Case: 1:05-cv-04811 Document #: 876 Filed: 01/13/15 Page 1 of 7 PageID #:26879
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`UNITED STATES DISTRICT COURT
`FOR THE NORTHERN DISTRICT OF ILLINOIS
`EASTERN DIVISION
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`Case No. 05-cv-4811
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`Judge Sharon Johnson Coleman
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`TRADING TECHNOLOGIES
`INTERNATIONAL, INC.,
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`Plaintiff,
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`v.
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`CQG, INC., and CQGT, LLC,
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`Defendants.
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`MEMORANDUM OPINION AND ORDER
`On December 12, 2014, CQG filed a Motion to Stay the case pending Covered Business
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`Method Review by the U.S. Patent and Trademark Office [845]. The Court allowed Trading
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`Technologies until December 29, 2014, to respond. No reply was allowed, but one was filed.1 For
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`the reasons stated below, the motion is denied.
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`Background
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`The instant motion stems from a petition filed by TD Ameritrade Holding Corp. et al. on
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`May 19, 2014, with the USPTO requesting review under the transitional program for covered
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`business method patents of U.S. Patent No. 6,772,132 B1 (one of the patents-in-suit in our case –
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`the ‘132 patent).2 TD Ameritrade challenged the patentability of claims 1-56 of the ‘132 patent under
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`35 U.S.C. § 101 (among other things). On December 4, 2014, the USPTO determined that the
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`petition demonstrates that it is more likely than not that the challenged claims are unpatentable
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`under 35 U.S.C. § 101, and therefore instituted a covered business method patent review of claims
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`1 The Court subsequently granted TT’s Motion to Strike the Reply [872].
`2 Notably, TD Ameritrade is a defendant in a lawsuit filed by TT currently pending before Judge Virginia Kendall, 10 C
`715. In that case, TD Ameritrade filed the motion to stay on May 22, 2014. Judge Kendall has not yet ruled on that
`motion. It is not uncommon for courts to wait to rule on a motion to stay until after the USPTO has issued its decision
`whether to grant review. TT filed its response in opposition to the stay in that case on December 16, 2014.
`1
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`Page 1 of 7
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`TRADING TECH EXHIBIT 2001
`CQG & CQGT v. Trading Technologies
`CBM2015-00057
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`Case: 1:05-cv-04811 Document #: 876 Filed: 01/13/15 Page 2 of 7 PageID #:26880
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`1-56 of the ‘132 patent. (Dkt. 845-6, Ex. 5). CQG represented in their motion its intention to file a
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`petition with the USPTO challenging the patentability of the ‘304 patent (the other patent-in-suit in
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`this case) under 35 U.S.C. § 101. CQG filed a petition with the USPTO for a covered business
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`method patent review for each of the patents-in-suit on January 9, 2015, after this motion was
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`briefed and taken under advisement by the Court.
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`Legal Standard
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`The America Invents Act (“AIA”) was signed into law on September 16, 2011, and the
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`transitional program for covered business method patents came into effect one year later in
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`September 2012. “The AIA permits covered business method review only for ‘covered business
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`method patents,’ which it defines as ‘patent[s] that claim[ ] a method or corresponding apparatus for
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`performing data processing or other operations used in the practice, administration, or management
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`of a financial product or service, except that the term does not include patents for technological
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`inventions.” Market-Alerts Pty. Ltd. v. Bloomberg Finance LP et al., 922 F.Supp.2d 486, 491 (D. Del. Feb.
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`3, 2013)(citing America Invents Act (AIA), Pub. L. No. 112-29, § 18(d)(1), 125 Stat. 331 (2011)).
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`The covered business review process lasts no more than 18 months, issuing a final written decision
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`within twelve months of its beginning its review. See 77 Fed. Reg. 48757 (2012).
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`The AIA identifies four factors that a district court should consider when deciding whether
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`to grant a stay: (1) whether a stay, or the denial thereof, will simplify the issues in question and
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`streamline the trial; (2) whether discovery is complete and whether a trial date has been set; (3)
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`whether a stay, or the denial thereof, would unduly prejudice the nonmoving party or present a clear
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`tactical advantage for the moving party; and (4) whether a stay, or the denial thereof, will reduce the
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`burden of litigation on the parties and on the court. Versata Software, Inc. v. Callidus Software, Inc., 771
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`F. 3d 1368, 2014 U.S. App. LEXIS 21962, *4 (Fed. Cir. Nov. 20, 2014)(citing § 18(b)(1) of the AIA).
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`Case: 1:05-cv-04811 Document #: 876 Filed: 01/13/15 Page 3 of 7 PageID #:26881
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`Discussion
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`CQG moves for a stay of the case in its entirety, arguing that section 101 subject matter
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`patentability is a threshold question that should be resolved before the court considers subordinate
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`issues such as infringement and validity. CQG refers to Judge Mayer concurring opinion in
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`Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 2014 U.S. App. LEXIS 21633, *20 (Fed. Cir. Nov. 14,
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`2014), for the proposition that this Court must stay the litigation to allow the USPTO to determine
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`patentability in the first instance. In his concurrence, Judge Mayer likens section 101 determination
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`to a jurisdictional inquiry, stating “if claimed subject matter does not fall within the ambit of section
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`101, any determination on validity or infringement constitutes an impermissible advisory opinion.”
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`Id. Judge Mayer goes on to recite with approval some of the benefits of addressing section 101 at the
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`outset of litigation.
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`I. Four Factors for a Stay
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`With respect to the four factors, CQG first argues that the USPTO review may eliminate the
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`‘132 patent entirely from this case. CQG also asserts that extensive and costly expert discovery
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`remains to be completed as well as ruling on the three motions for summary judgment and pretrial
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`preparation. Further, CQG argues that a stay will neither prejudice TT nor give CQG an unfair
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`advantage. Lastly, CQG maintains that staying the case will reduce the burden on the Court and the
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`parties. This Court weighs each factor in turn.
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`1. Simplify the Issues and Streamline the Trial
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`“[T]his simplification factor weighs more strongly in favor of a stay when all of the litigation
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`claims are undergoing CBM review.” Versata Software, Inc., 2014 U.S. App. LEXIS 21962, at *7. Here,
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`only one of the patents-in-suit is subject to covered business method review. Although review of the
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`‘132 patent could decide the issue of § 101 validity, there are other issues relating to the ‘132 patent
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`Case: 1:05-cv-04811 Document #: 876 Filed: 01/13/15 Page 4 of 7 PageID #:26882
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`that the Court would still have to resolve. Moreover, the ‘304 patent is not implicated in any covered
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`business method review and thus this Court would have to resolve all issues relating to that patent.
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`In Virtualagility, Inc. v. Salesforce.com, Inc. et al., 759 F.3d 1307, 1314 (Fed. Cir. 2014), cited by CQG, the
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`court found it significant that CBM review included all asserted claims on the sole asserted patent
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`and therefore review could dispose of the entire litigation. CQG only recently filed a petition with
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`the USPTO for review of the ‘304 patent. This factor therefore weighs against a stay.
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`2. Stage of Litigation
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`CQG asserts that there is extensive and costly expert discovery remaining as well as pending
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`motions for summary judgment and pretrial preparation. “Staying a case at an early juncture ‘can be
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`said to advance judicial efficiency and maximize the likelihood that neither the [c]ourt nor the parties
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`expend their assets addressing invalid claims’… On the other hand, when confronted with a motion
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`to stay in the later stages of a case, ‘the [c]ourt and the parties have already expended significant
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`resources on the litigation, and the principle of maximizing the use of judicial and litigant resources
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`is best served by seeing the case through to its conclusion.” Market-Alerts Pty. Ltd., 922 F.Supp.2d at
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`494.
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`Here, the case is set for trial in fewer than 60 days (73 days from filing of the motion to
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`stay), pretrial dates are set, claim construction is complete, and all that remains of discovery is a
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`rebuttal expert and the deposition of CQG’s astrologer Mr. Hwang. Since CQG filed this motion,
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`this Court has issued its ruling on one of the pending motions for summary judgment, issued an
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`order on the second motion for summary judgment, and is in the process of finalizing its opinion
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`memorandum and order on the last remaining motion for summary judgment.3 While this Court
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`acknowledges that there remains significant work to be done on this case, the bulk of discovery,
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`3 The Court entered an order stating that it would treat CQG’s motion for summary judgment on willfulness as a motion
`for directed verdict given the short time remaining before trial and the need for TT to depose Mr. Hwang before it is
`able to respond to the motion. The Court expects to issue its ruling on CQG’s motion for summary judgment on the
`lack of written description within 10 days.
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`Case: 1:05-cv-04811 Document #: 876 Filed: 01/13/15 Page 5 of 7 PageID #:26883
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`dispositive motions, Daubert motions, and claim construction is complete and what remains is what
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`always remains 60 days from trial – the final pretrial order, motions in limine, and any depositions
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`that the parties have not had an opportunity to conduct. This factor weighs strongly against a stay.
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`3. Undue Prejudice vs. Tactical Advantage
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`CQG asserts that a stay would neither prejudice TT nor provide a tactical advantage to
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`CQG. Courts consider a variety of factors to determine prejudice, including the timing of the stay
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`request, the status of review proceedings, and the relationship between the parties. See See Market-
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`Alerts Pty. Ltd., 922 F.Supp.2d at 494. Indeed, the potential for delay does not, by itself, establish
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`undue prejudice. Here, the case is nearly ten years old and thus further delay would not suggest
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`undue prejudice. However, evidence of dilatory motive could point against a stay. See Virtualagility,
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`Inc., 759 F.3d at 1319. In Virtualagility, Inc., the court noted that defendant Salesforce.com filed a
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`covered business method review petition less than four months after Virtualagility instituted
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`infringement action and moved to stay almost immediately. Id. By contrast, here, CQG only recently
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`(January 9, 2015) sought review by the USPTO. CQG provides no reason for its delay in seeking
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`such review despite having since September 2012 when CBM review came into effect. CBM review,
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`even of the ‘132 patent, is in its early stages since the USPTO just decided on December 4, 2014, to
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`allow review. At least one court has found that the status of the administrative process weighs
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`against a stay if it is in the early stages. See Market-Alerts Pty. Ltd., 922 F.Supp.2d at 495. Additionally,
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`CQG is not the petitioner of the CBM review recently allowed by the USPTO and will not be
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`estopped from asserting any invalidity theories that the USPTO adjudicates during the review.
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`CQG’s delay in seeking such review on its own behalf until 60 days before the trial date suggests an
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`effort to impede the proceedings.
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`CQG raises the other litigation stays in this case as evidence of a lack of prejudice to TT.
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`Yet, the previous stays to litigation, for an appeal of the claim construction issues in the eSpeed
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`Case: 1:05-cv-04811 Document #: 876 Filed: 01/13/15 Page 6 of 7 PageID #:26884
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`litigation and for settlement negotiations, conserved judicial resources by preventing the need for
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`relitigation of certain issues and had the potential for complete resolution short of trial had an
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`agreement been reached. That is not the situation with the present request for a stay. Additionally,
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`courts are reluctant to stay proceedings where the parties are direct competitors as CQG and TT are
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`here. See Market-Alerts Pty. Ltd., 922 F.Supp.2d at 495. The combination here of potential prejudice
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`to TT and the possible tactical advantage and dilatory motive attributable to CQG weighs against a
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`stay.
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`4. Burden of Litigation
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`CQG only recently petitioned the USPTO for CBM review of the ‘304 patent. CQG also
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`submitted its own petition for CBM review of the ‘132 patent. If the USPTO invalidates the patents,
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`only then will the Court and the parties be spared the costly litigation. Yet, “the language and
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`legislative history of the reexamination statute show that Congress expected reexamination to take
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`place concurrent with litigation, and that cancellation of claims during reexamination would be
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`binding in concurrent litigation.” Fresenius USA, Inc. v. Baxter Int’l, Inc., 721 F.3d 1330, 1339 (Fed.
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`Cir. 2013). Therefore, this factor is neutral.
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`II. Patent Eligibility under 35 U.S.C. § 101
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`Patent Eligibility under 35 U.S.C. § 101 is a question of law proper for consideration by the
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`district court. In re BRCA1-& BRCA2-Based Hereditary Cancer Test Patent Litig., No. 2014-1361, 2014
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`WL 7156722, at *2 (Fed. Cir. Dec. 17, 2014). The Supreme Court has set forth analytical framework
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`to distinguish patents under § 101 that claim patent-ineligible laws of nature, natural phenomena,
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`and abstract ideas from those that claim patent-eligible applications of those concepts. DDR
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`Holdings, LLC v. Hotels.com, L.P., et al., 2014 U.S. App. LEXIS 22902, *20-21 (Fed. Cir. Dec. 5, 2014)
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`(citing Mayo v. Collaborative Servs. v. Prometheus Labs., Inc., 132 S.Ct. 1289, 1294, 182 L. Ed. 2d 321
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`(2012)). As explained in Alice Corp. v. CLS Bank Int’l, 134 S.Ct. 2347, 2355, 82 L. Ed. 2d 296 (2014),
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`Case: 1:05-cv-04811 Document #: 876 Filed: 01/13/15 Page 7 of 7 PageID #:26885
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`first the court determines whether the claims at issue are directed to a patent-ineligible abstract idea.
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`If so, then the court considers the elements of each claim to determine whether the additional
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`elements transform the nature of the claim into a patent-eligible application of that abstract idea. Id.
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`After Alice there is no doubt that “recitation of generic computer limitations does not make an
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`otherwise ineligible claim patent-eligible.” DDR Holdings, LLC, 2014 U.S. App. LEXIS 22902, at
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`*22. In DDR Holdings, the Federal Circuit found that the claims at issue there were patent-eligible
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`because “they do not merely recite the performance of some business practice known from the pre-
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`Internet world along with the requirement to perform it on the Internet. Instead, the claimed
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`solution is necessarily rooted in computer technology in order to overcome a problem specifically
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`arising in the realm of computer networks.” Id. at *26.
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`TT argues that following DDR Holdings, the patents-in-suit are patent-eligible under § 101
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`and that TT is likely to ultimately prevail in the covered business method review in the USPTO.
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`Examination by this Court of the patents-in-suit under § 101 is a question for another time as
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`“Congress clearly did not intend district courts to hold mini-trials reviewing the PTAB’s decision on
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`the merits of the CBM review.” Virtualagility, Inc., 759 F.3d at 1313. Nevertheless, it is a question
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`properly within this Court’s purview and will necessarily be addressed prior to the conclusion of the
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`trial.
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`Conclusion
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`Based on the foregoing, this Court denies CQG’s Motion to Stay [845].
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`IT IS SO ORDERED.
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`Date: January 13, 2015
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`Entered: ________________________________
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` Sharon Johnson Coleman
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` U.S. DISTRICT JUDGE
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`Page 7 of 7