` Filed: September 23, 2016
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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
`_________________
`Case CBM2015-00179
`U.S. Patent 7,533,056
`_________________
`
`
`
`PATENT OWNER’S MOTION TO EXCLUDE
`UNDER 37 C.F.R. 42.64(C)
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`TABLE OF CONTENTS
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`CBM2015-00179
`U.S. Patent 7,533, 056
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`I. Preliminary Statement ....................................................................................... 1
`II. Standard ............................................................................................................... 1
`III. TSE (Ex. 1003) Should Be Excluded ............................................................... 1
`A. TT Timely Objected to TSE, Which Was Relied Upon in
`Petitioners’ Petition .......................................................................................... 1
`B. TSE Has Not Been Authenticated under FRE 901 .......................... 2
`i. The 2005 Kawashima Deposition Testimony is Hearsay ............. 2
`ii. The residual hearsay exception of FRE 807 applies to both the
`2005 Kawashima deposition and Patent Owner’s evidence from district
`court litigation .............................................................................................. 3
`iii. Even if the 2005 Kawashima Deposition Testimony was
`admissible, the deposition testimony raises more doubt than it resolves. ... 6
`IV. Certain Deposition Testimony of TT’s Experts Dan Olsen (Ex. 1059) and
`Christopher Thomas (Ex. 1060) Should be Excluded .......................................... 8
`A. TT Timely Objected to the Deposition Testimony, Which Was
`Relied Upon in Petitioners’ Reply .................................................................. 8
`B. The Probative Value of the Testimony at Pages 57 and 58 of the
`Olsen Transcript is Outweighed by a Danger of Prejudice and Confusing
`the Issues under FRE 403 ................................................................................ 9
`C. The Probative Value of the Testimony at Pages 248 and 263-269
`of the Thomas Transcript is Outweighed by a Danger of Prejudice and
`Confusing the Issues under FRE 403 ...........................................................10
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`ii
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`Preliminary Statement
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`I.
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`U.S. Patent 7,533, 056
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`Pursuant to 37 C.F.R. §§ 42.64(c) and 42.61(a) and the Federal Rules of
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`Evidence, Patent Owner Trading Technologies International, Inc. (“TT”), moves to
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`exclude TSE (Ex. 1003), because Petitioners have failed to meet the authentication
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`requirements of FRE 901 and because the only purportedly authenticating evidence
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`(Ex. 1007, the transcript of a 2005 deposition of Atshushi Kawashima) is hearsay
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`under FRE 801.
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`In addition, TT moves to exclude certain deposition testimony of TT’s
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`experts Dan Olsen (Ex. 1059) and Christopher Thomas (Ex. 1060) under FRE 403
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`because its probative value is substantially outweighed by a danger of unfair
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`prejudice and confusing the issues as the result of vague questioning.
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`II.
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`Standard
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`A Motion to Exclude must (a) identify where in the record the objection was
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`made, (b) identify where in the record the evidence sought to be excluded was
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`relied upon by an opponent, (c) address objections to exhibits in numerical order,
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`and (d) explain the objection. Trial Practice Guide, 77 Fed. Reg. 48,756, 48,767
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`(Aug. 14, 2012).
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`III. TSE (Ex. 1003) Should Be Excluded
`A. TT Timely Objected to TSE, Which Was Relied Upon in
`Petitioners’ Petition
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`TT timely objected to Exhibit 1003 in objections filed March 9, 2016.
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`1
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`Paper 30 at 3-4. Petitioners rely upon TSE (Ex. 1003) in their Petition for some
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`CBM2015-00179
`U.S. Patent 7,533, 056
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`instituted prior art grounds and indirectly for their 35 U.S.C. § 101 grounds via a
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`reference to the prior art grounds. E.g., Petition, Paper 9 at 27 and 38-60.
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`TSE Has Not Been Authenticated under FRE 901
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`B.
`To satisfy the requirement of authenticating or identifying an item of
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`evidence, the proponent must produce evidence sufficient to support a finding that
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`the item is what the proponent claims it is. FRE 901(a). Petitioners have produced
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`no such evidence to support a finding that TSE is authentic, relying solely on
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`Exhibit 1007, the transcript of a 2005 deposition of Atshushi Kawashima, which is
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`insufficient in multiple respects.
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`i.
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`The 2005 Kawashima Deposition Testimony is
`Hearsay
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`The only evidence that even attempts to authenticate TSE is Exhibit 1007,
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`the transcript of the 2005 Kawashima deposition. See Ex. 1010, pp. 97-99. The
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`2005 Kawashima deposition was conducted in a district court case, not any of the
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`CBM proceedings. Ex. 1007 at 1. As a result, the 2005 Kawashima deposition is,
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`by definition, hearsay.
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`FRE 801 defines hearsay as “a statement that: (1) the declarant does not
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`make while testifying at the current trial or hearing; and (2) a party offers in
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`evidence to prove the truth of the matter asserted in the statement.” Since
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`2
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`testimony by Mr. Kawashima in the district court case was not made “while
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`CBM2015-00179
`U.S. Patent 7,533, 056
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`testifying at the current trial or hearing,” to the extent such testimony is used to
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`prove the authenticity of TSE, it must be considered hearsay.
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`ii.
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`The residual hearsay exception of FRE 807 applies to
`both the 2005 Kawashima deposition and Patent
`Owner’s evidence from district court litigation
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`However, just like Patent Owner’s evidence from district court litigation
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`(e.g., Ex. 2223 (trader declarations), etc.), the 2005 Kawashima deposition
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`transcript should not be excluded as hearsay. “Hearsay is generally inadmissible
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`because ‘the statement is inherently untrustworthy: the declarant may not have
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`been under oath at the time of the statement, his or her credibility cannot be
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`evaluated at trial, and he or she cannot be cross-examined.’” United States v.
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`Reilly, 33 F.3d 1396, 1409 (3d Cir. 1994); see also Queen v Hepburn, 11 U.S. 290
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`(1813). These concerns are not present with respect to the 2005 Kawashima
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`deposition transcript.
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`Although no exception under FRE 803 or FRE 804 applies, the residual
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`hearsay exception of FRE 807 applies to both Patent Owner’s evidence from
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`district court litigation and the 2005 Kawashima deposition transcript because the
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`parties in this proceeding had the opportunity to cross examine the witnesses from
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`the district court litigation.
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`FRE 807 requires:
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`3
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`a. the statement has equivalent circumstantial guarantees of
`trustworthiness;
`b. it is offered as evidence of a material fact;
`c. it is more probative on the point for which it is offered than any
`other evidence that the proponent can obtain through reasonable
`efforts; and
`d. admitting it will best serve the purposes of these rules and the
`interests of justice.
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`Just like Patent Owner’s evidence from district court litigation, Mr. Kawashima’s
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`2005 deposition transcript satisfies each of these requirements.
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`This is similar to the circumstances in the recently decided Apple v. VirnetX.,
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`IPR2015-00811, Paper No. 44. In that case, the Board denied a motion to exclude
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`declaration testimony from another proceeding as hearsay. Id. at 68-70.
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`Specifically, the Board noted that “[t]he vast majority of testimony in inter partes
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`reviews is admitted in paper form, as a declaration, instead of as live witness
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`testimony. Thus, whether or not testimony is specifically created for a specific IPR
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`or is created for another proceeding, if the declaration is sworn testimony and the
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`witness is available for cross-examination, the testimony bears the same guarantees
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`of trustworthiness.” Id. at 69-70. With this in mind, the Board found that the
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`residual hearsay exception of FRE 807 applied to the declaration testimony. Id.
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`at 69.
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`4
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`Likewise, here, both Patent Owner’s evidence from district court litigation
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`and the Kawashima 2005 deposition transcript are sworn testimony regarding
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`material facts. Indeed, both are from district court litigation, where they were
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`subject to the Federal Rules of Evidence, just like in this proceeding, and thus have
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`equivalent circumstantial guarantees of trustworthiness.
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`Patent Owner’s evidence from district court litigation differs from the
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`Kawashima 2005 deposition transcript only in that Patent Owner exerted greater
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`efforts to obtain better evidence than Petitioners. Patent Owner attempted to bring
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`in alternative evidence through depositions in this proceeding but such efforts were
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`opposed by Petitioner and denied by the Board. See Paper No. 54 at 2-5. Admitting
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`Patent Owner’s evidence from district court litigation thus serves the interests of
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`justice and does not undermine the rule on hearsay, because Patent Owner was
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`precluded from accessing other evidence after exerting reasonable efforts and
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`Petitioners were not prejudiced because they could have deposed Patent Owner’s
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`witnesses here if they wanted to.
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`In contrast, Petitioners did not make reasonable efforts to obtain new
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`nonhearsay evidence authenticating TSE. Instead, Petitioners fought against Patent
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`Owner’s efforts to obtain new nonhearsay evidence by opposing Patent Owner’s
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`request to depose Mr. Kawashima in these proceedings. See Paper No. 39 (Board
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`deciding it is Petitioner’s responsibility to secure availability of Kawashima).
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`5
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`Although Patent Owner was eventually able to depose Mr. Kawashima in
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`U.S. Patent 7,533, 056
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`these proceedings, that does not differentiate the Kawashima 2005 deposition
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`transcript from Patent Owner’s evidence from district court litigation. Petitioners
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`could have likewise deposed the witnesses on which Patent Owner relies here but
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`simply chose not to do so.
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`Accordingly, Patent Owner’s evidence from district court litigation and the
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`2005 Kawashima deposition transcript should stand or fall together. To the extent
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`the Board excludes any of Patent Owner’s evidence from district court litigation,
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`which it should not, the Board should likewise exclude the 2005 Kawashima
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`deposition transcript.1
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`iii.
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`Even if the 2005 Kawashima Deposition Testimony
`was admissible, the deposition testimony raises more
`doubt than it resolves.
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`Rather than supporting a finding under FRE 901(a) that TSE is what
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`Petitioners claim it is, the 2005 Kawashima deposition transcript ultimately raises
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`additional doubts as to the authenticity of the document.
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`1 TT timely objected to Exhibit 1007, the 2005 Kawashima deposition
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`transcript, in objections filed March 21, 2016. Paper 30 at 2. Petitioners rely upon
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`the 2005 Kawashima deposition transcript in their Petition to establish that TSE is
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`prior art. E.g., Petition, Paper 9 at 21-22.
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`6
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`For example, in the deposition, Mr. Kawashima draws a conclusion about
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`the authenticity of TSE, a document of hundreds of pages, based on the perceived
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`absence of a mark in “looking briefly through” the document. Specifically, he
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`testified:
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`Q Is this entire document, this document identified as Defendant’s
`Exhibit 179, from August 24 of 1998?
` A Yes.
`Q How do you know?
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` Because when we replace sections there is a mark indicating a
`correction at the bottom of the page. And just looking briefly through
`this document, I didn’t see that mark and therefore I thought that was
`the original date.
` Ex. 1007, pp. 97-98.
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` A
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`Further, when asked how one would know if a distributed manual were the
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`same as a particular copy, Mr. Kawashima merely makes the conclusory assertion
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`that a comparison would reveal whether a distributed copy were the same, without
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`any detail as to how such a comparison would be carried out how what level of
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`scrutiny might be required. Specifically, he testified:
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`Q Is there any way to tell that the manual that was distributed is the
`same as Defendant's Exhibit 179?
`A If you were to compare this with the distributed manual you would
`be able to tell.
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`7
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`Ex. 1007, p. 99.
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`U.S. Patent 7,533, 056
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`Finally Mr. Kawashima’s testimony cannot be relied upon as to
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`authentication because he is not a disinterested witness. As noted in Patent
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`Owner’s Response, Kawashima’s employer—the Tokyo Stock Exchange—
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`challenged TT’s Japanese counterpart to U.S. Patent No. 6,766,304, which was
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`asserted in the litigation in which Kawashima previously testified. Paper No. 77 at
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`40-41. Moreover, at his deposition in the current proceeding, when Mr.
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`Kawashima was asked if he was attending voluntarily, he answered that he was
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`present at the direction of the Tokyo Stock Exchange. Exhibit 2163, p. 9. Further,
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`he acknowledged that he “did a practice run or went through anticipated questions
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`that might come out” with Petitioners counsel Lori Gordon and Natalie Morgan.
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`Id. at pp 11-12.
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`In view of the above, Petitioners have not produced evidence sufficient to
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`support a finding that TSE is what Petitioners claim it is. TSE should thus be
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`excluded.
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`IV. Certain Deposition Testimony of TT’s Experts Dan Olsen (Ex. 1059)
`and Christopher Thomas (Ex. 1060) Should be Excluded
`A. TT Timely Objected to the Deposition Testimony, Which Was
`Relied Upon in Petitioners’ Reply
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`TT timely objected to Exhibit 1059 during the deposition. Ex. 1059 at 57-58.
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`TT also timely objected to Exhibit 1060 during the deposition. Ex. 1060 at 393-
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`8
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`397. Petitioners rely upon pages 57 and 58 of the Olsen deposition transcript (Ex.
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`1059) and pages 248 and 263-269 of the Thomas deposition transcript (Ex. 1060)
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`in their Reply for their 35 U.S.C. § 101 grounds. Reply, Paper 110 at 5.
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`B.
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`The Probative Value of the Testimony at Pages 57 and 58 of the
`Olsen Transcript is Outweighed by a Danger of Prejudice and
`Confusing the Issues under FRE 403
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`The answers at page 57 and 58 were in response to vague and ambiguous
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`questions yielding irrelevant testimony that Petitioners are using in a confusing and
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`misleading manner to imply that the claimed inventions do not improve computers.
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`18 Q. Okay. Does the GUI in Figure 3 make
`19 the computer run faster?
`20 A. That's not the improvement claimed.
`21 Q. I'm asking. That's the question I'm
`22 asking.
`1 A. It does not.
`2 Q. Does it allow the computer to use less
`3 energy?
`4 MS. KURCZ: Objection, form.
`5 BY MR. SOKOHL:
`6 Q. Does the GUI in Figure 3 allow the
`7 computer to use less energy?
`8 A. That is not one of the claimed
`9 improvements, no.
`10 Q. Does the GUI in Figure 3 make the
`11 computer more efficient relative to the network?
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`9
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`12 A. That's not one of the claimed
`13 improvements, no.
`Ex. 1059 at 57:18-58:13. Rather than admitting the claimed inventions do not
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`U.S. Patent 7,533, 056
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`improve computers, Mr. Olsen was simply stating what was not explicitly recited
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`by the claims. The probative value of this testimony is thus substantially
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`outweighed by a danger of unfair prejudice and confusing the issues as the result of
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`vague questioning. Accordingly, it should be excluded under FRE 403.
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`C. The Probative Value of the Testimony at Pages 248 and 263-269
`of the Thomas Transcript is Outweighed by a Danger of Prejudice
`and Confusing the Issues under FRE 403
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`The answers at page 248 and 263-269 were in response to vague and
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`ambiguous questions yielding irrelevant testimony that Petitioners are using in a
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`confusing and misleading manner to imply that the claimed inventions do not
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`improve computers.
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`15 Q. It does have to do with the patent.
`16 Does Claim 1 recite a GUI? What
`17 does Claim 1 recite? If you're going to just
`18 repeat the claim, that's fine. But do you have a
`19 generalization for what Claim 1 recites?
`20 A. A GUI tool.
`21 Q. Okay. Does the GUI tool of Claim 1
`22 cause the recited computer from Claim 1 to process
`1 data faster than a Figure 2 type GUI tool?
`2 MR. GANNON: Object to the form,
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`10
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`3 scope.
`4 THE WITNESS: This isn't about
`5 processing data. There's nothing claiming
`6 processing data.
`7 BY MR. SOKOHL:
`8 Q. Okay. Does it make the computer more
`9 efficient?
`10 A. There's nothing claiming to make the
`11 computer -- well, first of all, you have to define
`12 what making the computer more efficient is.
`13 Q. Well, does it make it more
`14 efficient -- does it make the computer more
`15 efficient in any way?
`16 MR. GANNON: Object to the form.
`17 BY MR. SOKOHL:
`18 Q. Does the GUI tool of Claim 1 make the
`19 computer more efficient in any way?
`20 MR. GANNON: Object to the form.
`21 THE WITNESS: The elements of Claim 1
`22 do not relate to making the computer more
`1 efficient. That's not what is described in all of
`2 the elements of Claim 1.
`3 BY MR. SOKOHL:
`4 Q. Does the GUI tool of Claim 1 make the
`5 computer more reliable?
`6 MR. GANNON: Object to the form.
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`11
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`7 THE WITNESS: Again, my answer is
`8 going to be similar.
`9 The elements of Claim 1 have
`10 nothing to do with making a computer more
`11 reliable. The elements of Claim 1 claim a new
`12 type of GUI tool that has previously not been
`13 described.
`14 BY MR. SOKOHL:
`15 Q. Okay. Does the computer in Claim 1
`16 include a memory, if you know?
`17 MR. GANNON: Object to the form,
`18 scope.
`19 THE WITNESS: It doesn't relate,
`20 again, for the same reason my answer is going to
`21 be that the claims, the elements of Claim 1 do not
`22 relate to the memory of a computer, and they
`1 relate, they describe the structure, makeup, and
`2 function of a GUI tool.
`3 BY MR. SOKOHL:
`4 Q. If I was to ask you whether or not the
`5 GUI tool of Claim 1 made a memory as part of a
`6 computer more efficient or reliable or processed
`7 data faster, would your answer be the same as it
`8 was for the computer generically?
`9 MR. GANNON: Object to the form.
`10 THE WITNESS: It would be the same.
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`12
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`11 BY MR. SOKOHL:
`12 Q. If I was to ask you the same question
`13 regarding processing data faster, more reliably,
`14 or more efficiently with regard to a processor
`15 that makes up a computer, would the answer be the
`16 same?
`17 MR. GANNON: Object to the form.
`18 THE WITNESS: Yes. In relation to
`19 what you're just saying?
`20 BY MR. SOKOHL:
`21 Q. Uh-huh.
`22 A. Yes.
`1 Q. Does the GUI tool of Claim 1 cause the
`2 computer to display the data to the screen faster
`3 than conventional GUI tools?
`4 MR. GANNON: Object to the form,
`5 scope.
`6 THE WITNESS: Again, my answer is
`7 going to be the elements of Claim 1 have nothing
`8 to do with displaying data on a screen faster or
`9 anything like that. They describe the structure,
`10 makeup, and function of a GUI tool.
`11 BY MR. SOKOHL:
`12 Q. Does the GUI tool of Claim 1 cause the
`13 user's input device to operate any faster than
`14 conventional GUIs?
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`13
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`15 MR. GANNON: Object to the form,
`16 scope.
`17 THE WITNESS: Could you just repeat
`18 that, please?
`19 BY MR. SOKOHL:
`20 Q. Sure. Does the GUI tool of Claim 1
`21 cause the user's input device to operate faster
`22 than conventional GUIs?
`1 MR. GANNON: Object to the form,
`2 scope.
`3 MR. SOKOHL: I'm going to restate that
`4 question.
`5 BY MR. SOKOHL:
`6 Q. Does the GUI tool of Claim 1 cause the
`7 user's input device to operate any faster than a
`8 user's input devices used with conventional GUIs?
`9 A. And, again, the elements of Claim 1
`10 and Claim 1 itself or any other claims are not
`11 directed to the input devices or anything else
`12 like that. They describe the structure, makeup,
`13 and function of a GUI tool.
`14 Q. Does the GUI tool of Claim 1 cause the
`15 recited computer to communicate with the
`16 electronic exchange any faster than conventional
`17 GUI tools?
`18 MR. GANNON: Object to the form,
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`14
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`19 scope.
`20 THE WITNESS: Again, the elements of
`21 Claim 1 do not cause the network -- it's nothing
`22 to do with the network elements of the computer,
`1 anything to do with that. They specifically
`2 describe the structure, makeup, and function of a
`3 GUI tool.
`4 BY MR. SOKOHL:
`5 Q. Other than the way that the data is
`6 displayed in the GUI tool of Claim 1, how else is
`7 it functionally different from conventional
`8 devices?
`9 MR. GANNON: Object to the form,
`10 foundation.
`11 THE WITNESS: In exactly the way as
`12 described in Claim 1. You're talking about Claim
`13 1; correct?
`Ex. 1060 at 263:155-269:13; see also Ex. 1060 at 247:17-249:2.. Rather than
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`admitting the claimed inventions do not improve computers, Mr. Thomas was
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`simply stating what was not explicitly recited by the claims. The probative value of
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`this testimony is thus substantially outweighed by a danger of unfair prejudice and
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`confusing the issues as the result of vague questioning. Accordingly, it should be
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`excluded under FRE 403.
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`Dated: September 23, 2016
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`
`
`By: /Joshua L. Goldberg/ (Reg. No. 59,369)
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`15
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`CERTIFICATE OF SERVICE
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`CBM2015-00179
`U.S. Patent 7,533, 056
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`The undersigned hereby certifies that a copy of the foregoing PATENT
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`
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`OWNER’S MOTION TO EXCLUDE UNDER 37 C.F.R. 42.64(C) was served
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`on September 23, 2016, via email directed to counsel of record for the Petitioner at
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`the following:
`
`Robert Sokohl
`rsokohl-PTAB@skgf.com
`
`Lori Gordon
`lgordon-PTAB@skgf.com
`
`Richard Bemben
`rbemben-PTAB@skgf.com
`
`John C. Phillips
`CBM41919-0007CP1@fr.com
`
`PTAB@skgf.com
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`
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`Dated: September 23, 2016
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`
`
`/Valencia Daniel/
`Valencia Daniel
`Litigation Legal Assistant
`
`FINNEGAN, HENDERSON, FARABOW,
`GARRETT & DUNNER, LLP
`
`
`16