Case: 16-1616 Document: 22 Page: 1 Filed: 04/25/2016
`
`No. 2016-1616
`
`
`United States Court of Appeals for the Federal Circuit
`
`
`
`
`TRADING TECHNOLOGIES INTERNATIONAL, INC.,
`
`Plaintiff-Appellee,
`
`v.
`
`CQG, INC., CQG, LLC, fka CQGT, LLC,
`
`Defendants-Appellants.
`
`
`Appeal from the United States District Court for the Northern District of Illinois
`in No. 1:05-cv-04811, Judge Sharon Johnson Coleman
`
`OPENING BRIEF OF APPELLANTS
`
`Kenneth R. Adamo
`Eugene Goryunov
`Meredith Zinanni
`Vishesh Narayen
`KIRKLAND & ELLIS LLP
`300 North LaSalle
`Chicago, IL 60654
`(312) 862-2000
`
`John C. O’Quinn
`KIRKLAND & ELLIS LLP
`655 15th Street, NW
`Washington, DC 20005
`(202) 879-5000
`
`Counsel for Defendants-Appellants
`
`
`
`Adam G. Kelly
`William J. Voller III
`John A. Cotiguala
`LOEB & LOEB LLP
`321 North Clark Street
`Suite 2300
`Chicago, IL 60654
`(312) 464-3100
`
`
`
`April 25, 2016
`
`
`
`
`Page 1 of 117
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`TRADING TECH EXHIBIT 2412
`IBG ET AL. v. TRADING TECH
`CBM2015-00181
`
`

`

`Case: 16-1616 Document: 22 Page: 2 Filed: 04/25/2016
`
`CERTIFICATE OF INTEREST
`
`Counsel for Appellant certifies the following:
`
`The full name of every party represented by me is:
`
`CQG, Inc. and CQG, LLC (f/k/a CQGT, LLC)
`
`The name of the real party in interest is:
`
`CQG, Inc. and CQG, LLC (f/k/a CQGT, LLC) are the real parties in interest.
`
`All parent corporations and any publicly held companies that own 10
`percent or more of the stock of the party represented by me are:
`
`CQG, Inc. does not have a parent company. CQG, LLC is a wholly-owned
`
`1.
`
`2.
`
`
`3.
`
`
`
`subsidiary of CQG, Inc. No publicly held company owns 10 percent or more of
`
`the stock of either CQG, Inc. or CQG, LLC.
`
`4.
`
`The names of all law firms and the partners or associates that appeared
`for the party now represented by me in the trial court or are expected to
`appear in this Court are:
`
`
`Kirkland & Ellis LLP
`
`Kenneth R. Adamo
`
`John O’Quinn
`
`Eugene Goryunov
`
`Meredith Zinanni
`
`Vishesh Narayen
`
`Loeb & Loeb LLP
`
`Adam Glenn Kelly
`
`Christopher M Swickhamer
`
`John Anthony Cotiguala
`
`Laura A Wytsma
`
`
`
`Page 2 of 117
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`

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`Case: 16-1616 Document: 22 Page: 3 Filed: 04/25/2016
`
`Terry D Garnett
`
`William J. Kramer
`
`William Joshua Voller
`
`Melaina D. Jobs
`
`Johnnet Simone Jones
`
`Chuhak & Tecson, P.C.
`
`David Seth Argentar
`
`Bell, Boyd & Lloyd, LLC (now K&L Gates)
`
`Heather Ann Boice
`
`Jeana R. Lervick
`
`Kara Eve Foster Cenar
`
`Faegre & Benson LLP (now Faegre Baker Daniels, LLP)
`
`Jared B. Briant
`
`Nina Y. Wang
`
`Mark W. Fischer
`
`Neal S. Cohen
`
`Welsh & Katz, Ltd.
`
`Joseph E. Cwik
`
`Kara Eve Foster Cenar
`
`Robert B. Breisblatt
`
`Bryan Cave LLP
`
`Kara Eve Foster Cenar
`
`Mariangela M. Seale
`
`
`
`
`
`
`
`Page 3 of 117
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`

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`Case: 16-1616 Document: 22 Page: 4 Filed: 04/25/2016
`
`
`
`TABLE OF CONTENTS
`
`Page
`
`STATEMENT OF RELATED CASES ................................................................. viii
`
`INTRODUCTION ..................................................................................................... 1
`
`JURISDICTIONAL STATEMENT .......................................................................... 3
`
`STATEMENT OF THE ISSUES............................................................................... 3
`
`STATEMENT OF THE CASE .................................................................................. 4
`
`STATEMENT OF FACTS ........................................................................................ 5
`
`I.
`
`Commodities Trading ...................................................................................... 5
`
`II.
`
`The Patents-In-Suit .......................................................................................... 6
`
`III. The District Court’s Ruling ........................................................................... 14
`
`SUMMARY OF THE ARGUMENT ...................................................................... 15
`
`STANDARD OF REVIEW ..................................................................................... 17
`
`ARGUMENT ........................................................................................................... 18
`
`I.
`
`THE DISTRICT COURT ERRED IN FINDING THE
`CHALLENGED CLAIMS PATENT-ELIGIBLE UNDER § 101. .............. 18
`
`A.
`
`Alice Step One: The Claims Are Directed To An Abstract
`Commodity-Trading Idea. ................................................................... 20
`
`1.
`
`2.
`
`3.
`
`4.
`
`The Challenged Claims Are Directed To Commodities
`Trading, A Fundamental Economic Practice And
`Abstract Idea. ............................................................................ 21
`
`The “Vintage” Of An Abstract Idea Or Fundamental
`Economic Practice Is Irrelevant. ............................................... 23
`
`The Details Of The Challenged Claims Are Similarly
`Abstract. .................................................................................... 26
`
`Claims Directed To An Abstract Idea Remain Abstract
`Even If They Purportedly Solve A Problem In The Art. .......... 29
`
`i
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`Page 4 of 117
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`

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`Case: 16-1616 Document: 22 Page: 5 Filed: 04/25/2016
`
`
`
`5.
`
`Claims Directed to an Abstract Idea Remain Abstract
`Even Without Total Preemption. .............................................. 31
`
`B.
`
`Alice Step Two: The Claim Elements, Individually And As An
`Ordered Combination, Add Nothing Inventive. .................................. 33
`
`1.
`
`2.
`
`3.
`
`4.
`
`The “Static Price Index” Does Not Transform The
`Abstract Commodity-Trading Idea Into A Patent-Eligible
`Invention. .................................................................................. 33
`
`The Other Claim Elements, Individually, Do Not
`Transform The Abstract Commodity-Trading Idea Into A
`Patent-Eligible Invention. ......................................................... 42
`
`The Claim Elements, Viewed As An Ordered
`Combination, Do Not Transform The Abstract
`Commodity-Trading Idea Into A Patent-Eligible
`Invention. .................................................................................. 44
`
`DDR Holdings, On Which The District Court Heavily
`Relied, Does Not Save The Claims. ......................................... 46
`
`C.
`
`The Challenged Claims Also Fail The Machine-or-
`Transformation Test, Confirming They Are Not Patent-Eligible. ...... 51
`
`II.
`
`THE DISTRICT COURT ERRED IN IMPOSING A CLEAR AND
`CONVINCING BURDEN OF PROOF ON CQG’S § 101
`CHALLENGE. .............................................................................................. 54
`
`CONCLUSION ........................................................................................................ 57
`
`
`
`ii
`
`Page 5 of 117
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`

`

`Case: 16-1616 Document: 22 Page: 6 Filed: 04/25/2016
`
`TABLE OF AUTHORITIES
`
`Page(s)
`
`
`
`CASES
`
`Accenture Global Servs., GmbH v. Guidewire Software, Inc.,
` 728 F.3d 1336 (Fed. Cir. 2013) ............................................................... 19, 41, 54
`
`Advanced Auctions LLC v. eBay, Inc.,
` No. 13CV1612, 2015 WL 1415265 (S.D. Cal. Mar. 27, 2015) .................... 30, 31
`
`Affinity Labs of Texas, LLC v. Amazon.com, Inc.,
` No. 6:15-CV-0029, 2015 WL 3757497(W.D. Tex. June 12, 2015) ....................56
`
`Alice Corp. Pty. Ltd. v. CLS Bank Int’l,
` 134 S. Ct. 2347 (2014) ................................................................................. passim
`
`Anhydrides & Chemicals, Inc. v. U.S.,
` 130 F.3d 1481 (Fed. Cir. 1997) ............................................................................55
`
`Ariosa Diagnostics, Inc. v. Sequenom, Inc.,
` 788 F.3d 1371 (Fed. Cir. 2015) ............................................................................32
`
`Bancorp Servs., L.L.C. v. Sun Life Assur. Co. of Canada (U.S.),
` 687 F.3d 1266 (Fed. Cir. 2012) ............................................................................46
`
`Bilski v. Kappos,
` 561 U.S. 592 (2010) ..................................................................................... passim
`
`buySAFE, Inc. v. Google, Inc.,
` 765 F.3d 1350 (Fed. Cir. 2014) ............................................................... 23, 25, 50
`
`Cloud Satchel, LLC v. Amazon.com, Inc.,
` 76 F. Supp. 3d 553 (D. Del. 2014) .......................................................................25
`
`Content Extraction & Transmission LLC v. Well Fargo Bank, Nat’l Ass’n,
` 776 F.3d 1343 (Fed. Cir. 2014) ......................................................... 24, 28, 48, 56
`
`Cyberfone Sys., LLC v. CNN Interactive Grp., Inc.,
` 558 F. App’x 988 (Fed. Cir. 2014) ............................................................... 18, 23
`
`CyberSource, Corp. v. Retail Decisions, Inc.,
` 654 F.3d 1366 (Fed. Cir. 2011) .................................................................... passim
`
`iii
`
`Page 6 of 117
`
`

`

`Case: 16-1616 Document: 22 Page: 7 Filed: 04/25/2016
`
`
`
`DDR Holdings, LLC v. Hotels.com, L.P.,
` 773 F.3d 1245 (Fed. Cir. 2014) .................................................................... passim
`
`Dealertrack, Inc. v. Huber,
` 674 F.3d 1315 (Fed. Cir. 2012) .................................................................... passim
`
`Diamond v. Diehr,
` 450 U.S. 175 (1981) ...................................................................................... 30, 39
`
`Digitech Image Techs., LLC v. Electronics for Imaging, Inc.,
` 758 F.3d 1344 (Fed. Cir. 2014) ......................................................... 26, 37, 41, 45
`
`Enfish, LLC v. Microsoft Corp.,
` 56 F. Supp. 3d 1167 (C.D. Cal. 2014) .......................................................... 38, 42
`
`Evolutionary Intelligence, LLC v. Sprint Nextel Corp.,
` No. 13-03587, 2015 WL 5829783 (N.D. Cal. Oct. 6, 2015) ...............................31
`
`Garfum.com Corp. v. Reflections By Ruth d/b/a Bytephoto.com,
` No. 14-5919, 2016 WL 1242762 (D.N.J. Mar. 30, 2016) ...................................48
`
`Gottschalk v. Benson,
` 409 U.S. 63 (1972) ...............................................................................................18
`
`Hewlett Packard Co. v. ServiceNow, Inc.,
` No. 14-CV-00570, 2015 WL 1133244 (N.D. Cal. Mar. 10, 2015) .....................38
`
`In re Bilski,
` 545 F.3d 943 (Fed. Cir. 2008), aff’d 561 U.S. 593 (2010) ........................... 52, 53
`
`Intellectual Ventures I LLC v. Capital One Bank (USA),
` 792 F.3d 1363 (Fed. Cir. 2015) .................................................................... passim
`
`Intellectual Ventures I LLC v. Symantec Corp.,
` 100 F. Supp. 3d 371 (D. Del. 2015) .....................................................................49
`
`Internet Patents Corp. v. Active Networks, Inc.,
` 790 F.3d 1343 (Fed. Cir. 2015) .................................................................... passim
`
`Internet Patents Corp. v. Gen. Auto. Ins. Servs., Inc.,
` 29 F. Supp. 3d 1264 (N.D. Cal. 2013), aff'd, 790 F.3d 1343 (Fed. Cir. 2015) ....56
`
`iv
`
`Page 7 of 117
`
`

`

`Case: 16-1616 Document: 22 Page: 8 Filed: 04/25/2016
`
`
`
`IpLearn, LLC v. K12 Inc.,
` 76 F. Supp. 3d 525 (D. Del. 2014) ................................................................ 30, 39
`
`Kaavo, Inc. v. Cognizant Tech. Solutions Corp.,
` No. 14-1192, 2016 WL 1268308 (D. Del. Mar. 31, 2016) ..................................25
`
`Kaavo, Inc. v. Cognizant Tech. Solutions Corp.,
` No. 14-1192, 2016 WL 476730 (Feb. 5, 2016) ...................................................25
`
`Kickstarter, Inc. v. Fan Funded, LLC,
` No. 11 Civ. 6909, 2015 WL 3947178 (S.D.N.Y. June 29, 2015) ........................56
`
`Mayo Collaborative Servs. v. Prometheus Labs., Inc.,
` 132 S. Ct. 1289 (2012) ................................................................................. passim
`
`Microsoft Corp. v. i4i Ltd. P’ship,
` 131 S. Ct. 2238 (2011) ...................................................................... 17, 54, 55, 56
`
`Money Suite Co. v. 21st Century Ins. & Fin. Servs., Inc.,
` No. 13-1747, 2015 WL 436160 (D. Del. Jan. 27, 2015) .............................. 23, 49
`
`O’Neal v. McAninch,
` 513 U.S. 432 (1995) .............................................................................................55
`
`OIP Techs., Inc. v. Amazon.com, Inc.,
` 788 F.3d 1359 (Fed. Cir. 2015), cert. denied, 136 S. Ct. 701 (2015) ..... 17, 54, 57
`
`Parker v. Flook,
` 437 U.S. 584 (1978) ...................................................................................... 30, 38
`
`Planet Bingo, LLC v. VKGS LLC,
` 576 F. App’x 1005 (Fed. Cir. 2014) ....................................................................29
`
`Shortridge v. Found. Constr. Payroll Serv., LLC,
` No. 14-CV-04850, 2015 WL 1739256 (N.D. Cal. Apr. 14, 2015) ......................38
`
`SkillSurvey, Inc. v. Checkster LLC,
` No. 15-1766, 2016 WL 1255785 (E.D. Pa. Mar. 31, 2016) ................................29
`
`Source Search Techs., LLC v. Kayak Software Corp.,
` 111 F. Supp. 3d 603 (D.N.J. July 1, 2015) ..........................................................49
`
`v
`
`Page 8 of 117
`
`

`

`Case: 16-1616 Document: 22 Page: 9 Filed: 04/25/2016
`
`
`
`Telebuyer, LLC v. Amazon.com, Inc.,
` No. 2:13-cv-1677, 2015 WL 4493045 (W.D. Wash. July 23, 2015) ...................31
`
`Teva Pharm. USA, Inc. v. Sandoz, Inc.,
` 135 S. Ct. 831 (2015) ...........................................................................................55
`
`TNS Media Research, LLC v. Tivo Research & Analytics, Inc.,
` No. 11 CIV. 4039, 2016 WL 817447 (S.D.N.Y. Feb. 22, 2016) .........................56
`
`Tranxition, Inc. v. Lenovo (U.S.) Inc.,
` No. 3:12-cv-01065, 2015 WL 4203469 (D. Or. July 9, 2015) ............................56
`
`Ultramercial, Inc. v. Hulu, LLC,
` 722 F.3d 1335 (Fed. Cir. 2013) ............................................................................17
`
`Ultramercial, Inc. v. Hulu, LLC,
` 772 F.3d 709 (Fed. Cir. 2014) ...................................................................... passim
`
`Vehicle Intelligence & Safety LLC v. Mercedes-Benz USA, LLC,
` No. 2015-1411, 2015 WL 9461707 (Fed. Cir. Dec. 28 2015) .............................32
`
`Versata Dev. Grp., Inc. v. SAP Am., Inc.,
` 793 F.3d 1306 (Fed. Cir. 2015) ..................................................................... 24, 50
`
`VirtualAgility Inc. v. Salesforce.com, Inc.,
` 759 F.3d 1307 (Fed. Cir. 2014) ..................................................................... 21, 34
`
`WildTangent, Inc. v. Ultramercial, LLC,
` 134 S. Ct. 2870 (2014) .........................................................................................17
`
`Young v. Lumenis, Inc.,
` 492 F.3d 1336 (Fed. Cir. 2007) ............................................................................54
`
`STATUTES
`
`28 U.S.C. § 1295(a)(1) ............................................................................................... 3
`
`28 U.S.C. § 1331 ........................................................................................................ 3
`
`28 U.S.C. § 1338(a) ................................................................................................... 3
`
`35 U.S.C. § 101 ................................................................................................ passim
`
`vi
`
`Page 9 of 117
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`

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`Case: 16-1616 Document: 22 Page: 10 Filed: 04/25/2016
`
`
`
`RULES
`
`Fed. R. Evid. 201(b) .......................................................................................... 21, 34
`
`vii
`
`Page 10 of 117
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`

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`Case: 16-1616 Document: 22 Page: 11 Filed: 04/25/2016
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`
`
`STATEMENT OF RELATED CASES
`
`An appeal from this action was previously before this Court in Trading
`
`Technologies Int’l, Inc. v. CQG, Inc. and CQGT, LLC, No. 2015-1277, an
`
`interlocutory appeal from the district court’s denial of a motion to stay. That
`
`appeal was terminated on July 8, 2015, prior to oral argument. No decision was
`
`issued in the case.
`
`U.S. Patent Nos. 6,772,132 and 6,766,304 (collectively, “the patents-in-
`
`suit”) were previously before this Court on issues related to infringement and
`
`invalidity under 35 U.S.C. §§ 102 and 112 in Trading Techs. Int’l, Inc. v. SunGard
`
`Data Sys., Inc., Nos. 2015-1767, -1768 (Fed. Cir. Apr. 4, 2016) and Trading Techs.
`
`Int’l, Inc. v. eSpeed, Inc., 595 F.3d 1340 (Fed. Cir. 2010). U.S. Patent No.
`
`6,766,304 was also before this Court in In re Trading Techs. Int’l, Inc., No. 2016-
`
`120 (Fed. Cir. Mar. 18, 2016), on a petition for a writ of mandamus to the Patent
`
`Trial and Appeal Board (“PTAB”) of the U.S. Patent and Trademark Office
`
`regarding institution of a covered business method review (“CBMR”) trial.
`
`All claims of the patents-in-suit are currently before the PTAB in instituted
`
`CBMR trials CBM2016-00035, CBM2015-00182, and CBM2015-00161, where
`
`the PTAB has found “it is more likely than not that the challenged claims are
`
`unpatentable under 35 U.S.C. § 101.” Appx3129; see also Appx3359-60,
`
`viii
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`Page 11 of 117
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`Case: 16-1616 Document: 22 Page: 12 Filed: 04/25/2016
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`
`
`Appx3149. These proceedings may be directly affected by this Court’s decision in
`
`the pending appeal.
`
`U.S. Pat. No. 7,676,411 is related to the patents-in-suit, sharing the same
`
`specification and describing a nearly identical purported invention. Appx3373-74.
`
`It previously was before this Court in Trading Techs. Int’l, Inc. v. Open E Cry,
`
`LLC, 728 F.3d 1309 (Fed. Cir. 2013), and currently is before the PTAB in an
`
`instituted CBMR trial CBM2015-00181, where the PTAB has found “it is more
`
`likely than not that the challenged claims are unpatentable” under §§ 101 and 103.
`
`Appx3323, Appx3356. This proceeding may be directly affected by this Court’s
`
`decision in the pending appeal.
`
`ix
`
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`Page 12 of 117
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`Case: 16-1616 Document: 22 Page: 13 Filed: 04/25/2016
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`
`
`INTRODUCTION
`
`For hundreds of years, individuals and companies have participated in
`
`commodities trading through a commodities exchange. Participation requires
`
`traders to exchange offers to buy and sell a specific commodity at different prices
`
`and quantities. Where offers to buy and sell match, a contract is created between
`
`two traders. For a trader to be successful, she must have accurate and timely
`
`information about the commodities market, and must be able to relay her trade to
`
`the market in an accurate and timely manner.
`
`The patent claims asserted in this case, at their core, are directed to such
`
`well-known commodities trading concepts. The claims cover a method using a
`
`graphical user interface (“GUI”) that displays and updates market information for a
`
`commodities exchange and allows users to place a trade order. In simple terms,
`
`the claims recite displaying market information in a grid.
`
`Under well-settled U.S. Supreme Court and circuit precedent, these claims
`
`are not patent-eligible because they cover nothing more than “a fundamental
`
`economic practice,” which is an abstract idea. Alice Corp. Pty. Ltd. v. CLS Bank
`
`Int’l, 134 S. Ct. 2347, 2356 (2014). Nor do the claim elements, taken individually
`
`or as an ordered combination, add “an ‘inventive concept’ sufficient to ‘transform’
`
`the claimed abstract idea into a patent-eligible application.” Id. at 2357 (citation
`
`omitted). All they do is take long-known business and economic principles and
`
`1
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`Case: 16-1616 Document: 22 Page: 14 Filed: 04/25/2016
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`
`
`attempt to implement them on a computer. But merely requiring “generic
`
`computer implementation[] fail[s] to transform that abstract idea into a patent-
`
`eligible invention.” Id. Because the asserted claims improperly attempt to capture
`
`and control abstract ideas fundamental to the commodities trading process, they
`
`fail the Supreme Court’s two-step Alice test for determining patent-eligibility
`
`under 35 U.S.C. § 101.
`
`The district court made numerous errors in its analysis. At Alice step one, it
`
`improperly focused on the relatively recent development of electronic commodities
`
`trading, instead of considering its analogue in centuries-old, non-electronic
`
`commodities trading. Yet, numerous courts have held claims describing a process
`
`used to generate price quotes for various types of financial products, based on a
`
`given set of criteria, are directed to a fundamental economic practice and therefore
`
`to an abstract idea. The district court further erred by relying on the alleged
`
`novelty and non-obviousness of the claims and on a supposed lack of complete
`
`preemption—which is not the law for patent-eligibility under § 101. At Alice step
`
`two, the only “inventive concept” the district court identified—the “static price
`
`index” of the claims—is not actually inventive. The claims just recite methods for
`
`arranging market data through a GUI, but merely providing an allegedly new way
`
`to display market data is not inventive.
`
`2
`
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`
`
`The district court compounded its errors by applying a “clear and
`
`convincing” evidentiary burden to the legal question of patent-eligibility under
`
`§ 101, after acknowledging that patent-eligibility is a question of law. Appx3-4.
`
`This Court should reverse the judgment and find that the challenged claims
`
`are not directed to patent-eligible subject matter under § 101.
`
`JURISDICTIONAL STATEMENT
`
`The district court had jurisdiction over this action under 28 U.S.C. §§ 1331
`
`and 1338(a). The district court issued its final judgment on February 17, 2016, and
`
`CQG, Inc. and CQG, LLC timely filed their notice of appeal on February 23, 2016.
`
`This Court has jurisdiction under 28 U.S.C. § 1295(a)(1).
`
`STATEMENT OF THE ISSUES
`
`1. Whether claims 1 and 8 of U.S. Patent No. 6,772,132 and claims 1 and 27
`
`of U.S. Patent No. 6,766,304 are directed to patent-ineligible subject matter and
`
`therefore invalid under 35 U.S.C. § 101, where: (a) the claims are directed to the
`
`abstract idea of displaying and updating market information for a commodities
`
`exchange, and placing an order based on that market information, (b) the claims
`
`require, at most, data gathering, organization, and display using generic computer
`
`equipment and software that does not add an “inventive step” to that abstract idea,
`
`and (c) the claims fail this Court’s “machine-or-transformation” test.
`
`3
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`Case: 16-1616 Document: 22 Page: 16 Filed: 04/25/2016
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`
`
`2. Whether the district court erroneously applied a clear and convincing
`
`evidentiary standard in determining, as a matter of law, that the challenged claims
`
`are patent-eligible under 35 U.S.C. § 101.
`
`STATEMENT OF THE CASE
`
`On August 19, 2005, Trading Technologies International, Inc. (“TT”) sued
`
`CQG, Inc. and CQG, LLC (f/k/a CQGT, LLC) (collectively, “CQG”) in the U.S.
`
`District Court for the Northern District of Illinois, accusing CQG of infringing U.S.
`
`Pat. Nos. 6,772,132 (“the ’132 patent”) and 6,766,304 (“the ’304 patent”).
`
`Appx33, Appx253-55. CQG answered TT’s complaint, asserting affirmative
`
`defenses and counterclaims of non-infringement and invalidity.
`
` Appx35,
`
`Appx261-63. TT answered CQG’s counterclaims. Appx35.
`
`On January 26, 2015, the district court granted CQG leave to file a brief in
`
`support of its claim that the asserted claims of the patents-in-suit are patent-
`
`ineligible under § 101. Appx138. After the parties completed briefing (Appx138,
`
`Appx145, Appx153), the district court held a hearing on CQG’s § 101 challenge
`
`(Appx138, Appx156). The next day, the district court held, as a matter of law, that
`
`the asserted claims were “not directed to an abstract idea, and even if they were, an
`
`element of the claims recite an inventive concept.” Appx9, Appx10. The district
`
`court then held a jury trial on the remaining issues of infringement, validity, and
`
`damages, and entered final judgment in TT’s favor on February 17, 2016.
`
`4
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`Case: 16-1616 Document: 22 Page: 17 Filed: 04/25/2016
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`Appx10-11. CQG timely filed its Notice of Appeal to this Court on February 23,
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`2016. Appx193.
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`STATEMENT OF FACTS
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`I.
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`COMMODITIES TRADING
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`Commodities trading is centuries old, occurring on exchanges in New York
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`as early as 1725, and even earlier in Continental markets. Appx800-801. The
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`Chicago Butter and Egg Board “was founded in 1898 and evolved into the Chicago
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`Mercantile Exchange (now CME) in 1919.” Appx806. CME is a commodities
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`exchange that began trading agricultural commodities and later expanded into
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`trading futures on precious metals, currencies, and other financial instruments.
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`Appx806-07.
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`A commodities market relies on bids and asks to function. Appx202 at 2:13-
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`16, Appx218 at 2:19-22. A bid is an offer to buy a specified quantity of a
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`commodity at a particular price and an ask is an offer to sell a specified quantity of
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`a commodity at a particular price. Appx203 at 4:56-58, Appx219 at 4:60-62. The
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`aggregate of all bid and ask prices and quantities is called the “market depth.” Id.
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`The price of the highest current bid (“best bid price”) and the price of the lowest
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`current ask (“best ask price”) is known as the “inside market.” Appx203 at 4:58-
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`60, Appx219 at 4:62-64. The inside market changes as the best bid and best ask
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`prices in the market rise and fall. Appx205 at 8:38-39, Appx222 at 9:4-5.
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`Case: 16-1616 Document: 22 Page: 18 Filed: 04/25/2016
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`Originally, commodities trading was done in pits, where traders of a
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`particular commodity would stand together and communicate using specialized,
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`standardized hand signals and verbal outcries. Appx979 at ll. 12-23, Appx2559-60
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`at 307:25-308:18, Appx2562 at ll. 7-11. Through this “negotiation process,” if a
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`buy price and sell price matched, then a transaction was done. Appx2558-59 at
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`306:21-307:2. Commodities trading eventually migrated to an electronic system,
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`almost completely replacing pit trading. Appx2564 at ll. 7-19. Like the pits,
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`electronic commodities trading involves a centralized auction process, but “here
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`the central place isn’t a pit on the floor; it’s a computer, a computer server.”
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`Appx2564 at ll. 17-19 (testimony of Dr. Pirrong, TT’s expert). Rather than shout a
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`bid or ask in the pit, a trader submits an order with a bid or ask to a centralized
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`exchange computer. Appx2564-65 at 312:13-313:8. The computer determines
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`whether there is a match between a bid and ask and, if so, creates a transaction. Id.
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`II. THE PATENTS-IN-SUIT
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`The patents-in-suit are “directed to the electronic trading of commodities.”
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`Appx202 at 1:12-13, Appx218 at 1:16-17. Both patents are titled “Click Based
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`Trading with Intuitive Grid Display of Market Depth,” and, other than different
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`priority statements, have identical specifications. Appx194, Appx210. As the
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`district court explained, both patents-in-suit “are directed to ‘[c]lick based trading
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`with intuitive grid display of market depth.’” Appx1 (quoting Appx202 at 1:2-3).
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`Case: 16-1616 Document: 22 Page: 19 Filed: 04/25/2016
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`Claims 1 and 8 of the ’132 patent and claims 1 and 27 of the ’304 patent
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`(collectively, “the challenged claims”) are at issue in this appeal. The parties agree
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`that claim 1 in each patent is representative for the § 101 analysis. Appx1-2,
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`Appx1475. In other words, claim 8 of the ’132 patent rises and falls with claim 1
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`of the ’132 patent, and claim 27 of the ’304 patent rises and falls with claim 1 of
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`the ’304 patent.
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`Claim 1 of the ’304 patent claims a “method for displaying market
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`information” of a “commodity being traded in an electronic exchange,” and
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`sending a trade order to the exchange. The claimed method uses a GUI to display
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`a “static price axis,” which displays a fixed list of prices, and “an order entry
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`region” corresponding to each price. The claimed GUI also dynamically displays
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`bids and asks associated with each price. The claimed GUI further allows a trader
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`to “set[]” trade order parameters and “send[]” the trade order to the exchange. The
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`claimed method recites steps long-known in non-electronic commodities trading—
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`displaying market information and placing trade orders—and adds the requirement
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`that the steps be performed on a computer, without identifying any specialized
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`computer equipment or programming for executing the method:
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`1. A method for displaying market information relating to
`and facilitating trading of a commodity being traded in an
`electronic exchange having an inside market with a highest
`bid price and a lowest ask price on a graphical user
`interface, the method comprising:
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`Case: 16-1616 Document: 22 Page: 20 Filed: 04/25/2016
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`[a] dynamically displaying a first indicator in one of a
`plurality of locations in a bid display region, each
`location in the bid display region corresponding to a
`price level along a common static price axis, the first
`indicator representing quantity associated with at least
`one order to buy the commodity at the highest bid
`price currently available in the market;
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`[b] dynamically displaying a second indicator in one of a
`plurality of locations in an ask display region, each
`location in the ask display region corresponding to a
`price level along the common static price axis, the
`second indicator representing quantity associated with
`at least one order to sell the commodity at the lowest
`ask price currently available in the market;
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`[c] displaying the bid and ask display regions in relation
`to fixed price levels positioned along the common
`static price axis such that when the inside market
`changes, the price levels along the common static
`price axis do not move and at least one of the first and
`second indicators moves in the bid or ask display
`regions relative to the common static price axis;
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`[d] displaying an order entry region comprising a
`plurality of locations for receiving commands to send
`trade orders, each location corresponding to a price
`level along the common static price axis; and
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`[e] in response to a selection of a particular location of
`the order entry region by a single action of a user
`input device, setting a plurality of parameters for a
`trade order relating to the commodity and sending the
`trade order to the electronic exchange.
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`Appx223-224 at 12:37-13:3 (lettering and emphasis added).
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`Claim 1 of the ’132 patent claims a “method of placing a trade order” on an
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`electronic commodities exchange. The claimed method uses a GUI to display a
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`Case: 16-1616 Document: 22 Page: 21 Filed: 04/25/2016
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`“static display of prices” and “an order entry region” corresponding to each price.
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`The claimed GUI also dynamically displays the market depth (bids and asks) of a
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`commodity, aligned with the static display of prices. The claimed GUI further
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`allows a trader to “set[]” trade order parameters and “send” the trade order to the
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`exchange. The claimed method recites steps long-known in non-electronic
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`commodities trading—displaying market information and placing trade orders—
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`and adds the requirement that the steps be performed on a computer, without
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`identifying any specialized computer equipment or programming for executing the
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`method:
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`1. A method of placing a trade order for a commodity on
`an electronic exchange having an inside market with a
`highest bid price and a lowest ask price, using a graphical
`user interface and a user input device, said method
`comprising:
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`[a] setting a preset parameter for the trade order;
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`[b] displaying market depth of the commodity, through a
`dynamic display of a plurality of bids and a plurality
`of asks in the market for the commodity, including at
`least a portion of the bid and ask quantities of the
`commodity, the dynamic display being aligned with a
`static display of prices corresponding thereto, wherein
`the static display of prices does not move in response
`to a change in the inside market;
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`[c] displaying an order entry region aligned with the
`static display prices comprising a plurality of areas for
`receiving commands from the user input devices to
`send trade orders, each area corresponding to a price
`of the static display of prices; and
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`Case: 16-1616 Document: 22 Page: 22 Filed: 04/25/2016
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