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`Page 1
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` - - -
` UNITED STATES PATENT AND TRADEMARK OFFICE
` - - -
` BEFORE THE PATENT TRIAL AND APPEAL BOARD
` - - -
` IBG LLC, INTERACTIVE BROKERS LLC,
`TRADESTATION GROUP, INC., TRADESTATION SECURITIES,
` INC., TRADESTATION TECHNOLOGIES, INC., and IBFX,
` INC.,
` Petitioners,
` v.
` TRADING TECHNOLOGIES INTERNATIONAL, INC.,
` Patent Owner.
` - - -
` CBM2015-00161 (Patent No. 6,766,304 B2)
` CBM2015-00172 (Patent No. 7,783,556)
` CBM2015-00179 (Patent No. 7,533,056 B2)
` CBM2015-00181 (Patent No. 7,676,411 B2)
` CBM2015-00182 (Patent No. 6,772,132 B1)
` - - -
` July 15, 2016 - 9:00 a.m.
` - - -
` TELECONFERENCE IN THE ABOVE MATTER
` BEFORE: JEREMY M. PLENZLER
` MEREDITH C. PETRAVICK
` SALLY C. MEDLEY
` Administrative Patent Judges
`
` - - -
`
` VERITEXT NATIONAL COURT REPORTING COMPANY
` MID-ATLANTIC REGION
` 1250 Eye Street, NW, Suite 1201
` Washington, DC 20005
`
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`TRADING TECH EXHIBIT 2335
`TRADESTATION ET AL. v. TRADING TECH
`CBM2015-00172
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`Page 2
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`APPEARANCES:
`
` STERNE, KESSLER, GOLDSTEIN & FOX, P.L.L.C.
` BY: ROBERT E. SOKOHL, ESQUIRE
` LORI A. GORDON, ESQUIRE
` RICHARD M. BEMBEN, ESQUIRE
` 1100 New York Avenue, N.W.
` Washington, D.C. 20005-3934
` 202-371-2600
` rsokohl-ptab@skgf.com
` lgordon-ptab@skgf.com
` rbemben-ptab@skgf.com
` and
` FISH & RICHARDSON
` BY: ADAM J. KESSEL, ESQUIRE
` One Marina Park Drive
` Boston, MA 02210-1878
` 617-368-2180
` kessel@fr.com
` Representing the Petitioners
`
` FINNEGAN, HENDERSON, FARABOW, GARRETT &
` DUNNER, LLP
` BY: RACHEL L. EMSLEY, ESQUIRE
` Two Seaport Lane
` Boston, MA 02210-2001
` 617-646-1600
` rachel.emsley@finnegan.com
` and
` BY: ERIKA HARMON ARNER, ESQUIRE
` Two Freedom Square
` 11955 Freedom Drive
` Reston, VA 20190-5675
` 571-203-2754
` erika.arner@finnegan.com
` Representing the Patent Owner
`
` - - -
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` JUDGE PLENZLER: Good morning. This
`
`is Judge Plenzler at the Patent Trial and Appeal
`
`Board. This is the conference call for
`
`CBM2015-00161, '172, '179, '181, and '182. I'm
`
`joined on the call by Judges Medley and Petravick.
`
` Do we have someone on the call for
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`Petitioner?
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` MR. SOKOHL: Yes, Your Honor. This
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`is Rob Sokohl and with me today is Lori Gordon,
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`Richard Bemben, and Adam Kessel.
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` JUDGE PLENZLER: All right. Thank
`
`you.
`
` And for Patent Owner?
`
` MS. EMSLEY: For Patent Owner, this
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`is Rachel Emsley, and with me on the call is Erica
`
`Arner.
`
` JUDGE PLENZLER: All right. Thank
`
`you.
`
` And is there a court reporter?
`
` THE COURT REPORTER: There is, Your
`
`Honor.
`
` JUDGE PLENZLER: All right.
`
` And I assume that's Patent Owner's
`
`court reporter?
`
` MS. EMSLEY: That's correct.
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` JUDGE PLENZLER: All right. And I'm
`
`sure by now you're familiar with the procedure for
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`getting that in the record, so I won't go over the
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`details.
`
` Patent Owner requested this call, it
`
`looks like, to discuss a request to file an offer of
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`proof, so we're going to hear from them first.
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` But before we do, I would just like a
`
`little background information, just to clarify the
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`whole procedure for how this all came about,
`
`primarily with respect to the request and the grant
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`of relief from the District Court for the protective
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`order.
`
` If you could just explain, just very
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`briefly, the timeline as far as, you know, when you
`
`received the information that the District Court has
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`now given you relief to use, when you requested
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`permission to use it, and then when the District
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`Court ultimately granted that relief, that would be
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`appreciated.
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` MS. EMSLEY: Yes, Your Honor. This
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`is Rachel Emsley. I need to look at the exact
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`filings in the District Court. But when the Board
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`denied TT's motion for additional discovery, the
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`Board noted that the District Court could authorize
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`the Patent Owner to use the District Court discovery
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`in these proceedings, that discovery being subject
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`to the District Court's protective order, as you
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`know.
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` So following that denial of
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`additional discovery, Trading Technologies filed a
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`motion with the District Court for relief from the
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`protective order so that we could submit the
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`documents themselves in an offer of proof, getting
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`relief from the protective order.
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` So on July 13th the District Court
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`entered an order that adopts the District Court's
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`ruling as stated in open court in a hearing on
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`July 7th. So both parties were represented at that
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`hearing.
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` The District Court therefore granted
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`permission for TT to submit the documents and
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`transcripts identified in the motion for additional
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`discovery, and that's the same discovery that the
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`District Court previously granted despite the stay
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`because of its potential relevance to this PTAB
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`proceeding. And this was specific for the offer of
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`proof in the PTAB.
`
` So I'm not sure exactly the date that
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`that was filed. I need to look back at that for a
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`moment, if you don't mind.
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` MR. KESSEL: Your Honor, I could fill
`
`in the timeline -- this is Adam Kessel -- if you
`
`would like.
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` JUDGE PLENZLER: Sure.
`
` MR. KESSEL: So there were two
`
`motions to modify the protective order in the
`
`District Court. The first was filed on June 13th
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`and that one was withdrawn by the Patent Owner.
`
` That was the motion relating to
`
`providing a set of documents that were confidential
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`for the purposes of the motion for additional
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`discovery. And immediately after the Patent Owner
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`filed that motion for relief, we agreed that they
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`could use a handful of documents for the motion for
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`additional discovery, so the motion was withdrawn on
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`June 14th.
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` Then there was a second motion to
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`modify the protective order for the purpose of this
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`offer of proof and that was filed on July 1st, and
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`we actually offered as well to stipulate that they
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`could use some of the documents just for the purpose
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`of seeking to make the offer of proof.
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` We went to Court instead and the
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`Court allowed the protective order to be modified
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`for the purpose of allowing TT to make this motion
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`on July 7th.
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` JUDGE PLENZLER: Okay. Thank you.
`
` So the protective order, the relief
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`is just for this offer of proof then; is that
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`correct?
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` MS. EMSLEY: Yes, that's correct.
`
` JUDGE PLENZLER: Okay. And I guess
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`if you could help me out, Ms. Emsley, just an
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`initial question: What exactly are you looking to
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`get out of -- I guess why do you need to file this
`
`offer of proof? If you could just explain generally
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`first, and then we can get into some more details.
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` MS. EMSLEY: Sure. We are seeking
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`authorization to submit the offer of proof under
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`Federal Rule of Evidence 103(a)(2) to submit the
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`evidence denied in the Patent Owner's motion for
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`additional discovery because this is the mechanism
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`that the Federal Rules of Evidence provide to us to
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`preserve the evidentiary issue for appeal.
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` So for us, if it's necessary to argue
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`on appeal that this evidence was excluded from the
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`proceeding in error, this offer of proof would be
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`used by the Federal Circuit to determine whether
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`there was an error made.
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` JUDGE PLENZLER: But it sounds like
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`you just said you want to use the offer of proof to
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`bring the evidence in. So you'd want to file the
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`evidence; is that a correct understanding?
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` MS. EMSLEY: Yes. The filing that
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`we're proposing would consist of a simple cover
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`sheet, case caption page, stating that this is an
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`offer of proof, the nonconfidential description of
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`the documents that TT submitted to the District
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`Court, and the documents themselves as exhibits with
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`a motion to seal.
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` JUDGE PLENZLER: Right. And you also
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`mentioned that, you know, it's based on a ruling
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`that excluded evidence here. I guess where did we
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`exclude that evidence?
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` MS. EMSLEY: Well, that evidence is
`
`excluded by virtue of the fact that we were denied
`
`the additional discovery in this proceeding. So at
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`present our Patent Owner responses are filed and the
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`relief that we sought to get the documents in to the
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`PTAB as additional discovery so we could use them in
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`our arguments was denied in the additional discovery
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`motion.
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` JUDGE PLENZLER: So aren't you
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`basically saying that we abused our discretion in
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`denying the motion for additional discovery? I'm
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`just wondering why these exhibits would be filed and
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`what that would mean for us. I mean, how would we
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`use them? Like you said, you have your Patent Owner
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`response filed already; right? So if these exhibits
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`come in and they're filed, what does that do for us
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`in the record here? How does that affect the case?
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` MS. EMSLEY: It does not affect the
`
`case from your perspective. I mean, I think there's
`
`certainly the ability for you to look at them,
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`although in the past I know that the PTAB, a board,
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`at least one board, has allowed an offer of proof
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`and noted that they will not use that material in
`
`making their final determination.
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` And so we are not expecting that the
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`Board will consider this evidence. We're not asking
`
`the Board to consider the documents. We understand
`
`that you might not view them at all. We seek only
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`to preserve the evidentiary issue as prescribed by
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`the Federal Rules of Evidence.
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` JUDGE PLENZLER: And which case are
`
`you referencing where a panel has allowed that offer
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`of proof?
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` MS. EMSLEY: It was not this panel,
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`to be clear. The case number for that is IPR --
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`it's an IPR -- 2014-'209. And in that case a party
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`was allowed to make an offer of proof on record
`
`during an oral hearing, which was when they actually
`
`made that request. It appears that that's the first
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`time their request was made. And they did so at the
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`oral hearing.
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` And in that transcript -- it's Paper
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`51 in that proceeding, the date is April 3rd,
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`2015 -- the Board said that they would not consider
`
`the evidence, but they allowed the offer of proof to
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`be made.
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` JUDGE PLENZLER: Okay. Do you have
`
`anything else to add before I give Petitioner an
`
`opportunity to respond?
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` MS. EMSLEY: Yes, Your Honor. So I'm
`
`jumping around a little bit, but we're aware that
`
`the Federal Circuit has relied on offers of proof in
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`the past, at least when considering nonobviousness,
`
`and we feel that without the offer of proof, the
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`evidentiary issue may not be properly preserved for
`
`appeal and that's a risk that prejudices TT if we're
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`not allowed to make this offer of proof.
`
` The District Court in the hearing
`
`understood the difficulty for the PTAB to adjudge
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`the relevance based on the simple statements that we
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`were able to make in our motion for additional
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`discovery; and in the hearing on July 7th, when she
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`considered this issue, the District Court
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`underscored the necessity for the PTAB to have all
`
`material relevant information.
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` So we feel that an offer of proof is
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`appropriate here because the evidence has been
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`excluded and should be authorized because these
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`proceedings are applying the Federal Rules of
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`Evidence under 37 CFR 42.62.
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` We're not aware of any case where a
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`trial court has properly refused an offer of proof
`
`when evidence has been excluded; and the same holds
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`true for the PTAB, as far as we can see, that when
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`evidence has been excluded, an offer of proof has
`
`been granted, although so far it's only been in one
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`case.
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` JUDGE PLENZLER: And just so I
`
`understand, I guess maybe you mentioned it and I
`
`missed it, but why is it necessary to preserve this
`
`issue for appeal? Why does the Federal Circuit
`
`require that you have this offer of proof? I know
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`you mentioned that it's necessary, you know, to
`
`preserve the issue for appeal. I mean, why can't
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`you argue that we just -- because it seems ultimate
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`abuse of discretion for denying a motion for
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`additional discovery. Is that a correct
`
`understanding?
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` MS. EMSLEY: Yes. But there's now
`
`been a development where the District Court has
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`enabled us to put in the documents themselves, and
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`because of the confidentiality issue the PTAB didn't
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`have all of the material to make its determination.
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`So the only way to adjudicate whether the ruling to
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`exclude the documents was in error is with the
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`documents themselves.
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` JUDGE PLENZLER: Right. I mean, I
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`guess there's really nothing where things were
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`technically excluded; right? I mean, this is just a
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`denial of a motion for additional discovery that
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`we're talking about; correct?
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` MS. EMSLEY: In our view that's an
`
`exclusion of the evidence. I think certainly on
`
`appeal they could say that that isn't an exclusion
`
`of the evidence. But the evidence was sought to be
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`entered into this proceeding and was denied entry.
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`Not on a motion to exclude, per se, but the effect
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`is the same.
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` JUDGE PLENZLER: Okay. And I know
`
`you mentioned the District Court said the
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`information was necessary to the PTAB proceeding.
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`Did they say why it's necessary to the PTAB
`
`proceeding?
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` MS. EMSLEY: I think that discussion
`
`wasn't had at the District Court. I wasn't in the
`
`proceeding, but I've read the transcript. It
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`appears that, you know, there wasn't a lot of time
`
`spent by the Court in that hearing. So that wasn't
`
`discussed exactly.
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` JUDGE PLENZLER: And I guess, you
`
`know, if we're talking about filing the actual
`
`evidence itself, right, why isn't that supplemental
`
`information?
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` MS. EMSLEY: Well, because it
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`wouldn't be considered by the Board. It's only in
`
`the record for consideration by the Federal Circuit
`
`to decide whether the evidence was excluded in
`
`error.
`
` And so if they make that
`
`determination, then I imagine that the case would be
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`remanded so that the PTAB could review that
`
`evidence. But it isn't supplemental information to
`
`what we put in our Patent Owner response because the
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`Board isn't going to consider it.
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` JUDGE PLENZLER: Okay.
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` All right. And I guess you mentioned
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`that the District Court granted relief for the offer
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`of proof. I guess why aren't you just in general
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`not allowed to use it in this proceeding other than,
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`right, giving the offer of proof?
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` MS. EMSLEY: Why are we not
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`allowed --
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` JUDGE PLENZLER: Yeah. Why is this
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`limited by the District Court for the offer of
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`proof?
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` MS. EMSLEY: Well, because Your
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`Honors have denied the additional discovery in the
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`PTAB.
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` JUDGE PLENZLER: But, I mean, are you
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`saying the District Court would have let it in, they
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`would have given you the relief to use it if this
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`would have been done in time, right, if it would
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`have been done before Patent Owner --
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` MS. EMSLEY: Well, I don't know what
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`the result would have been. You know, we
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`came before -- you know, these are documents that
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`were subject to the protective order and it's not --
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`these aren't third-party confidential documents.
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`This is confidentiality that's controlled by the
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`Petitioners.
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` And so, you know, the issue of
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`whether the documents can be -- the protective order
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`modification and the use of these documents is in
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`the control of the Petitioners.
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` And we came to the PTAB with what we
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`thought was sound reasons for asking for the
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`additional discovery in the PTAB, relief that should
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`have been able to be granted by this Board. And so
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`the necessity of going to the District Court for
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`that, you know, we felt that this venue was the
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`place for that request.
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` JUDGE PLENZLER: Okay. I guess do
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`you have anything further to add before I hear from
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`Petitioner?
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` MS. EMSLEY: No, Your Honor.
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` JUDGE PLENZLER: All right.
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` I think Judge Petravick might have a
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`question. So I'll give her a minute if she wants to
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`come on and ask you something.
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` JUDGE PETRAVICK: Yes. Hello. This
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`is Judge Petravick. My question is if you went to
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`the District Court Judge and the District Court
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`Judge has the authority over that protective order,
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`that's the only thing that's preventing your from
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`using this evidence in the PTAB trial, and we don't
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`have any authority over the District Court's
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`protective order, why is the District Court only
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`letting -- why didn't you just ask the District
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`Court to modify the protective order in light for
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`the offer of proof? Why didn't you ask the District
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`Court to just, in general, modify the protective
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`order to let all the information in? -- because you
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`keep telling me that it's the Petitioners that's in
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`control, but yet you went to the District Court
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`Judge to ask. I'm assuming the District Court Judge
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`had the power to modify the protective order, in
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`general, to let the information in. I mean, you
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`possess this information.
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` MS. EMSLEY: Yes. So there were two
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`requests made to the District Court with the motion.
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`Litigation counsel did ask for relief generally to
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`have all of the discovery available, you know, going
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`forward, because now our Patent Owner responses are
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`in and we don't have the opportunity to use that
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`evidence.
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` But there was the request made
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`limited for the offer of proof, and that's the one
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`that the District Court felt was appropriate here;
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`and that if we need relief in the future for future
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`proceedings to use documents, that we could come
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`back and ask for relief.
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` JUDGE PETRAVICK: So in the June 13th
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`motion that was withdrawn by you, were you asking
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`for the District Court to lift its protective order,
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`in general, so that you could use the information in
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`your Patent Owner's response?
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` MS. EMSLEY: We were actually asking
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`for the District Court to allow us to use -- you
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`know what? I have not reviewed that motion. I
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`don't want to speak out of turn on what that said.
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`If you'd like me to review it, I can go back and
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`look at that.
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` JUDGE PETRAVICK: So it seems to me
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`that the facts of this case actually are that the
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`only thing that's preventing you from using this
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`evidence in this proceeding is not the PTAB, it's
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`the District Court protective order, and it seems
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`like you've gone twice to the District Court to ask
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`them to lift that protective order.
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` If you had filed this information
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`with your Patent Owner response, the Board does not
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`enforce or not enforce District Court protective
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`orders. So, you know, that would be a thing between
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`you and the District Court; not between you and the
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`Board.
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` So my question is: Why didn't you
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`go -- or basically what I would like to know is:
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`Have you gone to the District Court to ask for its
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`general relief or why haven't you?
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` MS. EMSLEY: I believe that that
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`request was made to the District Court but that we
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`were in the process of making our motion for
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`additional discovery because it was our
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`understanding that in the past the Board, even in
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`view of District Court protective orders, has
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`granted additional discovery of protected documents
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`based on the advice of litigation counsel that the
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`documents were relevant to things like secondary
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`considerations. And so there was solid ground for
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`believing that the PTAB was the place to ask for
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`this relief.
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` And the motion that was previously
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`before the District Court, you know, we were granted
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`the motion for additional discovery and had a very
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`quick time to prepare our motion; and in that time
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`it's my understanding that Petitioners reached out
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`to Patent Owner and offered a small set of documents
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`for use in the additional discovery in exchange for
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`foregoing the relief in the District Court, which
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`was going to require a hearing that next day. And
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`Page 19
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`so that's what happened with that motion, to my
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`recollection.
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` JUDGE PETRAVICK: And so the second
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`time you went to the District Court for the relief
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`from the protective order for the offer of proof and
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`for just generally submitting the information at the
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`PTAB, and the District Court denied you relief from
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`the protective order for generally submitting the
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`information at the PTAB.
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` MS. EMSLEY: That's correct.
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` JUDGE PETRAVICK: Thank you. I just
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`wanted to make sure that that was clear.
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` MS. ARNER: I'm sorry; just to be
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`accurate, she deferred that second request. I'm
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`sorry; this is Erica Arner. She granted the offer
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`of proof permission and said for the second request,
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`the more general use of the documents, come back to
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`me on the specific documents. So she granted the
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`first and then said that she would entertain the
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`other at a later time.
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` JUDGE PETRAVICK: So at this later
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`time, if they relieve you from the protective order,
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`then you have the evidence. There's really nothing
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`preventing you from submitting them in the case.
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` MS. ARNER: Well, the denial of the
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`additional discovery motion prevents it in these
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`five cases.
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` JUDGE PETRAVICK: If you possessed
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`the information, why would it deny you from putting
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`it in this case?
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` MS. ARNER: Well, our response is
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`done; right?
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` JUDGE PETRAVICK: Well, there are
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`other ways under our rules to offer information.
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` MS. ARNER: I think we view the
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`denial of the additional discovery motion as the
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`answer to that request.
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` I'll cede it back to Ms. Emsley. I
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`just wanted to correct that one thing.
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` JUDGE PETRAVICK: So why, if the
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`District Court gives you relief from the protective
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`order, can't you submit this information into the
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`PTAB?
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` MS. EMSLEY: I'm sorry; could you say
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`that question again?
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` JUDGE PETRAVICK: Why, if the
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`District Court releases you from the protective
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`order, can't you submit this information into the
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`PTAB under our other rules?
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` MS. EMSLEY: What other rule? I'm
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`not sure I --
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` JUDGE PETRAVICK: As supplemental
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`information, a request for supplemental
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`briefing/supplemental information.
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` MS. EMSLEY: I mean, our
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`understanding from the denial of additional
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`discovery is that this information was not adjudged
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`to be appropriate in this proceeding or allowed in
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`this proceeding, and so you're telling us that now
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`if we go to the District Court --
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` JUDGE PETRAVICK: I believe what the
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`additional discovery motion said is that you didn't
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`meet the requirements for additional discovery. You
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`have possession of this information; is that
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`correct? TT has possession of this information.
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` MS. EMSLEY: Yes, they do.
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` JUDGE PETRAVICK: And so if you have
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`possession of the information, the only thing that's
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`preventing you from using it is the District Court
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`protective order; is that correct?
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` MS. EMSLEY: Yes. Alternatively,
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`though, the Petitioners, whose confidential
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`information it is, could say that this is produced
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`now in the PTAB under the PTAB protective order.
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` JUDGE PETRAVICK: Well, so they
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`haven't yet even objected to the admissibility of
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`this evidence in this PTAB proceeding; is that
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`correct?
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` MS. ARNER: Yes, they did in that
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`denial, in their opposition.
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` All right. Never mind.
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` JUDGE PETRAVICK: When have you
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`offered this evidence into this PTAB trial?
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` MS. EMSLEY: Well, we weren't able to
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`offer that evidence. You know, our understanding is
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`that we had to come to you to ask for additional
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`discovery in order to offer this evidence.
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` JUDGE PETRAVICK: All right. I think
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`I understand what you're trying to do here. Thank
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`you.
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` JUDGE PLENZLER: Can I just put you
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`guys on hold for one second? I just want to confer
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`with my panel very briefly and we'll be right back
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`online. All right?
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` - - -
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` (Whereupon there was a recess in the
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`proceedings.)
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` - - -
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` JUDGE PLENZLER: All right. This is
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`Judge Plenzler. I'm back on the call with Judges
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`Medley and Petravick.
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` I assume we still have counsel for
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`the parties on the line?
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` MR. SOKOHL: Yes, Your Honor.
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` MS. EMSLEY: Yes, Your Honor.
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` JUDGE PLENZLER: All right. I guess
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`if we could hear from Petitioner, if you have a
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`response to what Patent Owner has explained here.
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` MR. SOKOHL: Sure, Your Honor. This
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`is Rob Sokohl. A few things.
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` First, you know, an offer of proof
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`under Federal Rule of Evidence 103, as you pointed
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`out, permits the parties to file an offer of proof
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`to preserve an error in an evidentiary ruling.
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` There has been no evidentiary ruling
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`in this case. You have merely denied their request
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`for additional discovery. And here the request was
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`denied for procedural and substantive reasons and
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`the Board reasoned there that Patent Owner did not
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`satisfy the Garmin and Bloomberg factors.
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` Now, a denial of discovery is not the
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`same as exclusion of evidence. So we disagree with
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`the Patent Owner. So an offer of proof is just not
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`the appropriate vehicle here.
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` Rather, I believe, as you pointed
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`out, Judge Petravick, probably the proper course of
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`action would have been a request for reconsideration
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`for abuse of discretion or something along those
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`lines, but not an offer of proof.
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` Further, this request is untimely.
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`It's a not-so-subtle attempt to try to add materials
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`to this proceeding. There are replies in all five
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`proceedings that have been filed. Patent Owner
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`filed them on June 27th. It had an opportunity to
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`acknowledge all the issues they're talking about
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`prior to filing their replies and did not.
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` In fact, they obtained an extension
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`for this very purpose, and yet they still didn't
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`file these documents or get the appropriate ruling
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`from the District Court in a timely fashion.
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` So it is just improper at this point
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`to allow them to file these additional documents.
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`They have, I believe, 90-plus documents on their
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`list that total over 600 pages, not including
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`transcripts, and it would be inappropriate to flood
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`the proceeding with additional documents that
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`haven't even been presented in their reply. And at
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`this point we would ask that the Board not allow
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`them to enter these documents and their offer of
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`proof.
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` Just quickly, in regard to the
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`District Court, I believe counsel for Patent Owner
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`got it mostly correct. I would like to just turn it
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`over quickly to Adam Kessel, who is