. PETRAVICK, and
`PHILIP J. HOFFMANN, Administrative Patent Judges.
`
`
`
`JOINT MOTION TO TERMINATE PROCEEDINGS AND NOTICE OF
`SETTLEMENT UNDER 35 U.S.C. § 327 AND 37 C.F.R §§ 42.72 AND 42.74
`
`
`
`1 An identical paper has also been filed in the following proceedings:
`
`
`CBM2014-00131 (Patent 7,533,056)
`CBM2014-00133 (Patent 7,676,411)
`CBM2014-00135 (Patent 6,772,132)
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`

`
`CBM2014-00131 (Patent 7,533,056)
`CBM2014-00133 (Patent 7,676,411)
`CBM2014-00135 (Patent 6,772,132)
`CBM2014-00137 (Patent 7,685,055)
`
`
`TABLE OF CONTENTS
`
`I.
`
`II.
`
`Introduction .................................................................................................................... 1
`
`Statement of Reasons for the Relief Requested ..................................................... 3
`
`A.
`
`Public policy favors terminating these proceedings. ................................ 3
`
`B. Allowing the parties to negotiate terms of a settlement,
`including termination of proceedings, serves the public interest. .......... 4
`
`C.
`
`Termination of these proceedings is appropriate at this stage in
`the proceedings in view of the Agreement. ................................................. 6
`
`III. Status of Related Proceedings ................................................................................... 7
`
`A.
`
`The existence of co-pending litigations and PTAB proceedings
`do not weigh against the reasons to terminate. ......................................... 10
`
`IV. Conclusion ............................................................. Error! Bookmark not defined.
`
`
`
`
`
`
`i
`
`

`
`
`
`CBM2014-00131 (Patent 7,533,056)
`CBM2014-00133 (Patent 7,676,411)
`CBM2014-00135 (Patent 6,772,132)
`CBM2014-00137 (Patent 7,685,055)
`
`
`I.
`
`Introduction
`
`Petitioners TD Ameritrade Holding Corporation, TD Ameritrade, Inc., and
`
`TD Ameritrade Online Holdings Corp. (“TD Ameritrade”) and Patent Owner
`
`Trading Technologies International, Inc. (“TT”) have entered into a confidential
`
`Settlement Agreement that resolves all underlying disputes between the parties,
`
`including CBM2014-00131 against U.S. Patent No. 7,533,056; CBM2014-00133
`
`against U.S. Patent No. 7,676,411; CBM2014-00135 against U.S. Patent No.
`
`6,772,132; and CBM2014-00137 against U.S. Patent No. 7,685,055, currently
`
`before the Board. The parties are filing a copy of the Agreement as Exhibit 2300
`
`along with a request to treat it as Confidential Business Information under 37
`
`C.F.R. § 42.74(c), and to seal it from the public absent showing good cause.
`
`In summary, the Settlement Agreement provides for: (1) a release of TD
`
`Ameritrade for alleged past damages; (2) a worldwide non-exclusive license from
`
`TT to TD Ameritrade under the patents at issue in the pending CBMs and many
`
`other U.S. and foreign patents for the term of the licensed patents; (3) TD
`
`Ameritrade providing TT good and valuable consideration for alleged past
`
`damages and the on-going license; (4) a worldwide cross-license to TT under
`
`certain TD Ameritrade patents; (5) dismissal of district court litigation between TT
`
`and TD Ameritrade involving the patents at issue in the CBMs as well as eleven
`
`1
`
`

`
`CBM2014-00131 (Patent 7,533,056)
`CBM2014-00133 (Patent 7,676,411)
`CBM2014-00135 (Patent 6,772,132)
`CBM2014-00137 (Patent 7,685,055)
`
`
`(11) additional patents; and (6) the termination of all of the pending CBMs with
`
`respect to all parties.
`
`Accordingly, pursuant to 35 U.S.C. § 327 and 37 C.F.R. §§ 42.72 and 42.74,
`
`the parties jointly request termination of all four proceedings involving the
`
`parties—CBM2014-00131 against U.S. Patent No. 7,533,056; CBM2014-00133
`
`against U.S. Patent No. 7,676,411; CBM2014-00135 against U.S. Patent No.
`
`6,772,132; and CBM2014-00137 against U.S. Patent No. 7,685,055—with respect
`
`to all parties, without rendering a final written decision in any of them. This joint
`
`consent for termination is based upon termination of all of the above listed CBM
`
`proceedings with respect to all parties because the requested termination is an
`
`important element of the consideration of the settlement agreement. During a
`
`telephone conference on June 30, 2015, when the parties informed the Board of
`
`this settlement, the Board authorized the parties to file a joint motion to terminate
`
`these proceedings.
`
`During that telephone conference, the Board noted the anticipated settlement
`
`agreement was contingent on the Board granting the requested termination and that
`
`there is no guarantee that the Board will grant such relief. The parties understand
`
`and respect that the requested termination is not automatic and is at the Board’s
`
`discretion, and that the Board is not a party to the settlement. For the reasons set
`
`2
`
`

`
`CBM2014-00131 (Patent 7,533,056)
`CBM2014-00133 (Patent 7,676,411)
`CBM2014-00135 (Patent 6,772,132)
`CBM2014-00137 (Patent 7,685,055)
`
`
`forth below, the parties respectfully submit the public interest and the
`
`congressional intent strongly supports the requested relief, and, therefore, the
`
`parties jointly request that this motion to terminate be granted.
`
`II.
`
`Statement of Reasons for the Relief Requested
`A.
`Public policy favors terminating these proceedings.
`Congress and the Federal Courts encourage settlement between litigants. See
`
`e.g., Delta Air Lines, Inc. v. August, 450 U.S. 346, 352 (1981) (“The purpose of
`
`[Fed. R. Civ. P.] 68 is to encourage the settlement of litigation.”); Bergh v. Dept. of
`
`Transp., 794 F.2d 1575, 1577 (Fed. Cir. 1986) (“The law favors settlement of
`
`cases.”), cert. denied, 479 U.S. 950 (1986). The U.S. Court of Appeals for the
`
`Federal Circuit also places a particularly strong emphasis on settlement. See
`
`Cheyenne River Sioux Tribe v. U.S., 806 F.2d 1046, 1050 (Fed. Cir. 1986) (noting
`
`that the law favors settlement to reduce antagonism and hostility between parties).
`
`Because Congress devised these proceedings as an alternative to litigation,
`
`termination following settlement comports with public policy. See 77 C.F.R.
`
`48680, 48680 (“The purpose of the AIA and this final rule is to establish a more
`
`efficient and streamlined patent system that will improve patent quality and limit
`
`unnecessary and counterproductive litigation costs”). As stated in the Board’s Trial
`
`Practice Guide, “[t]here are strong public policy reasons to favor settlement
`
`3
`
`

`
`CBM2014-00131 (Patent 7,533,056)
`CBM2014-00133 (Patent 7,676,411)
`CBM2014-00135 (Patent 6,772,132)
`CBM2014-00137 (Patent 7,685,055)
`
`
`between the parties to a proceeding.” Office Patent Trial Practice Guide, 77 Fed.
`
`Reg. 48,756, 46,768 (Aug. 14, 2012). As the Settlement Agreement includes
`
`provisions for cross-licensing of IP, as well as releases and covenants not to sue
`
`non-parties to the district court litigation, it also favors the public policy of
`
`encouraging licensing and access to technology.
`
`B. Allowing the parties to negotiate terms of a settlement, including
`termination of proceedings, serves the public interest.
`
`Maintaining these proceedings despite Petitioner’s and Patent Owner’s
`
`mutual desire to fully terminate them would prevent the Settlement Agreement
`
`from becoming effective and result in the unwanted continuation of all four CBM
`
`proceedings and the district court litigation and prevent the beneficial
`
`licensing/cross-licensing provided by the agreement. The Settlement Agreement is
`
`the result of months of intense negotiating between the parties and reflects a deal in
`
`which each side has made compromises and has eliminated risk. For example,
`
`Petitioner is providing TT consideration to obtain a release and license under the
`
`patents-at-issue as well as many other patents, thereby eliminating the expense of
`
`protracted litigation and the risk of injunctions and/or damages awards that could
`
`occur if Patent Owner prevails. Likewise, Patent Owner is granting a release and
`
`license for consideration far less than the damages being sought in court because it
`
`4
`
`

`
`CBM2014-00131 (Patent 7,533,056)
`CBM2014-00133 (Patent 7,676,411)
`CBM2014-00135 (Patent 6,772,132)
`CBM2014-00137 (Patent 7,685,055)
`
`
`will save significant litigation costs and eliminate the risk of Petitioner prevailing
`
`on grounds of non-infringement or invalidity.
`
`Denying the requested relief would discourage future settlements by
`
`removing a primary motivation for settlement—the removal of litigation costs and
`
`risks. If a risk of invalidity judgments in a post grant review against patent owner’s
`
`patents remains, there is a strong disincentive for the patent owner to enter into
`
`one-sided settlement agreements that completely eliminate the risk for the
`
`petitioner/defendant, but not for patent owner. In many instances, such as the case
`
`here, a settlement would not make sense if it involved only one party eliminating
`
`risk (e.g., just the petitioner removing its exposure or just the patent owner
`
`removing its exposure). Also, the Settlement Agreement eliminates significant
`
`costs and fees for both parties.
`
`The public interest Congress intended to further by creating these
`
`proceedings and making termination discretionary—to curb nuisance litigation by
`
`so-called “patent trolls”—does not exist here. See, e.g., 159 Cong. Rec. S3021
`
`(daily ed. Apr. 25, 2013) (Statement of Sen. Schumer). Patent Owner is not a non-
`
`practicing entity. Rather, Petitioner and Patent Owner have active businesses that
`
`now want to globally settle this matter and all litigation between the parties, which
`
`has consumed the parties’ resources since at least February 9, 2010 (when the
`
`5
`
`

`
`CBM2014-00131 (Patent 7,533,056)
`CBM2014-00133 (Patent 7,676,411)
`CBM2014-00135 (Patent 6,772,132)
`CBM2014-00137 (Patent 7,685,055)
`
`
`related district court litigation began). As noted above, there is also a public
`
`interest in promoting licensing and cross licensing of the sort in the Settlement
`
`Agreement because it spreads technology and increases competition.
`
`C. Termination of these proceedings is appropriate at this stage in
`the proceedings in view of the Agreement.
`
`A Final Written Decision is not statutorily due until December 2, 2015. The
`
`USPTO can conserve its resources through terminating the proceedings now,
`
`removing the need for the Board to further consider the arguments, and render a
`
`Final Written Decision.2 The requested terminations will also result in conserving
`
`resources of the district court because the Settlement Agreement provides for
`
`dismissal of that lawsuit. Terminations, forgoing a Final Written Decision, have
`
`been granted even in cases that proceeded past Oral Argument. See Callidus
`
`Software Inc. v. Versata Software, Inc., and Versata Dev. Group, Inc., CBM2013-
`
`00052, Paper 50 (Nov. 24, 2014) (terminating proceeding after Oral Argument on
`
`October 29, 2014); Clio USA, Inc. v. the Procter and Gamble Company, IPR2013-
`
`
`2 The parties have contemporaneously filed a request to withdraw their respective
`
`request for Oral Argument scheduled for July 9, 2015, because it is both parties
`
`intent to minimize any further costs and fees associated with these matters.
`
`6
`
`

`
`CBM2014-00131 (Patent 7,533,056)
`CBM2014-00133 (Patent 7,676,411)
`CBM2014-00135 (Patent 6,772,132)
`CBM2014-00137 (Patent 7,685,055)
`
`
`00438, Paper 57 (Oct. 31, 2014) (terminating proceeding after Oral Argument on
`
`July 28, 2014) ; Volusion, Inc. v. Versata Software, Inc. and Versata Development
`
`Group, Inc., CBM2013-00017, Paper 53 (June 17, 2014) and CBM2013-00018,
`
`Paper 52 (June 17, 2014) (terminating proceeding following oral hearings). In Sony
`
`Corp. v. Tessera Inc., IPR2012-00033, Paper 46, p. 2 (Dec 20, 2013), the Board
`
`terminated prior to Oral Hearing but after full briefing because the parties had
`
`reached “global settlement” of both the IPR and district court litigation, similar to
`
`the parties’ settlement here.
`
`Because oral argument has not occurred and the Board has not decided the
`
`merits of the proceedings, the expected normal course is to terminate proceedings
`
`upon settlement. See, e.g., Office Patent Trial Practice Guide, 77 Fed. Reg. 48,756,
`
`46,768 (Aug. 14, 2012) (citing 35 U.S.C. 317(a), as amended, and 35 U.S.C. 327)
`
`(“The Board expects that a proceeding will terminate after the filing of a settlement
`
`agreement, unless the Board has already decided the merits of the proceeding.”).
`
`III. Status of Related Proceedings
`Other than the district court case between Patent Owner and Petitioner that
`
`will be dismissed if the Settlement Agreement becomes effective (Trading Techs.
`
`Int’l, Inc. v. TD Ameritrade, Inc., TD Ameritrade Holding Corporation, and TD
`
`Ameritrade Online Holdings Corp., Case No. 10 C 883 (N.D. Ill.) (Consolidated
`
`7
`
`

`
`CBM2014-00131 (Patent 7,533,056)
`CBM2014-00133 (Patent 7,676,411)
`CBM2014-00135 (Patent 6,772,132)
`CBM2014-00137 (Patent 7,685,055)
`
`
`into Case No. 10 C 715))3, there are few matters involving the patents at issue in
`
`these proceedings remaining between TT and other companies listed below.4 The
`
`following are the related pending proceedings5:
`
`District Court Case
`Trading Techs. Int’l, Inc.
`v. Tradestation Sec., Inc.,
`Case No. 1:10-cv-00884
`(N.D. Ill.)
`Trading Techs. Int’l, Inc.
`v. IBG LLC, Case No.
`1:10-cv-00721 (N.D. Ill.)
`
`U.S. Patent Nos.
`6,772,132
`7,533,056
`7,676,411
`
`6,772,132
`7,533,056
`7,676,411
`7,685,055
`
`Status
`Consolidated into Case No.
`1:10-cv-00715 (N.D. Ill.)
`
`Consolidated into Case No.
`1:10-cv-00715 (N.D. Ill.)
`
`
`3 This case was captioned in parties’ Mandatory Notices (CBM2014-00131, Paper
`
`4, CBM2014-00133, Paper 1, CBM2014-00135 Paper 4, CBM2014-00137 Paper
`
`1) as Trading Techs. Int’l, Inc. v. thinkorswim Grp., Inc., 10 C 883 (N.D. Ill.). The
`
`updated caption is reflected above.
`
`4 TT represents that each of the parties in these cases are competitors of TT. TD
`
`Ameritrade does not have sufficient knowledge to join in this statement.
`
`5 Additional cases listed in the Mandatory Notices (CBM2014-00131, Paper 4,
`
`CBM2014-00133, Papers 1, 31, CBM2014-00135 Papers 4, 31, CBM2014-00137
`
`Papers 1, 40) have terminated as settled and/or Consent Judgment entered.
`
`8
`
`

`
`CBM2014-00131 (Patent 7,533,056)
`CBM2014-00133 (Patent 7,676,411)
`CBM2014-00135 (Patent 6,772,132)
`CBM2014-00137 (Patent 7,685,055)
`
`
`Settlement expected shortly;
`Consolidated into Case No.
`1:10-cv-00715 (N.D. Ill.)
`
`Consolidated into Case No.
`1:10-cv-00715 (N.D. Ill.)
`
`Trading Techs. Int’l, Inc.
`v. FuturePath Trading,
`LLC, Case No. 1:10-cv-
`00720 (N.D. Ill.)
`Trading Techs. Int’l, Inc.
`v. CQG, Inc., Case No.
`1:10-cv-00718 (N.D. Ill.)
`
`Trading Techs. Int’l, Inc.
`v. FuturePath Trading,
`LLC, Case No. 1:05-cv-
`05164 (N.D. Ill.)
`Trading Techs. Int’l, Inc.
`v. CQG, Inc., Case No.
`1:05-cv-04811 (N.D. Ill.)
`
`Trading Techs. Int’l, Inc.
`v. GL Consultants, Inc.,
`Case No. 1:05-cv-04120
`(N.D. Ill.)
`
`
`7,533,056
`7,676,411
`7,685,055
`
`7,533,056
`7,676,411
`7,685,055
`6,772,132
`
`
`6,772,132
`
`
`6,772,132
`
`
`Final Judgment entered on June
`12, 2015; Appeal Docketed (No.
`15-1768, Fed. Cir., consolidated
`with Appeal 15-1767)
`Patent found not invalid under
`35 U.S.C. § 101, Trial completed
`with verdict in favor of TT, Post-
`Trial Motions completed; Final
`Judgment and appeal to Federal
`Circuit expected soon
`Final Judgment of non-
`infringement with respect to
`certain products entered May 14,
`2015; Case settled to all other
`products and Appeal Docketed
`(No. 15-1767, Fed. Cir.)
`Petitioner
`Status
`
`USPTO Case
`Number
`CBM2015-00058 CQG, Inc. and
`CQGT, LLC
`
`U.S. Patent
`Number
`6,772,132
`
`
`
`Patent Owner
`Preliminary Response
`filed 5/6/15
`
`9
`
`

`
`CBM2014-00131 (Patent 7,533,056)
`CBM2014-00133 (Patent 7,676,411)
`CBM2014-00135 (Patent 6,772,132)
`CBM2014-00137 (Patent 7,685,055)
`
`
`Of the remaining cases, TT expects Futurepath to settle soon.6 GL
`
`Consultants has settled but has a remaining issue (a finding of non-infringement of
`
`the ’132 patent) on appeal. In CQG, CQG lost its arguments related to Sections
`
`101 (and 112) and post-trial briefing has been completed and is under
`
`consideration by the court.
`
`A. The existence of co-pending litigations and PTAB proceedings do
`not weigh against the reasons to terminate.
`
`During the telephone conference on June 30, 2015, the Board asked whether
`
`there were additional related proceedings. The four CBMs identified above are the
`
`only proceedings at the USPTO that involve TT and TD Ameritrade. And, as
`
`shown above, most litigations relating to the patents at issue have been settled and
`
`only a few active district court cases remain. The Agreement finally resolves the
`
`dispute between TD Ameritrade and TT, including the underlying district court
`
`litigation (Trading Techs. Int’l, Inc. v. TD Ameritrade, Inc. et al., Case No. 10 C
`
`883 (N.D. Ill).
`
`
`6 TD Ameritrade does not have sufficient knowledge to join this and the next
`
`sentence.
`
`10
`
`

`
`CBM2014-00131 (Patent 7,533,056)
`CBM2014-00133 (Patent 7,676,411)
`CBM2014-00135 (Patent 6,772,132)
`CBM2014-00137 (Patent 7,685,055)
`
`
`Of the eleven other parties defending litigations against the patents, only
`
`four parties remain (CQG, IBG, TradeStation, and FuturePath). IBG, TradeStation,
`
`and FuturePath have not filed any petitions with the USPTO to review the patents,
`
`nor have they sought to join any of these proceedings. See Sony Corp. v. Tessera
`
`Inc., IPR2012-00033, Paper 46, p. 2 (Dec 20, 2013) (terminating proceeding in its
`
`entirety noting that a remaining litigation defendant “could have, but did not, file a
`
`petition for inter partes review [or] motion for joinder, in order to join this
`
`review.”). As joint defendants in the pending case with TD Ameritrade, the
`
`remaining parties have declined invitations by the district court to be estopped by
`
`these CBM proceedings. See e.g., Ex. 2301-2304.
`
`CQG has requested CBM review of the U.S. Patent No. 6,772,132 patent on
`
`§§ 101 and 112 grounds, as well as a continuation of the '132 patent, U.S. Patent
`
`No. 6,766,304. See CBM2015-00058 and CBM2015-00057. A decision on
`
`institution has not issued for these two petitions. CGQ has already pursued these
`
`grounds in district court, lost, and will likely be appealing the court’s decision soon
`
`once post-trial motions are decided. All of the other defendants could have filed
`
`CBM petitions since September 16th of 2012 when CBM review became available
`
`and have chosen not to do so with the exception of the CQG’s ’132 and ’304
`
`petitions.
`
`11
`
`

`
`CBM2014-00131 (Patent 7,533,056)
`CBM2014-00133 (Patent 7,676,411)
`CBM2014-00135 (Patent 6,772,132)
`CBM2014-00137 (Patent 7,685,055)
`
`
`IV. Conclusion
`For the foregoing reasons, Petitioner TD Ameritrade and Patent Owner TT
`
`request that the Board terminate all four of these proceedings in their entirety.
`
`Respectfully submitted,
`
`
`
`
`
`Date: July 5, 2015
`
`
`
`Date: July 5, 2015
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`/Lori Gordon/
`Lori Gordon
`Registration No. 50,633
`Lead Counsel for Petitioner
`
`
`
`/Erika H. Arner/
`Erika H. Arner
`Registration No. 57,540
`Lead Counsel for Patent Owner
`
`
`
`
`
`
`
`
`
`12
`
`

`
`CBM2014-00131 (Patent 7,533,056)
`CBM2014-00133 (Patent 7,676,411)
`CBM2014-00135 (Patent 6,772,132)
`CBM2014-00137 (Patent 7,685,055)
`
`
`CERTIFICATE OF SERVICE
`
`The undersigned hereby certifies that a copy of the foregoing Joint Motion
`
`
`
`to Terminate Proceeding and Notice of Settlement under 35 U.S.C. § 327 and
`
`37 C.F.R. §§ 42.72 and 42.74, was served on July 5, 2015, via email directed to
`
`counsel of record for the Petitioner at the following:
`
`
`
`Lori A. Gordon
`lgordon-ptab@skgf.com
`
`Jonathan M. Strang
`jstrang-ptab@skgf.com
`
`Robert E. Sokohl
`rsokohl-ptab@skgf.com
`
`
`
`STERNE, KESSLER, GOLDSTEIN & FOX P.L.L.C.
`1100 New York Avenue, N.W.
`Washington, D.C. 20005-3934
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`/Ashley F. Cheung/
`Ashley F. Cheung
`Case Manager
`
`
`
`
`
`
`
`FINNEGAN, HENDERSON, FARABOW,
`GARRETT & DUNNER, LLP
`
`13

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