IN THE UNITED STATES PATENT TRIAL & APPEAL BOARD
`
`Attorney Docket No 41919-0005CP1
`CBM of U.S. Patent No. 6,766,304
`
`
`
`
`TRADESTATION GROUP, INC. AND
`CQGTRADESTATION SECURITIES, INC. and CQGT, LLC
`
`Petitioners,
`
`v.
`
`TRADING TECHNOLOGIES INTERNATIONAL, INC.
`
`Patent Owner.
`
`
`
`U.S. Patent No. 6,766,304 B2
`
`
`
`PETITION FOR COVERED BUSINESS METHOD REVIEW UNDER 35
`U.S.C. § 321 AND § 18 OF THE LEAHY-SMITH AMERICA INVENTS ACT
`
`
`
`Mail Stop PATENT BOARD
`Patent Trial and Appeal Board
`U.S. Patent & Trademark Office
`P.O. Box 1450
`Alexandria, VA 22313-1450
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`
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`
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`Page 1 of 86
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`TRADING TECH EXHIBIT 2023
`TRADESTATION v TRADING TECH
`CBM2015-00161
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`

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`Attorney Docket No 41919-0005CP1
`CBM of U.S. Patent No. 6,766,304
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`
`TABLE OF CONTENTS
`
`I.
`
`III.
`
`Introduction ..................................................................................................... 1
`
`IIIII. Mandatory Notices (37 C.F.R. § 42.8(b)) ....................................................... 1
`
`A.
`
`B.
`
`C.
`
`Real Party-in-InterestParties-in-Interest ............................................. 1
`
`Related Matters ...................................................................................... 1
`
`Lead and Back-up Counsel Including Service Information .................. 2
`
`III. Payment of Fees ............................................................................................... 3
`
`IV. Grounds for Standing (37 C.F.R. 42.304(a)) ................................................... 3
`
`A. CQG HasPetitioners Have Standing to File a Petition Under 37
`C.F.R. § 42.302(a) ................................................................................. 3
`
`B. CQGTradeStation Is Not Estopped from Filing a Petition
`Under 37 C.F.R. §CFR 42.302(b) by Having Filed a Now-
`Dismissed DJ Action in 2005 3Non-Party CQG’s Earlier-Filed
`CBM Petition, and TradeStation Is the Sole Party-in-Interest in
`this Proceeding ...................................................................................... 4
`
`1.
`
`2.
`
`Institution of CBM Review Is Not Precluded by
`CQG’s Earlier Filed Declaratory Judgment Action,
`Because Such Action Was Dismissed Without
`Prejudice .................................................................................... 4
`
`The Rules Promulgated by the PTO Under Section 18
`of the AIA Do Not Prohibit Institution of CBM
`Review, Because a Petitioner First Filed a Declaratory
`Judgment Action ..................................................................... 10
`
`3.
`
`35 U.S.C. § 325(a)(1) Does Not Apply to CBM Review
`and Does Not Bar the Institution of CBM Review that
`Is Initiated After the Filing of a Declaratory
`Judgment Action ..................................................................... 13
`The ’304 Patent Is EligibleAvailable for Covered Business
`Method Patent Review Under 37 C.F.R. § 42.301 ...........................178
`
`C.
`
`
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`i
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`Page 2 of 86
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`

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`1.
`
`2.
`
`3.
`
`4.
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`Attorney Docket No 41919-0005CP1
`CBM of U.S. Patent No. 6,766,304
`
`
`The USPTO Has Already Determined that the ’304
`Patent Is a Covered Business Method Patent....................... 1910
`
`a.
`
`b.
`
`Classification .................................................................. 10
`
`Claim Language .............................................................. 11
`
`The ’304 Patent Is Not for a “Technological Invention” ..... 2112
`
`The Claimed Subject Matter of the ’304 Patent as a
`Whole Does Not Recite a Technical Feature that Is Novel
`and Unobvious Over the Prior Art ....................................... 2314
`
`The Claimed Subject Matter of the ’304 Patent as a
`Whole Does Not Solve a Technical Problem Using a
`Technical Solution ............................................................... 2517
`
`a.
`
`b.
`
`Plain Language ............................................................... 17
`
`Legislative History ......................................................... 18
`
`V.
`
`Identification of Challenge Under 37 C.F.R. § 42.304(b) ........................ 2922
`
`A.
`
`Specific Statutory Grounds of Challenge ....................................... 3022
`
`B. A Person of Ordinary Skill in the Art ............................................ 3022
`
`C.
`
`Claim Construction ........................................................................ 3023
`
`VI. Detailed Explanation of Reasons That Claims 1−40 of the ’304 Patent
`Are Unpatentable ...................................................................................... 3224
`
`A. Ground 1: Claims 1−40 Are Unpatentable Under 35 U.S.C.
`§ 101 ............................................................................................... 3224
`
`1.
`
`New PTO Guidelines ........................................................... 3325
`
`a.
`
`b.
`
`Ultramercial, LLC v. Hulu, LLC, 657 F.3d 1323
`(Fed. Cir. 2014) ............................................................... 26
`
`DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d
`1245 (Fed. Cir. 2014) ..................................................... 27
`
`2.
`
`Indicators of Abstract Ideas ................................................. 3729
`ii
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`Page 3 of 86
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`3.
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`4.
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`Attorney Docket No 41919-0005CP1
`CBM of U.S. Patent No. 6,766,304
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`Economic Practices Are Abstract Ideas ............................... 3931
`
`The ’304 Patent Is Not Patentable Under 35 U.S.C. § 101
`Because All of Its Claims Are Directed to an Abstract
`Idea ....................................................................................... 4133
`
`a.
`
`b.
`
`The Claims of the ’304 Patent Are Directed to an
`Abstract Idea ................................................................... 36
`
`The Claim Elements—Either Separately or as an
`Ordered Combination—Do Not Provide
`“Something More” .......................................................... 39
`
`c.
`
`Claims Fail the Machine-or-Transformation Test .......... 44
`
`(1) The ’304 Patent Claims Are Not Tied to a
`Particular Machine ............................................... 45
`
`(2) The ’304 Patent Claims Do Not Transform a
`Particular Article into a Different State or
`Thing .................................................................... 47
`
`d.
`
`e.
`
`Dependent Claims ........................................................... 48
`
`Other Related TT Patents Have Been Determined
`to Be Abstract by the Board ........................................... 48
`
`B. Ground 2: Claims 1−40 Are Unpatentable Under 35 U.S.C. §
`112, First Paragraph, for Lacking Sufficient Written
`Description of a Price Column Where Only Some Prices Move,
`Not All ............................................................................................ 5953
`
`1.
`
`Claim Coverage .................................................................... 6155
`
`2. Written Description .............................................................. 6256
`
`3.
`
`Possession ............................................................................ 6559
`
`VII. Conclusion ................................................................................................ 6660
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`
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`Attorney Docket No 41919-0005CP1
`CBM of U.S. Patent No. 6,766,304
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`
`EXHIBITS
`
`U.S. Patent No. 6,766,304
`File History, U.S. Patent No. 6,766,304
`TD Ameritrade Holding Corp. v. Trading Tech. Int’l, Inc., Case
`CBM2014-00136, Decision Denying Institution (Paper No. 19), at
`pp. 7–12 (P.T.A.B. Dec. 2, 2014)
`Memorandum Opinion and Order, Dkt. #735, Trading Tech. Int'l,
`Inc. v. CQGT, LLC, et al., 05-cv-4811, U.S. District Court for the
`Northern District of Illinois, Eastern Division
`TD Ameritrade Holding Corp. v. Trading Tech. Int 'l, Inc., Case
`CBM2014-00136, Petition (Paper No. 4) (P.T.A.B. May 20, 2014)
`TD Ameritrade, Patent Owner’s Preliminary Response (Paper No.
`18), at pp. 6-7 (P.T.A.B. Sept. 3, 2014)
`TD Ameritrade Holding Corp. v. Trading Tech. Int’l, Inc.,
`CBM2014-00131, Decision to Institute (Paper No. 19), at p. 15
`(P.T.A.B. Dec. 2, 2014)
`TD Ameritrade Holding Corp. v. Trading Tech. Int’l, Inc.,
`CBM2014-00133, Decision to Institute (Paper No. 19), at p. 14
`(P.T.A.B. Dec. 2, 2014)
`TD Ameritrade Holding Corp. v. Trading Tech. Int’l, Inc.,
`CBM2014-00137, Decision to Institute (Paper No. 19), at p. 14
`(P.T.A.B. Dec. 2, 2014)
`TD Ameritrade Holding Corp. v. Trading Tech. Int’l, Inc.,
`CBM2014-00135, Decision to Institute (Paper No. 19), at p. 14
`(P.T.A.B. Dec. 2, 2014)
`Kemp II, et al. US 6,772,132
`Statement of Reasons for Allowance in the ‘304 patent
`Declaration of Dr. John Phillips Mellor (“Mellor decl.”)
`Excerpts of Appendices for Mellor Declaration
`Lodewijk Petram, “The World’s First Stock Exchange”
`“Futures/ Option Purchasing System Trading Terminal Operation
`Guide”, Tokyo Stock Exchange Operation System Division
`
`iv
`
`TS 1001
`TS 1002
`TS 1003
`
`TS 1004
`
`TS 1005
`
`TS 1006
`
`TS 1007
`
`TS 1008
`
`TS 1009
`
`TS 1010
`
`TS 1011
`TS 1012
`TS 1013
`TS 1014
`TS 1015
`TS 1016
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`
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`Attorney Docket No 41919-0005CP1
`CBM of U.S. Patent No. 6,766,304
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`TS 1017
`
`TS 1018
`
`TS 1019
`TS 1020
`
`Translation of “Futures/ Option Purchasing System Trading
`Terminal Operation Guide”, Tokyo Stock Exchange Operation
`System Division
`Certificate of Translation of “Futures/ Option Purchasing System
`Trading Terminal Operation Guide”, Tokyo Stock Exchange
`Operation System Division
`Gutterman, et al. US Patent No. 5,297,031
`Ellen Terrell, “History of the American and NASDAQ Stock
`Exchanges”, September, 2006 (Updated October, 2012)
`
`v
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`Page 6 of 86
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`I.
`
`II. Introduction
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`Attorney Docket No 41919-0005CP1
`CBM of U.S. Patent No. 6,766,304
`
`
`Petitioners, CQG TradeStation Group, Inc. and CQGTTradeStation
`
`Securities, LLCInc. (collectively, “CQGPetitioners” or “TradeStation”) request
`
`Post- GrantCovered Business Method “CBM”) review of claims 1−40 of Covered
`
`Business Method Patent, U.S. Patent No. 6,766,304 B2 (“the ’304 patent”) (Ex
`
`1001). The ’304 patent issued on June 20, 2004, and is owned by Trading
`
`Technologies International, Inc. (Id.) The Petitioner“Patent Owner” or “TT”).
`
`Petitioners will show below that the claims of the ’304 patent are unpatentable
`
`because they are directed to an abstract idea, and based on the broadest reasonable
`
`interpretation, lack written description. Accordingly, covered business method
`
`patent (“CBM”) review of claims 1−40 of the ’304 patent should be granted.
`
`II.
`
`III. Mandatory Notices (37 C.F.R. § 42.8(b))
`A. Real Party-in-InterestParties-in-Interest
`The real parties-in-interest are CQG, Inc. and CQGT, LLCTradeStation
`
`Securities, Inc, TradeStation Group, Inc., TradeStation Technologies, Inc., and
`
`IBFX, Inc.
`
`B. Related Matters
`The ’304 patent is or has been involved in the following proceedings that
`
`may affect, or be affected by, a decision in this proceeding: GL Trade Am., Inc. v.
`
`Trading Tech. Int'l, Inc. (“TT”), 1:11-cv-001558 (N.D. Ill.); TT v. TradeHelm,
`
`
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`1
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`Inc., 1:10-cv-00931 (N.D. Ill.); TT v. Rosenthal Collins Group, LLC, 1:10-cv-
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`Attorney Docket No 41919-0005CP1
`CBM of U.S. Patent No. 6,766,304
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`00929 (N.D. Ill.); TT v. Open E Cry, LLC, et al., 1:10-cv-00885 (N.D. Ill.); TT v.
`
`thinkorswim Group, Inc., et al., 1:10-cv-00883 (N.D. Ill.); TT v. Tradestation Sec.,
`
`Inc., et al., 1:10-cv-00884 (N.D. Ill.); TT v. FuturePath Trading, LLC, 1:10-cv-
`
`00720 (N.D. Ill.); TT v. Stellar Trading Sys., Ltd., et al., 1:10-cv-00882 (N.D. Ill.);
`
`TT v. Cunningham Trading Sys., LLC, et al., 1:10-cv-00726 (N.D. Ill.); TT v. BGC
`
`Partners, Inc., 1:10-cv-00715 (N.D. Ill.); TT v. CQG, Inc., et al., 1:05-cv-04811
`
`(N.D. Ill.); TT v. IBG LLC, et al., 1:10- cv-00721 (N.D. Ill.); TT v. Orc Software,
`
`Inc., et al., 1:05-cv-06265 (N.D. Ill.); TT v. FuturePath Trading, LLC, 1:05-cv-
`
`05164 (N.D. Ill.); TT v. Transmarket Group, LLC, 1:05-cv-05161 (N.D. Ill.); TT v.
`
`FFastFill PLC, Inc., 1:05-cv-04449 (N.D. Ill.); TT v. Strategy Runner, Ltd., 1:05-
`
`cv-04357 (N.D. Ill.); TT v. Rolfe & Nolan Sys., Inc., et al., 1:05-cv-04354 (N.D.
`
`Ill.); TT v. RTS Realtime Sys., Inc., et al., 1:05-cv-04332 (N.D. Ill.); TT v.
`
`Peregrine Fin. Group, Inc., 1:05-cv-04137 (N.D. Ill.); TT v. GL Consultants, Inc.,
`
`et al., 1:05-cv-04120 (N.D. Ill.); Rosenthal Collins Group, LLC v. TT, 1:05-cv-
`
`04088 (N.D. Ill.); TT v. Ninja Trader, LLC, 1:05-cv-03953 (N.D. Ill.); TT v.
`
`Patsystems NA LLC, et al., 1:05-cv-02984 (N.D. Ill.); TT v. Man Group PLC, et
`
`al., 1:05-cv-02164; TT v. Refco Group, Ltd., LLC, 1:05-cv-01079 (N.D. Ill.); TT v.
`
`Kingstree Trading, 1:04-cv-06740 (N.D. Ill.); TT v. Goldenberg Hehmeyer, 1:04-
`
`cv-06278 (N.D. Ill.); TT, et al. v. eSpeed, Inc., 1:04-cv-05312 (N.D. Ill.).
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`
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`2
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`Attorney Docket No 41919-0005CP1
`CBM of U.S. Patent No. 6,766,304
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`C. Lead and Back-up Counsel Including Service Information
`Petitioners provide the following designation of counsel:
`
`BACKUP COUNSEL
`LEAD COUNSEL
`Kevin Su, Reg. No. 57,377
`John C. Phillips, Reg. No. 35,322
`3200 RBC Plaza
`3200 RBC Plaza
`60 South Sixth Street
`60 South Sixth Street
`Minneapolis, MN 55402
`Minneapolis, MN 55402
`T: 617-521-7827
`T: 858-678-4304
`F: 877-769-7945
`F: 877-769-7945
`E-mail: CBM41919-0005CP1@fr.com
`E-mail: phillips@fr.com
`Lead counsel for Petitioners is Adam G. Kelly and back-up counsel is
`
`William J. Kramer and William J. Voller, III, of the law firm of Loeb & Loeb LLP
`
`having an address at 321 N. Clark St., Suite 2300, Chicago, IL 60654, telephone
`
`number (312) 464-3100, and facsimile number (312) 464-3111. Petitioners
`
`consent to service by email at the following email addresses: akelly@loeb.com,
`
`wkramer@loeb.com, and wvoller@loeb.com.
`
`Please address all correspondence and service to counsel designated above.
`
`Petitioners also consent
`
`to electronic service by email at CBM41919-
`
`0005CP1@fr.com.
`
`III. Payment of Fees
`Petitioners authorize the Patent and Trademark Office to charge Deposit
`
`Account No. 06-1050 for the fee set in 37 C.F.R. § 42.15(b) for this Petition, and
`
`further authorize payment for any additional fees to be charged to this Deposit
`
`Account.
`
`
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`3
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`Attorney Docket No 41919-0005CP1
`CBM of U.S. Patent No. 6,766,304
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`IV. Grounds for Standing (37 C.F.R. 42.304(a))
`A. CQG HasPetitioners Have Standing to File a Petition Under 37
`C.F.R. § 42.302(a)
`
`CQG certifies that it meets the eligibility requirements of 37 C.F.R. §
`
`42.302(a)Petitioners certify that the ‘304 patent is available for CBM because TT
`
`sued CQG, Inc. and CQGT, LLCTradeStation for infringement of the ’304 patent.
`
`See TT v. CQGTradeStation Sec., Inc., et al., 1:0510-cv-0481100884 (N.D. Ill.).
`
`Petitioners are not barred or estopped from requesting CBM review. As explained
`
`below, it is more likely than not that at least one claim of the ’304 patent is invalid
`
`under 35 U.S.C. § 101 and/or § 112. Moreover, CBM review is available for the
`
`’304 patent for the reasons set forth below.
`
`B. CQGTradeStation Is Not Estopped from Filing a Petition Under
`37 C.F.R. §CFR 42.302(b) by Having Filed a Now-Dismissed DJ
`Action in 2005Non-Party CQG’s Earlier-Filed CBM Petition, and
`TradeStation Is the Sole Party-in-Interest in this Proceeding
`
`CQG filed a complaint for declaratory judgment action against TT
`
`challenging, inter alia, the invalidity of the ’304 patent in the U.S. District Court
`
`for the District of Colorado on August 17, 2005 (“Colorado Action”). (Ex. 1003.)
`
`The Colorado Action was assigned Case No. 05-cv-01584. (Id.) Two days later,
`
`on August 19, 2005, TT sued CQG in the Northern District of Illinois (“Illinois
`
`Action”), which was designated Case No. 1:05-cv-04811. (Ex. 1004.) TT then
`
`filed a renewed motion to transfer the Colorado Action to the Northern District of
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`Illinois on December 22, 2005. (Ex. 1005.) The renewed motion to transfer was
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`Attorney Docket No 41919-0005CP1
`CBM of U.S. Patent No. 6,766,304
`
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`granted on September 21, 2006, and the Colorado Action was transferred to the
`
`Northern District of Illinois the same day (“Transferred Colorado Action”). (Ex.
`
`1006.) The Transferred Colorado Action was designated Case No. 1:06-cv-05222
`
`by the Northern District of Illinois and assigned to Judge John W. Darrah, but was
`
`subsequently re-assigned to Judge James B. Moran on November 14, 2006,
`
`because the Illinois Action, Case No. 1:05-cv-04811, was pending before Judge
`
`Moran. (Ex. 1007.) On December 1, 2006, the Transferred Colorado Action, Case
`
`No. 1:06-cv- 05222, was dismissed without prejudice by Judge Moran. (Ex. 1008.)
`
`On January 9, 2015, CQG, Inc. and CQGT, LLC (collectively, “CQG”)
`
`jointly filed a CBM petition on the ’304 patent that was denied on July 10, 2015
`
`under 35 U.S.C. § 325(a)(1) and 37 C.F.R. § 43.302(c) because CQG had
`
`previously filed a declaratory judgment action against TT.1 The merits of CQG’s
`
`
`1 CQG’s previously-filed declaratory judgment action had been dismissed without
`
`prejudice; however, the Board found that when CQG amended its answer in
`
`response to a later-filed infringement action to include its earlier-filed declaratory
`
`claims, “it was as if the claims from the [declaratory judgment] action were
`
`continued into the [infringement action],” and accordingly CQG was barred from
`
`seeking CBM review.
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`petition were not reached. See CQG, Inc. v. Trading Technologies Int’l, Inc., CBM
`
`2015-00057, Paper 13. Portions of this petition and its exhibits, including the
`
`declaration of Dr. Mellor, are substantially identical to CQG’s petition and exhibits
`
`(except the portions concerning the effect of the declaratory judgment action have
`
`been removed). Any argument by TT that TradeStation was a real-party-in-interest
`
`to CQG’s petition, and thus is estopped from filing this petition, is without merit,
`
`for several independent reasons.
`
`First, TradeStation and CQG are separate unrelated corporate entities with
`
`no common ownership and no common control. Nor do they even have a
`
`commercial relationship that could conceivably bear on issues of privity or real-
`
`party-in-interest for this petition. While they are both accused of infringing the
`
`same patent (albeit in separate lawsuits), the Board has repeatedly held that a non-
`
`party’s status as a co-defendant and/or co-member of a joint defense group is
`
`insufficient to render that non-party a real party in interest. See, e.g., Petroleum
`
`Geo-Servs. Inc. v. WesternGeco LLC, IPR2014-00687, Paper 33 at 16 (PTAB Dec.
`
`15, 2014) (holding petitioners and non-party’s shared interest in invalidating patent
`
`at issue, “collaborat[ion] together, and invo[cation of the] common interest
`
`privilege with respect to sharing potentially invalidating prior art references” were
`
`insufficient to render non-party a real-party-in-interest); accord JP Morgan Chase
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`Attorney Docket No 41919-0005CP1
`CBM of U.S. Patent No. 6,766,304
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`& Co. et al v. Maxim Integrated Products, Inc., CBM2014-00179, Paper 11 at 13
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`(PTAB Feb. 20, 2015).
`
`Second, there can be no question that TradeStation had nothing to do with
`
`the CQG declaratory judgment (“DJ”) action that was the basis of the Board’s
`
`refusal to institute CQG’s request for CBM review. CQG filed that action in
`
`August 17, 2005, in the District of Colorado (many years before TT accused
`
`TradeStation of infringement). Shortly thereafter, TT sued CQG for infringement
`
`in the Northern District of Illinois. Ultimately, CQG’s declaratory judgment action
`
`was transferred to Illinois, then dismissed without prejudice shortly before CQG
`
`amended its answer in Illinois to include, as counterclaims, its DJ claims from its
`
`Colorado action. Those counterclaims were thus asserted by CQG in Illinois in
`
`December 2006, and the CQG case was tried to a jury earlier this year.
`
`Contrary to TT’s prior representations to the Northern District of Illinois,
`
`CQG is not estopped from filing this petition under 37 C.F.R. § 42.302(b). First,
`
`theTradeStation, by contrast, was not sued by TT until 2010. That litigation
`
`remains in its very early stages. TradeStation had no involvement, influence,
`
`control, or even knowledge of CQG’s 2005 declaratory judgment action filed by
`
`CQG was dismissed without prejudice and, therefore, is considered to have never
`
`been filed. Second, the rules promulgated by the PTO under Section 18 of the
`
`Leahy-Smith America Invents Act (“AIA”) do not prohibit the filing of ain
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`Colorado, nor did it participate in TT’s 2005 Illinois case against CQG. Thus, any
`
`suggestion that the CQG 2005 declaratory judgment action before the filing of
`
`asomehow estops TradeStation from filing the instant petition for CBM review.
`
`Third,under 35 U.S.C. § 325(a)(1), which relates to Post-Grant Review (“PGR”),
`
`does not apply to CBM review. and/or 37 C.F.R. § 43.302(c) would be baseless.
`
`Third, the similarity of TradeStation’s petition and CQG’s petition does not
`
`change the fact that TradeStation is the only real-party-in-interest for this petition.
`
`The Trial Practice Guide explains that, in general, a real-party-in-interest is a
`
`“party that desires review of the patent” or “at whose behest the petition has been
`
`filed.” Office Patent Trial Practice Guide, 77 Fed. Reg. 48,756, 48,759 (Aug. 14,
`
`2012). TradeStation desires review of the ’304 patent, which it has been accused
`
`of infringing in a lawsuit filed by TT against it in 2010. TradeStation is filing this
`
`petition on its own behest and at its own cost, using its own counsel. CQG did not
`
`control or influence TradeStation’s decision to file this petition, nor did CQG
`
`participate in the preparation of this petition other than passively having its earlier-
`
`filed petition serve as its basis, nor will it exercise any control or influence as this
`
`proceeding moves forward. CQG has not funded TradeStation’s petition and will
`
`not fund TradeStation’s participation in this proceeding at any point in the future.
`
`TradeStation is represented by separate counsel from CQG, both in the TT
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`litigation and for the instant petition. CQG had no opportunity to review, provide
`
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`Attorney Docket No 41919-0005CP1
`CBM of U.S. Patent No. 6,766,304
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`comments on, or otherwise influence the instant petition before it was filed by
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`TradeStation. Nor will it have any such opportunities moving forward. In brief,
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`there is simply no basis to conclude that a “non-party exercised or could have
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`exercised control over a party’s participation” in this CBM.
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`TT may argue that the fact that TradeStation is largely resubmitting
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`arguments that were previously presented by CQG (but never reached by the
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`Board) is a basis for privity or a finding that CQG is also a real-party-in-interest in
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`this proceeding. That argument has already been rejected in a precedential
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`decision by the Board. JP Morgan Chase & Co. et al v. Maxim Integrated
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`Products, Inc., CBM2014-00179, Paper 11 at 13 (PTAB Feb. 20, 2015).
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`The JP Morgan Chase case is precisely on point. In that case, a third party
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`(like CQG) had previously sued the patentee for a declaratory judgment of
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`invalidity. That case was ultimately consolidated into a multi-district litigation that
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`included the petitioners. The petitioners and the third party jointly filed a CBM
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`request, prior to the Board’s clarification that CBM proceedings, like IPR
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`proceedings, are subject to the DJ action bar. Subsequent to that clarification, the
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`Board dismissed the entire CBM on the basis of the third party’s prior DJ action.
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`The petitioners then re-filed a substantially similar petition, relying on the same
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`declarant, but leaving out the third party that the Board had previously found was
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`barred from seeking a CBM based on its DJ action. The Board rejected the patent
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`Attorney Docket No 41919-0005CP1
`CBM of U.S. Patent No. 6,766,304
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`owner’s argument that the overlap in prior art and arguments, as well as the use of
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`the same declarant, between the re-filed petition and the dismissed petition
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`evidenced the third party’s control and contributions to the proceeding sufficient to
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`raise a defect in the identification of the real-party-in-interest. Consequently, the
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`Board instituted the proceeding over the patent owner’s objection. The same result
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`applies here.
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`1. Institution of CBM Review Is Not Precluded by CQG’s Earlier
`Filed Declaratory Judgment Action, Because Such Action
`Was Dismissed Without Prejudice
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`Covered business method patent review of the ’304 patent should be granted
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`because CQG’s declaratory judgment action was dismissed without prejudice prior
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`to the filing of the present petition. Thus, it is considered to have never existed.
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`Federal courts treat a civil action that is dismissed without prejudice as
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`“something that de jure never existed.” Holloway v. U.S., 60 Fed. Cl. 254, 261
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`(Fed. Cl. 2004), aff’d 143 F. App’x 313 (Fed. Cir. 2005); see also Beck v.
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`Caterpillar, Inc., 50 F.3d 405, 407 (7th Cir. 1995) (“[Plaintiff’s] suit was
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`dismissed voluntarily pursuant to [Rule] 41(a), and is treated as if it had never been
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`filed.”). The Federal Circuit has consistently interpreted the effect of dismissals
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`without prejudice as “leav[ing] the parties as though the action had never been
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`brought.” See, e.g., Graves v. Principi, 294 F.3d 1350, 1356 (Fed. Cir. 2002); Jet,
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`Inc. v. Sewage Aeration Sys., 223 F.3d 1360, 1364 (Fed. Cir. 2000).
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`10
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`Attorney Docket No 41919-0005CP1
`CBM of U.S. Patent No. 6,766,304
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`Similarly, the Board has found that civil actions dismissed without prejudice
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`to have no preclusive effect. See Callidus Software Inc. v. Versata Software, Inc.,
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`Case CBM2013-00053, Decision to Institute (Paper No. 16), at p. 6 (P.T.A.B. Mar.
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`4, 2014) (holding that dismissal without prejudice indicates that judgment is not on
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`the merits and will have no preclusive effect); see also Macuto U.S.A. v. BOS
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`GmbH & KG, Case IPR2012-00004, Decision to Institute (Paper No. 18), at pp.14–
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`16 (PTAB Jan. 14, 2013) (holding that a dismissal without prejudice nullified the
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`effect of service for purposes of 35 U.S.C. § 315(b)). Thus, when an action is
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`dismissed without prejudice, the parties are free to litigate the matter in a
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`subsequent action, as though the dismissed action had never existed. Univ. of
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`Pittsburgh v. Varian Med. Sys., Inc., 569 F.3d 1328, 1333 (Fed. Cir. 2009); see
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`also 9 WRIGHT & MILLER, FED. PRAC. & PROC. CIV. § 2367 (3d ed.); id. at
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`nn. 6 & 9 (citing numerous cases throughout the courts of appeals).
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`When a court permits a party to dismiss the declaratory judgment action
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`voluntarily without prejudice, the party effectively unmakes that choice, and the
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`action is considered never to have existed. Here, the court dismissed CQG’s
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`declaratory judgment action without prejudice prior to the filing of the present
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`Petition. Therefore, the declaratory judgment action never existed, and CQG is not
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`estopped from filing the present Petition.
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`If TT attempts to rely on the Board’s decision in Securebuy, LLC v.
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`Attorney Docket No 41919-0005CP1
`CBM of U.S. Patent No. 6,766,304
`
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`CardinalCommerce Corp., Case CBM2014-00035, Decision to Institute (Paper
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`No. 13) (P.T.A.B. Apr. 25, 2014) (Precedential), or the Board’s decision in Branch
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`Banking & Trust Co. v. Maxim Integrated Products, Inc., Case CBM2013-00059,
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`Decision Denying Institution (Paper No. 12) (P.T.A.B. Mar. 20, 2014), to support
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`an argument that the filing of a declaratory judgment action precludes the filing of
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`a CBM petition, both cases can be distinguished from the present case. In
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`SecureBuy, the petitioner filed a declaratory judgment action two weeks prior to
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`the filing of its petition for CBM review, and the declaratory judgment action
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`remained on-going at the time the Board issued its decision denying institution of
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`CBM review. Securebuy, Decision to Institute (Paper No. 13), at p. 3. In Branch
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`Banking, the petitioner filed a declaratory judgment action prior to filing its
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`petition for CBM review. Branch Banking, Decision Denying Institution (Paper
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`No. 12), at p. 3. The declaratory judgment action was consolidated into another
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`action by order of the Judicial Panel on Multi-district Litigation and remained
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`ongoing. Id.; Branch Banking, Ex. 1005, at pp. 6–7, n.2; (Ex. 1009, at p. 4.) Here,
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`the declaratory judgment action filed by CQG is no longer pending as it was
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`dismissed without prejudice in 2006 before the merits of the case were decided. In
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`addition, there were no orders consolidating the Transferred Colorado Action with
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`the Illinois Case.1 The Board’s decisions in SecureBuy and Branch Banking,
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`Attorney Docket No 41919-0005CP1
`CBM of U.S. Patent No. 6,766,304
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`therefore, are not applicable to the present Petition, and CQG’s petition for
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`institution of CBM review of the ’304 patent should be granted.
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`Further, TT will likely attempt to rely on Apple, Inc. v. Rensselaer
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`Polytechnic Institute, Case IPR2014-00319, Decision Denying Institution (Paper
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`No. 12) (P.T.A.B., Jun. 12, 2014). In that case, a first infringement complaint was
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`filed by Dynamic Advances, LLC against Apple, Inc. on October 19, 2012
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`(Dynamic I), and a second infringement complaint was filed by Dynamic
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`Advances, LLC in conjunction with Rensselaer Polytechnic Institute (“RPI”)
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`against Apple, Inc. on June 3, 2013 (Dynamic II). Id., at p. 3. The court ordered
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`the consolidation of the two actions and dismissed Dynamic I without prejudice.
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`Id. The Board concluded that because Dynamic I was consolidated with Dynamic
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`II, Dynamic I remained pending and presented a time bar to the petition for Inter
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`Partes Review filed by Apple, Inc. on January 3, 2014. Id., at p. 7 (“[W]e
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`conclude that the Dynamic I case did not cease in the same sense as a complaint
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`1 Although TT filed a motion in the Illinois Case to consolidate the
`Transferred Colorado Action with the Illinois case (Ex. 1010), an order ruling on
`the motion was never entered by the court. (See Ex. 1011); see also footnote 2,
`infra.
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`dismissed without prejudice—it was consolidated with another case, and its
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`Attorney Docket No 41919-0005CP1
`CBM of U.S. Patent No. 6,766,304
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`complaint cannot be treated as if it never existed.” (emphasis added)).
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`Here, the Illinois Action and the Transferred Colorado Action were not
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`consolidated. Notably, in Apple, the parties had filed a “Stipulated Joint Request
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`to Coordinate Civil Actions,” which was signed and entered by the court. Apple,
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`Ex. 1022, at p. 1. The stipulated joint request specifically requested that the court
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`“coordinate” the two actions, and indicated how the two actions were to be
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`combined. Id., at p. 2 (E.g., “All disclosures, discovery, and filings by Dynamic
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`Advances . . . in [Dynamic I] are hereby deemed to have occurred in [Dynamic II]
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`as made jointly by both Dynamic Advances and RPI, including all reservation of
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`rights.”) No such stipulation was filed in the Transferred Colorado Action or the
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`Illinois Action nor is there any order stating that the Transferred Colorado Action
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`and Illinois Action were consolidated. (see Ex. 1011.) The order filed by Judge
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`Moran in the Transferred Colorado Action states that the “case is dismissed
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`without prejudice”—plain and simple.2 (Ex. 1008.) There is no mention of
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`2 TT may argue that CQG submitted a proposed order to Judge Moran that,
`if signed, would have granted TT’s Motion for Consolidation of the Transferred
`Colorado Action with the Illinois Action, see footnote 1, supra, and granted
`dismissal of the Transferred Colorado Action without prejudice and leave for CQG
`to file an amended answer and counterclaims. (See Ex. 1012.) But, that proposed
`order was never entered by court. Instead, the court entered an order that granted
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`consolidation, coordination, or incorporation of the claims of the Transferred
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`Attorney Docket No 41919-0005CP1
`CBM of U.S. Patent No. 6,766,304
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`Colorado Action into the Illinois Action. Thus, unl