IN THE UNITED STATES PATENT TRIAL & APPEAL BOARD
`
`CQG, INC. and CQGT, LLC
`
`Petitioners,
`
`v.
`
`TRADING TECHNOLOGIES INTERNATIONAL, INC.
`
`Patent Owner.
`
`Case CBM2015-00057 (U.S. Patent No. 6,766,304 B2)
`Case CBM2015-00058 (U.S. Patent No. 6,772,132 B1)
`
`PETITIONERS’ REQUEST FOR REHEARING
`UNDER 37 C.F.R. §§ 42.71(c) and 42.71(d)
`
`Mail Stop PATENT BOARD
`Patent Trial and Appeal Board
`U.S. Patent & Trademark Office
`P.O. Box 1450
`Alexandria, VA 22313-1450
`
`

`
`TABLE OF CONTENTS
`
`Page
`
`I.
`
`II.
`
`Introduction......................................................................................................1
`
`Standard of Review..........................................................................................3
`
`III. Argument .........................................................................................................3
`
`A.
`
`The Board Overlooked the Finality of the District Court’s
`Dismissal of CQG’s Transferred DJ Action and Misapplied
`Brennan v. Kulick and Section 325(a)(3)..............................................3
`
`1.
`
`2.
`
`3.
`
`4.
`
`The Order of Dismissal Was Undeniably Final..........................4
`
`A Final Order of Dismissal Renders the Action a
`Nullity .........................................................................................5
`
`a.
`
`b.
`
`Dismissal Circumstances Are Irrelevant Here. ................5
`
`The PTAB Has Consistently Granted Institution
`on Identical Facts..............................................................6
`
`Arguendo, if Circumstances Are To Be Considered,
`the Circumstances Here Counsel in Favor of
`Institution. ...................................................................................8
`
`Under the Statute, Counterclaims Cannot Bar
`Institution of a CBM Proceeding..............................................10
`
`B.
`
`The Board Erred When It Asserted that CQG’s Dismissed DJ
`Claims Effectively Continued in the Illinois Infringement
`Action ..................................................................................................11
`
`1.
`
`CQG Did Not Add An Invalidity Counterclaim After
`Dismissal of Its Colorado DJ Action ........................................11
`
`a.
`
`b.
`
`CQG’s Invalidity Counterclaim Already Existed
`in the Illinois Infringement Action.................................11
`
`CQG’s Non-Infringement and Unenforceability
`Claims Are Irrelevant Under Section 325(a)(1).............12
`
`i
`
`

`
`TABLE OF CONTENTS (CONTINUED)
`
`Page
`
`2.
`
`The Colorado DJ Action Was Not the “But For”
`Reason for CQG’s Amended Illinois Counterclaims ...............14
`
`a.
`
`b.
`
`Rule 15(a)(2) Permits Liberal Amendment of
`Counterclaims.................................................................14
`
`The Court Lacked Authority to “Authorize”
`CQG’s Amended Counterclaims....................................15
`
`IV. Conclusion. ....................................................................................................15
`
`ii
`
`

`
`TABLE OF AUTHORITIES
`
`Page(s)
`
`Cases
`
`Apple Inc., v. Rensselaer Poly. Inst.,
`No. IPR2014-00319, Paper No. 12 at 3
`(P.T.A.B. Jun. 12, 2014 ........................................................................................7
`
`B. Braun Med., Inc. v. Abbott Labs.,
`124 F.3d 1419 (Fed. Cir. 1997) ..........................................................................13
`
`C.R. Bard, Inc. v. M3 Sys. Inc.,
`157 F.3d 1340 (Fed. Cir. 1998) ..........................................................................13
`
`Callidus Soft. v. Versata Soft., Inc.,
`No. CBM2013-00053, Paper No. 16 at 6 ...................................................1, 7, 15
`
`Clio USA, Inc. v. Procter and Gamble Co.,
`No. IPR 2013-00438, Paper No. 9 at 7-9
`(P.T.A.B. Jan. 9, 2014) .........................................................................................7
`
`Cyanotech Corp. v. Bd. of Trs. of the Univ. of Ill.,
`No. IPR2013-00401, Paper No. 17 at 3, 9-12
`(P.T.A.B. Dec. 19, 2013).............................................................................passim
`
`In re Gartside,
`203 F.3d 1305 (Fed. Cir. 2000) ............................................................................3
`
`Graves v. Principi,
`294 F.3d 1350 (Fed. Cir. 2002) ............................................................................5
`
`Holloway v. U.S.,
`60 Fed. Cl. 254 (Fed. Cl. 2004) ........................................................................5, 6
`
`Illumina, Inc. v. Trs. of Columbia Univ. in the City of N.Y.,
`No. IPR2013-00011, Paper No. 44 at 2
`(P.T.A.B. May 10, 2013) ......................................................................................3
`
`Invue Sec. Prods., Inc. v. Merch. Techs., Inc.,
`No. IPR2013-00122, Paper No. 17 at 8-10
`(P.T.A.B. Jun. 27, 2013).........................................................................2, 8, 9, 10
`
`iii
`
`

`
`TABLE OF AUTHORITIES (CONTINUED)
`
`Page(s)
`
`Loral Space & Commc’ns, Inc. v. Viasat, Inc.,
`Nos. IPR2014-00236, -239, -240, Paper No. 7 at 7
`(P.T.A.B. Apr. 21, 2014) ......................................................................................6
`
`Motorola Mobility LLC v. Int’l Ventures I LLC,
`No. CBM2015-00004, Paper No. 20 at 2
`(P.T.A.B. Jul. 24, 2015)........................................................................................3
`
`PNY Techs., Inc. v. Phison Elec. Corp.,
`No. IPR2013-00472, Paper No. 16 at 2
`(P.T.A.B. Apr. 23, 2014) ......................................................................................3
`
`Soltys v. Costello,
`520 F.3d 737 (7th Cir. 2008) ..............................................................................14
`
`TD Ameritrade Holding Corp. v. Trading Techs. Int’l, Inc.,
`No. CBM2014-00135, Paper No. 19 at 2
`(P.T.A.B. Dec. 2, 2014) ......................................................................................10
`
`Statutes
`
`35 U.S.C. § 21(b) .......................................................................................................1
`
`35 U.S.C. § 101........................................................................................................10
`
`35 U.S.C. § 315(a) .....................................................................................................7
`
`35 U.S.C. § 315(a)(1).....................................................................................7, 10, 15
`
`35 U.S.C. § 325(a)(1)........................................................................................passim
`
`35 U.S.C. § 325(a)(3).................................................................................2, 3, 10, 11
`
`Declaratory Judgment Act. ........................................................................................9
`
`Other Authorities
`
`37 C.F.R. § 1.7(a).......................................................................................................1
`
`37 C.F.R. § 42.71(c)...............................................................................................1, 3
`
`iv
`
`

`
`TABLE OF AUTHORITIES (CONTINUED)
`
`Page(s)
`
`37 C.F.R. § 42.71(d) ..................................................................................................3
`
`37 C.F.R. § 42.71(d)(2)..............................................................................................1
`
`Fed. R. Civ. Proc. 15(a)(2).............................................................................2, 14, 15
`
`Fed. R. Civ. Proc. 42..............................................................................................7, 8
`
`v
`
`

`
`I.
`
`Introduction.
`
`Petitioners CQG, Inc. and CQGT, LLC (collectively, “CQG”) request
`
`rehearing of the Decision Denying Institution of Covered Business Method Patent
`
`Review regarding U.S. Patent No. 6,766,304 B2 (“the ’304 patent”) in Case
`
`CBM2015-00057 and U.S. Patent No. 6,772,132 B1 (“the ’132 patent”) in Case
`
`CBM2015-00058 (collectively, the “Institution Decision”) 1 under 37 C.F.R.
`
`§§ 42.71(c) and 42.71(d). CQG’s request for rehearing is timely under 37 C.F.R.
`
`§ 42.71(d)(2) and 35 U.S.C. § 21(b). See also 37 C.F.R. § 1.7(a).
`
`The Board’s Institution Decision should be reversed and institution should
`
`be granted because 35 U.S.C. § 325(a)(1) does not bar CQG’s CBM petitions. In
`
`arriving at its decision, the Board overlooked the fact that the order of dismissal of
`
`CQG’s previous Colorado DJ Action was final. Under Brennan v. Kulick, that
`
`dismissed action must be treated as a legal nullity, regardless of the circumstances
`
`surrounding that dismissal. 407 F.3d 603, 606-607 (3rd Cir. 2005). And under
`
`Callidus Soft. Inc. v. Versata Soft., Inc., final dismissal of CQG’s transferred
`
`Colorado DJ Action “clears the way for consideration . . . and does not act as a
`
`bar.” No. CBM2013-00053, Paper No. 16 at 6 (P.T.A.B. Mar. 4, 2014).
`
`1 The Institution Decisions (Papers 12 and 13) are identical. Accordingly, CQG
`
`files this request for rehearing in both Case CBM2015-00057 and Case CBM2015-
`
`00058. Pinpoint Citations to the Institution Decisions are abbreviated “Inst. Dec.”
`
`1
`
`

`
`Although the circumstances surrounding the dismissal are irrelevant, if they
`
`are considered, then they further compel institution. Indeed, the PTAB has
`
`previously held that there is no bar to institution in instances where a declaratory
`
`judgment (“DJ”) action is dismissed as lacking jurisdiction and the claims are filed
`
`as counterclaims in a co-pending infringement action. Cyanotech Corp. v. Bd. of
`
`Trs. of the Univ. of Ill., No. IPR2013-00401, Paper No. 17 at 3, 9-12 (P.T.A.B.
`
`Dec. 19, 2013); Invue Sec. Prods., Inc. v. Merch. Techs., Inc., No. IPR2013-00122,
`
`Paper No. 17 at 8-10 (P.T.A.B. Jun. 27, 2013). Moreover, even in the absence of
`
`Cyanotech Corp. and Invue Sec. Prods., the Institution Decision contradicts
`
`Section 325(a)(3), which exempts counterclaims from the Section 325(a)(1)
`
`calculus. 35 U.S.C. § 325(a)(3).
`
`Finally, the Board misapprehended that CQG did not add an invalidity
`
`counterclaim to the Illinois Infringement Action. That counterclaim already
`
`existed prior to the dismissal of the transferred Colorado DJ Action. The Board
`
`therefore erred as a matter of law when it suggested that the Colorado DJ Action
`
`was the but-for reason that the DJ claims effectively continued in the Illinois
`
`Infringement Action. The Board made additional errors of fact and law when it
`
`held that the Illinois Court authorized CQG’s amended counterclaims. To the
`
`contrary, the Illinois Court was powerless to reject those counterclaims under
`
`Federal Rule of Civil Procedure 15(a)(2).
`
`2
`
`

`
`II.
`
`Standard of Review.
`
`On rehearing, a decision denying institution is reviewed for an abuse of
`
`discretion. 37 C.F.R. § 42.71(c). An abuse of discretion occurs when the decision
`
`is based on an erroneous interpretation of the law, if a factual finding is not
`
`supported by substantial evidence, or if the decision represents an unreasonable
`
`judgment in weighing relevant factors. Motorola Mobility LLC v. Int’l Ventures I
`
`LLC, No. CBM2015-00004, Paper No. 20 at 2 (P.T.A.B. Jul. 24, 2015); PNY
`
`Techs., Inc. v. Phison Elec. Corp., No. IPR2013-00472, Paper No. 16 at 2
`
`(P.T.A.B. Apr. 23, 2014); Illumina, Inc. v. Trs. of Columbia Univ. in the City of
`
`N.Y., No. IPR2013-00011, Paper No. 44 at 2 (P.T.A.B. May 10, 2013). The
`
`substantial evidence standard asks whether a reasonable fact finder could have
`
`arrived at the decision after examination of the record as a whole. In re Gartside,
`
`203 F.3d 1305, 1312 (Fed. Cir. 2000). A request for rehearing must identify all
`
`matters misapprehended or overlooked by the Board. 37 C.F.R. § 42.71(d).
`
`III. Argument.
`
`A.
`
`The Board Overlooked the Finality of the District Court’s
`Dismissal of CQG’s Transferred DJ Action and Misapplied
`Brennan v. Kulick and Section 325(a)(3).
`
`The Board erred when it found that CQG’s finally dismissed Colorado DJ
`
`Action continued in the Illinois Infringement Action, thus barring institution of
`
`CQG’s CBM petitions under 35 U.S.C. § 325(a)(1). See Inst. Dec. at 8-9.
`
`3
`
`

`
`1.
`
`The Order of Dismissal Was Undeniably Final.
`
`The Board overlooked the fact that the order of dismissal of CQG’s
`
`transferred Colorado DJ Action was final, because it was entered without any
`
`conditions or procedure for reinstatement. See Ex. 1008 (no conditions); see
`
`Brennan, 407 F.3d at 606-607 (characterizing a final order of dismissal as one
`
`without any conditions or procedures for reinstatement). Indeed, the entirety of the
`
`Illinois Court’s order of dismissal is re-printed below.
`
`this case is
`the parties,
`to agreement of
`Pursuant
`dismissed without prejudice. All parties are to pay their
`own attorneys’ fees and costs in this case.
`
`Ex. 1008. (emphasis added).
`
`As evidenced by the italicized font, Judge Moran did not condition the
`
`dismissal on expiration of a time certain to fix a deficiency or otherwise afford
`
`CQG leave to refile a new complaint. Id. Moreover, the record is silent as to any
`
`discovery or filings made in the transferred Colorado DJ Action after the Court’s
`
`final order of dismissal. See Brennan, 407 F.3d at 607 (a case is not dismissed if
`
`the court retained control over the case, issued further orders, and allowed
`
`discovery). Under Brennan, a naked dismissal without prejudice devoid of any
`
`conditions must be treated as a final order of dismissal. Id. at 606-607 (finding a
`
`“notable distinction” between a final order of dismissal without any conditions on
`
`the one hand, and a conditional, non-final order of dismissal containing explicit
`
`4
`
`

`
`conditions for reinstatement). Accordingly, no reasonable fact finder could
`
`interpret the dismissal of the transferred Colorado DJ Action as anything other than
`
`a final order of dismissal.
`
`A Final Order of Dismissal Renders the Action a Nullity.
`2.
`Contrary to the Board’s misinterpretation of Brennan, the circumstances
`
`surrounding a final dismissal are irrelevant to Section 325(a)(1), even if similar
`
`counterclaims exist in a second filed action. See Inst. Dec. at 8.
`
`Dismissal Circumstances Are Irrelevant Here.
`a.
`Brennan and scores of other Federal cases make clear that the circumstances
`
`of dismissal without prejudice are irrelevant when the order of dismissal is final
`
`and unconditional. 407 F.3d at 606 (If the original complaint is “dismissed without
`
`prejudice, [then it] is treated as if it never existed.”); Holloway v. U.S., 60 Fed. Cl.
`
`254, 261 (Fed. Cl. 2004) (a dismissed action is “something that de jure never
`
`existed.”); aff’d Holloway v. U.S., 143 Fed. Appx. 313 (Fed. Cir. 2005); Graves v.
`
`Principi, 294 F.3d 1350, 1355-56 (Fed. Cir. 2002) (discussing rule in Federal
`
`courts that a dismissal without prejudice occurs without an adjudication on the
`
`merits, leaves the parties as though the action had never been brought, and renders
`
`the dismissed proceedings a nullity). Under Brennan, circumstances should only
`
`be considered when determining whether a non-final, conditional order of
`
`dismissal has ripened into a final, appealable order (e.g., if the conditions in the
`
`5
`
`

`
`order of dismissal are not satisfied). 407 F.3d at 608. Applying the Brenan logic
`
`to the CQG facts, there were no conditions in the order of dismissal. See Ex. 1008.
`
`Thus, the Board erred when it considered the circumstances surrounding the
`
`dismissal. Brennan, 407 F.3d at 606.
`
`The facts in Holloway are also relevant here. In Holloway, the court
`
`dismissed without prejudice because it lacked jurisdiction. Holloway, 60 Fed. Cl.
`
`at 260 (dismissed after the Court indicated that it was not permitted to consider
`
`case). Plaintiff refiled its complaint 7 months later. Id. In an attempt to avoid a
`
`statute of limitations, plaintiff argued that its second complaint had “merged” with
`
`the dismissed complaint. Id. The Court rejected that argument, because the
`
`second complaint could not possibly “relate back to something that de jure never
`
`existed.” Id. at 261; see Holloway, 143 Fed. Appx. at 314.
`
`Like the Holloway plaintiff, CQG’s transferred Colorado DJ Action is a
`
`legal nullity, because it was dismissed without prejudice. Accordingly, CQG’s
`
`Illinois counterclaims could not possibly be considered merged with, relate back
`
`to, or constitute a continuation of the Colorado DJ Action.
`
`b.
`
`The PTAB Has Consistently Granted Institution on
`Identical Facts.
`
`PTAB cases uniformly indicate that final orders of dismissal render the
`
`dismissed case a legal nullity. See e.g., Loral Space & Commc’ns, Inc. v. Viasat,
`
`Inc., Nos. IPR2014-00236, -239, -240, Paper No. 7 at 7 (P.T.A.B. Apr. 21, 2014)
`
`6
`
`

`
`(unlike a complaint that has been amended, a complaint dismissed without
`
`prejudice goes away as if has never been filed). And when evaluating 35 U.S.C.
`
`§ 325(a)(1) in CBM petitions and 35 U.S.C. § 315(a)(1) in IPR petitions2, the
`
`PTAB has consistently held that DJ actions dismissed without prejudice—like
`
`CQG’s transferred Colorado DJ Action—“clears the way for consideration . . . and
`
`does not act as a bar.” Callidus Soft., No. CBM2013-00053, Paper No. 16 at 6; see
`
`also Clio USA, Inc. v. Procter and Gamble Co., No. IPR 2013-00438, Paper No. 9
`
`at 7-9 (P.T.A.B. Jan. 9, 2014) (prior DJ complaint dismissed without prejudice
`
`does not bar inter partes review under 35 U.S.C. § 315(a), because the dismissed
`
`action is something that de jure never existed and is a nullity).
`
`To be clear, Apple is inapplicable here. The Apple order of dismissal
`
`expressly consolidated two actions under Rule 42 and permitted petitioner to
`
`proceed to litigate their claims and defenses as a DJ plaintiff (not as a defendant
`
`with counterclaims) in a co-pending action. Apple Inc., v. Rensselaer Poly. Inst.,
`
`No. IPR2014-00319, Paper No. 12 at 3 (P.T.A.B. Jun. 12, 2014). Unlike in Apple,
`
`2 See Callidus Soft., No. CBM2013-00053, Paper No. 16 at 6 (it is inappropriate to
`
`differentiate application of 35 U.S.C. §§ 315(a)(1) and 325(a)(1), because they are
`
`parallel provisions providing identical jurisdictional bars).
`
`7
`
`

`
`CQG’s order of dismissal did not order consolidation under Rule 42.3 Ex. 1008.
`
`Nor does it (or could it possibly) include a statement permitting CQG to remain DJ
`
`plaintiff in a co-pending case. Id.
`
`Because the dismissal without prejudice was final and did not order a
`
`consolidation, the Board erred when it held that CQG’s DJ claims effectively
`
`continued in Illinois for the reasons set forth above.
`
`3.
`
`Arguendo, if Circumstances Are To Be Considered, the
`Circumstances Here Counsel in Favor of Institution.
`
`Although the circumstances surrounding CQG’s dismissal should not have
`
`been considered, if circumstances are considered, then a reasonable fact finder
`
`could only find that the facts support institution. The similarities between this case
`
`and the facts in Cyanotech Corp. and Invue Sec. Prods. (where institutions were
`
`not barred) are striking. See Cyanotech Corp., No. IPR2013-00401, Paper No. 17
`
`at 3, 9-12; Invue Sec. Prods., No. IPR2013-00122, Paper No. 17 at 8-10. Like the
`
`petitioners there, where previous DJ actions were dismissed on jurisdictional
`
`grounds, the Colorado Court admitted that it lacked jurisdiction over CQG’s
`
`3 The agreement of the parties referenced in the order of dismissal and allegedly
`
`memorialized in the Proposed Minute Order is also silent as to any consolidation.
`
`Inst. Dec. at 4 (agreement is reflected in Proposed Minute Order); Ex. 1012
`
`(Proposed Minute Order).
`
`8
`
`

`
`Colorado DJ Action, because it constituted an anticipatory filing in violation of the
`
`Declaratory Judgment Act. Cyanotech Corp., No. IPR2013-00401, Paper No. 17
`
`at 3 (failure to join an indispensable party); Invue Sec. Prods., No. IPR2013-00122,
`
`Paper No. 17 at 9 (lacked subject matter jurisdiction); Ex. 1006 at 4 (no
`
`jurisdiction); id. at 2-3 (“[DJ] jurisdiction exists in a patent matter only when there
`
`is an explicit threat or other action by the patentee” and CQG’s DJ complaint
`
`constituted a “tactical strateg[y] similar to the maneuvering the Declaratory
`
`Judgment Act was designed to prevent.”).
`
`And like the Cyanotech Corp. petitioner, who was expressly permitted to
`
`add its DJ claims as counterclaims in the patent owner’s co-pending infringement
`
`action, the Illinois Court permitted CQG to assert its claims as counterclaims in
`
`TT’s co-pending infringement action. Cyanotech Corp., No. IPR2013-00401,
`
`Paper No. 17 at 3 (permitting petitioner to bring its DJ claims as counterclaims in a
`
`co-pending parallel infringement proceeding brought by the patent owner); Ex.
`
`1013. Finally, like the Invue Sec. Prods. petitioner, CQG’s Colorado DJ Action
`
`was transferred and dismissed before TT filed an answer and prior to any action on
`
`the merits. Invue Sec. Prods., No. IPR2013-00122, Paper No.17 at 9 (dismissed
`
`before any action on the merits); Ex. 1006 at 8-15 (no answer filed).
`
`Applying the logic of Cyanotech Corp. and Invue Sec. Prods. to the same
`
`facts here, the Board should find that the circumstances surrounding the dismissal,
`
`9
`
`

`
`if somehow relevant to Section 325(a)(1), compel institution of CBM proceedings.
`
`Like the petitioners in Cyanotech Corp. and Invue Sec. Prods., CQG’s dismissed
`
`Colorado DJ Action is a legal nullity and thus de jure never existed. And, under
`
`the statute, both CBM and IPR petitioners have a choice of forum to challenge the
`
`invalidity of a patent. 35 U.S.C. §§ 325(a)(1), 315(a)(1). CQG properly chose the
`
`PTAB as its forum of choice to challenge the dubious validity of the ’304 and ’132
`
`patents,4 and that decision should be respected, because CQG was “never in a
`
`position to litigate invalidity on multiple fronts simultaneously, the situation
`
`prevented by 35 U.S.C. § [325(a)].” Invue Sec. Prods., No. IPR2013-00122, Paper
`
`No. 17 at 10.
`
`4.
`
`Under the Statute, Counterclaims Cannot Bar Institution of
`a CBM Proceeding.
`
`The Board’s decision finding that DJ claims can effectively continue as
`
`counterclaims also violates the plain language of 35 U.S.C. § 325(a)(3). Under
`
`Section 325(a)(3), “[a] counterclaim challenging the validity of a claim of a patent
`
`does not constitute a civil action challenging the validity of a claim of a patent for
`
`4See TD Ameritrade Holding Corp. v. Trading Techs. Int’l, Inc., No. CBM2014-
`
`00135, Paper No. 19 at 2 (P.T.A.B. Dec. 2, 2014) (instituting CBM proceedings as
`
`to the ’132 patent after finding that claims 1-56 are “more likely than not . . .
`
`unpatentable under 35 U.S.C. § 101”).
`
`10
`
`

`
`purposes of this subsection.” 35 U.S.C. § 325(a)(3). Accordingly, notwithstanding
`
`Cyanotech Corp. (see § I(A)(3)), Section 325(a)(3) compels reversal of the Board’s
`
`erroneous decision, because counterclaims of invalidity are irrelevant to a Section
`
`325(a)(1) analysis. 35 U.S.C. § 325(a)(3). Therefore, reversal and institution of
`
`CBM proceedings are respectfully requested.
`
`B.
`
`The Board Erred When It Asserted that CQG’s Dismissed DJ
`Claims Effectively Continued in the Illinois Infringement Action.
`The Board’s decision not to institute should also be reversed, because no
`
`reasonable fact finder could find that the claims somehow effectively continued in
`
`the Illinois Infringement Action or that the Colorado DJ Action was the “but-for”
`
`occasion for the amendment that allegedly continued the claims. Inst. Dec. at 9.
`
`1.
`
`CQG Did Not Add An Invalidity Counterclaim After
`Dismissal of Its Colorado DJ Action.
`The only bar to CBM institution is an action “challenging the validity of a
`
`claim of the patent.” 35 U.S.C. § 325(a)(1) (emphasis added).
`
`a.
`
`CQG’s Invalidity Counterclaim Already Existed in
`the Illinois Infringement Action.
`
`The Illinois Court dismissed CQG’s transferred Colorado DJ Action on
`
`December 1, 2006. Ex. 1008. The Illinois Court separately acknowledged CQG’s
`
`right to amend its counterclaims in the later-filed Illinois Infringement Action on
`
`December 4, 2006. Ex. 1013. CQG amended its counterclaims on the same day.
`
`Ex. 1014. That amendment included three counterclaims: (1) a DJ of non-
`
`11
`
`

`
`infringement, invalidity, and unenforceability (id. at 7); (2) DJ of unenforceability
`
`based on inequitable conduct (id. at 7-9); and (3) DJ of unenforceability based on
`
`patent misuse (id. at 9-10). Apparently overlooked by the Board, however, is the
`
`undeniable fact that CQG’s original answer to TT’s complaint in the Illinois
`
`Infringement Action already included a counterclaim directed to non-infringement,
`
`invalidity, and unenforceability. Ex. 2008 at 6-7.
`
`No reasonable fact finder, therefore, could possibly find that CQG’s
`
`December 2006 amendment to its answer added the invalidity counterclaims.
`
`They already existed. Thus, no reasonable fact finder could find that this invalidity
`
`counterclaim effectively continued in the Illinois Infringement Action because of
`
`the Colorado DJ Action.
`
`b.
`
`CQG’s Non-Infringement and Unenforceability
`Claims Are Irrelevant Under Section 325(a)(1).
`
`Section 325(a)(1) bars institution of CBM proceedings when a petitioner has
`
`previously filed claims challenging invalidity. 35 U.S.C. § 325(a)(1).
`
`Accordingly, CQG’s non-infringement and unenforceability claims in its original
`
`and amended counterclaims to TT’s Infringement Action are irrelevant.
`
`Even if they are somehow relevant, CQG had already pled its non-
`
`infringement and non-specific unenforceability counterclaims before the Illinois
`
`Court dismissed the transferred Colorado DJ Action. Compare Ex. 2008 at 6-7
`
`(original counterclaims) with Ex. 1008 (dismissal); Ex. 1013 (permitting
`
`12
`
`

`
`amendment); Ex. 1014 (amended counterclaims). And regarding unenforceability,
`
`CQG’s later-filed specific unenforceability counterclaims based on inequitable
`
`conduct and patent misuse are merely delineations of its previously filed general
`
`unenforceability counterclaims. Ex. 2008 at 6 at ¶ 10 (unenforceability without
`
`identifying any specific basis); Ex. 1014 at 9, ¶ 18 (unenforceability based on
`
`inequitable conduct); id. at 10 at ¶ 25 (unenforceability based on patent misuse);
`
`see also C.R. Bard, Inc. v. M3 Sys. Inc., 157 F.3d 1340, 1372 (Fed. Cir. 1998)
`
`(“[A] holding of misuse renders the patent unenforceable until the misuse is
`
`purged; it does not, of itself, invalidate the patent.”). Regardless, CQG’s
`
`unenforceable counterclaims should be ignored in their entirety as per se improper
`
`counterclaims, because unenforceability is an affirmative defense not a
`
`counterclaim. B. Braun Med., Inc. v. Abbott Labs., 124 F.3d 1419, 1427-28 (Fed.
`
`Cir. 1997).5
`
`Accordingly, no reasonable fact finder could find that CQG’s invalidity
`
`claims in its dismissed Colorado DJ Action was the but-for cause of or reason for
`
`CQG’s invalidity counterclaims in the Illinois Infringement Action. Irrefutable
`
`5 Tellingly, CQG corrected its initial pleading mistake and dropped its
`
`unenforceability counterclaims later in the case. Ex. 1011 at 47 (Dkt. 309).
`
`13
`
`

`
`evidence establishes that CQG had already filed invalidity counterclaims in the
`
`Illinois Infringement Action prior to dismissal of the Colorado DJ Action.
`
`2.
`
`The Colorado DJ Action Was Not the “But For” Reason for
`CQG’s Amended Illinois Counterclaims.
`
`Rule 15(a)(2) provides, in relevant part, that a “party may amend its
`
`pleading . . . with the opposing party’s written consent or the court’s leave. The
`
`court should freely give leave when justice so requires.” Fed. R. Civ. P. 15(a)(2)
`
`(emphasis added).
`
`a.
`
`Rule 15(a)(2) Permits Liberal Amendment of
`Counterclaims.
`
`Initially, it is indisputable that Rule 15(a)(2) reflects a liberal attitude
`
`towards the amendment of pleadings and courts may only deny an amendment “if
`
`the moving party has unduly delayed in filing the motion, if the opposing party
`
`would suffer undue prejudice, or if the pleading is futile.” See Soltys v. Costello,
`
`520 F.3d 737, 743 (7th Cir. 2008). Indeed, after CQG first amended its answer in
`
`December 2006, both parties filed several amended pleadings independent of the
`
`existence of the Colorado DJ Action. Ex. 1011 at 47 (Dkt. 309); id. at 48 (Dkt.
`
`321); id. at 50 (Dkt. 332); id. at 51 (Dkt. 342). The sheer number of permitted
`
`amendments under Rule 15(a)(2) demonstrates that the Colorado DJ Action cannot
`
`be said to have been the but-for basis for CQG’s ability to amend counterclaims.
`
`14
`
`

`
`b.
`
`The Court Lacked Authority to “Authorize” CQG’s
`Amended Counterclaims.
`
`Despite the liberal approach to Rule 15(a)(2), the Court further erred by
`
`suggesting that the Illinois Court somehow authorized CQG to amend its answer in
`
`the Illinois Infringement Action. Under Rule 15(a)(2), courts have no authority to
`
`deny a motion to amend a pleading when the amendment is agreed upon by the
`
`parties. Fed. R. Civ. P. 15(a)(2) (“a party may amend its pleading . . . with the
`
`opposing party’s written consent”). The Board already found that the Proposed
`
`Minute Order constituted an agreement of the parties. Inst. Dec. at 4. Thus, the
`
`Illinois Court had no control over entry of the amendment. Contrary to the Board’s
`
`Institution Decision, the existence of the Colorado DJ Action had no effect on the
`
`counterclaims available to CQG in the Illinois Infringement Action.
`
`IV. Conclusion.
`
`For the foregoing reasons, the Board should reverse its Institution Decision.
`
`Dated: August 10, 2015
`
`Respectfully submitted,
`
`By:
`
`/Adam G. Kelly/
`Adam G. Kelly, Esq. (Reg. No. 54937)
`William J. Kramer, Esq. (Reg. No. 46229)
`William J. Voller III, Esq. (Reg. No. 64102)
`
`Attorneys for Petitioners
`321 North Clark Street
`Suite 2300
`Chicago, Illinois 60654
`(312) 464-3138
`
`15
`
`

`
`CERTIFICATE OF SERVICE
`
`The undersigned hereby certifies that the above-captioned Petitioners’
`
`Request for Rehearing, were served on August 10, 2015, upon the following
`
`parties via Federal Express and e-mail:
`
`Lead Counsel
`
`Back-up Counsel
`
`Erika H. Arner
`(erika.arner@finnegan.com)
`Finnegan, Henderson, Farabow,
`Garrett & Dunner, LLP
`11955 Freedom Drive
`Reston, VA 20190
`
`Joshua L. Goldberg
`(joshua.goldberg@finnegan.com)
`Finnegan, Henderson, Farabow, Garrett &
`Dunner, LLP
`901 New York Avenue, NW
`Washington, DC 20001-4413
`
`Steven F. Borsand
`(steve.borsand@tradingtechnologies.com)
`Jay Q. Knobloch
`(jay.knobloch@tradingtechnologies.com)
`Adam J. Faier
`(adam.faier@tradingtechnologies.com)
`Trading Technologies International, Inc.
`222 South Riverside Plaza, Suite 1100
`Chicago, Illinois 60606
`
`Date: August 10, 2015
`
`LOEB & LOEB LLP
`
`/Adam G. Kelly/
`Adam G. Kelly, Esq.
`Attorney for Petitioner
`Registration No. 54937
`321 North Clark Street
`Suite 2300
`Chicago, Illinois 60654
`(312) 464-3138