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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)
` - - -
` June 13, 2016 - 2:00 p.m.
` - - -
` TELECONFERENCE IN THE ABOVE MATTER
` - - -
` BEFORE: MEREDITH C. PETRAVICK
` JEREMY M. PLENZLER
` Administrative Patent Judges
`
` VERITEXT NATIONAL COURT REPORTING COMPANY
` MID-ATLANTIC REGION
` 1250 Eye Street, NW, Suite 1201
` Washington, DC 20005
`
`Veritext Legal Solutions
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`
`TRADING TECH EXHIBIT 2140
`IBG ET AL. v. TRADING TECH
`CBM2015-00182
`
`Page 1 of 45
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`APPEARANCES:
`
` STERNE, KESSLER, GOLDSTEIN & FOX, P.L.L.C.
` BY: LORI A. GORDON, ESQUIRE
` 1100 New York Avenue, N.W.
` Washington, D.C. 20005-3934
` 202-371-2600
` lgordon-ptab@skgf.com
` and
` FISH & RICHARDSON
` BY: ADAM J. KESSEL, ESQUIRE
` JOHN C. PHILLIPS, ESQUIRE
` One Marina Park Drive
` Boston, MA 02210-1878
` 617-368-2180
` kessel@fr.com
` phillips@fr.com
` Representing the Petitioners
`
` FINNEGAN, HENDERSON, FARABOW, GARRETT &
` DUNNER, LLP
` BY: KEVIN D. RODKEY, ESQUIRE
` 271 17th Street, NW, Suite 1400
` Atlanta, GA 30363-6209
` 404-653-6400
` kevin@rodkey@finnegan.com
` and
` BY: RACHEL L. EMSLEY, ESQUIRE
` JOSHUA L. GOLDBERG, ESQUIRE
` Two Seaport Lane
` Boston, MA 02210-2001
` 617-646-1600
` rachel.emsley@finnegan.com
` joshua.goldberg@finnegan.com
` Representing the Patent Owner
`
`ALSO PRESENT:
`
` STEVE BORSAND, ESQUIRE
` Executive Vice President of Intellectual
` Property
` Trading Technologies International, Inc.
`
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` JUDGE PLENZLER: Good afternoon.
`
`This is Judge Plenzler at the Patent Trial and
`
`Appeal Board. This is a conference call for
`
`CBM2015-00161, '172, '179, '181, and '182. I'm
`
`joined on the call by Judge Petravick.
`
` Do we have someone on the call from
`
`TradeStation for Petitioner?
`
` MS. GORDON: Yes, Your Honor. This
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`is Lori Gordon from Sterne Kessler. I'm also here
`
`with Adam Kessel from Fish & Richardson, and I
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`believe John Phillips will be joining as well.
`
` JUDGE PLENZLER: Okay.
`
` Is there anybody else on the call for
`
`any of the other Petitioners?
`
` - - -
`
` (No response.)
`
` - - -
`
` JUDGE PLENZLER: All right. Is
`
`someone on the call for Patent Owner?
`
` MR. RODKEY: Yes, Your Honor. This
`
`is Kevin Rodkey for Patent Owner, Trading
`
`Technologies. With me are Joshua Goldberg, Rachel
`
`Emsley, and Steve Borsand.
`
` JUDGE PLENZLER: Okay. Thank you.
`
` Do we have a court reporter?
`
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` THE COURT REPORTER: Yes, Your Honor.
`
` JUDGE PLENZLER: Okay. And that's
`
`for Patent Owner?
`
` MR. RODKEY: Yes, Your Honor.
`
` JUDGE PLENZLER: Okay. So you'll get
`
`that on file as soon as you can after this call, I
`
`assume; correct?
`
` MR. RODKEY: Yes, that's right.
`
` JUDGE PLENZLER: All right. I guess
`
`to get things started here, Patent Owner requested
`
`the call to discuss several discovery issues, so
`
`we're going to hear from Patent Owner first.
`
` But before we do, I'd like to get
`
`things started with an initial question to Patent
`
`Owner here as far as how all this is coming about.
`
` Based on a previous call that I think
`
`you reference in your e-mail as well as what you
`
`note in your e-mail, it seems like although the
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`District Court proceeding was stayed, discovery
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`continued, and the purpose of that discovery at
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`least in part was its relevance to these
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`proceedings.
`
` So I guess what we're initially
`
`wondering, if that was the purpose for discovery
`
`continuing, how do we end up where we are with that
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`discovery not being able to be used in these
`
`proceedings?
`
` MR. RODKEY: Yes, Your Honor, that's
`
`right. What happened was the District Court order
`
`limited production in the District Court, including
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`three depositions, the last of which is going on
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`right now, to gather evidence of secondary
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`considerations for use in these PTAB proceedings.
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`The Board also recognized that relevance.
`
` We obtained most of the productions
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`from TradeStation at the end of last week and we've
`
`been reviewing the documents. We've been deposing
`
`the witnesses as expected and we sent a list of
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`documents identified by Bates number and also
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`requests to use the deposition transcripts and also
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`to get production of certain databases and other
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`information that came to light during the
`
`depositions for use here.
`
` The reason we can't just simply use
`
`them is most of them are under the protective order
`
`in the District Court and because of that we can't
`
`bring them directly into the PTAB proceeding. I
`
`believe there was a motion filed in the District
`
`Court action, but that hasn't been acted on.
`
` So we need Petitioners' agreement to
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`use them here, even though that was the purpose of
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`the original discovery being granted. Despite our
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`requests, Petitioner has refused to allow that
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`production and that's how we end up on this call
`
`today.
`
` JUDGE PLENZLER: Okay. And it sounds
`
`like you're looking for these documents for evidence
`
`of secondary considerations; is that correct?
`
` MR. RODKEY: Well, it's twofold.
`
`Part of it is secondary considerations. The other
`
`part of it is many of the documents that have been
`
`identified by litigation counsel, we believe, are
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`inconsistent with the positions that Petitioners
`
`have taken in these proceedings.
`
` My understanding is that they show
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`the level of ordinary skill in the art; that they
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`show that the abilities that are at issue here are
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`technological, that they solve technological
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`problems. These issues are inconsistent with what
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`Petitioners said in their petitions and we think
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`that actually falls under routine discovery; not
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`additional discovery.
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` But even if we need to go down the
`
`route of additional discovery, we believe that all
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`of the Bloomberg factors are met and they are
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`facially met under the Board's case law so far.
`
` JUDGE PLENZLER: All right. And I
`
`guess just to get a sense of how much we're talking
`
`about here, what is the scope, like the number of
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`documents that you're looking to obtain?
`
` MR. RODKEY: As of right now, we've
`
`had more than 97,000 documents produced by
`
`TradeStation in the District Court. We have
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`identified by specific citation either Bates number
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`or form number to the database about 140, so
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`one-tenth of 1%, plus these three deposition
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`transcripts. So we've identified a very small
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`number.
`
` But we are also looking for access to
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`databases that have been not yet produced in the
`
`District Court because they contain customer
`
`information. But according to my understanding --
`
`and if you need more detail, I can turn this over to
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`Mr. Borsand, who is also litigation counsel, who can
`
`speak better to what the documents say that are
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`under the protective order -- they contain customer
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`information, but provide additional information
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`related to secondary considerations and the
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`inconsistent statements by the Petitioners.
`
` JUDGE PLENZLER: Okay. So, yes, 140
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`still sounds like a lot and I know you are
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`indicating you have more. The other documents that
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`you're talking about, those are, I guess, the
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`additional documents referenced in your e-mail that
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`you became aware of during the District Court
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`discovery; is that correct?
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` MR. RODKEY: Yes; and also the
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`databases, which we understand can be given to us by
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`simply providing the password.
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` JUDGE PLENZLER: And so you have
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`specific documents then that you're talking about
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`here; not just that you think that some documents
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`exist, you actually know of other specific
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`documents?
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` MR. RODKEY: Yes, we know of other
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`specific documents. And actually what I would like
`
`to do is I would like to turn it over to Mr. Borsand
`
`because he is actually litigation counsel and has
`
`seen the documents.
`
` But my understanding is we have those
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`documents identified and under the Board's decision
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`in Actifio -- and I can provide this later -- but
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`also in Chevron North America, the identification of
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`specific documents is enough for compelling
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`discovery under the Board's Trial Practice Guide and
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`under the Board's rules.
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` We've identified those, but according
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`to what happened at the depositions, we've also been
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`pointed to, for example, those databases that
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`include additional documents that will be relevant
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`to either secondary considerations or inconsistent
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`statements.
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` JUDGE PLENZLER: Right. I mean, you
`
`need to know more than just that a specific document
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`exists under Cuozzo and Bloomberg; right? I mean,
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`you're not just saying that if you know a document
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`exists, you get it, are you?
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` MR. BORSAND: No. We know more than
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`that. This is Mr. Borsand.
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` MR. RODKEY: Yes. We know the
`
`substance of the ones we've identified and my
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`understanding is we know the substance of the ones
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`that have not yet been produced but we're also
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`seeking, all of which will be relevant to the
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`information we want to present to the Board.
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` MR. BORSAND: I mean, Your Honor --
`
`this is Mr. Borsand -- would I be able to elaborate
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`a little bit on the documents, is that okay, or do
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`you want --
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` JUDGE PLENZLER: I guess just very
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`briefly. Then I'd like to hear from counsel for
`
`Petitioner.
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` MR. BORSAND: First?
`
` JUDGE PLENZLER: No. Go ahead, go
`
`ahead. Very briefly, though.
`
` MR. BORSAND: Okay. I mean, because
`
`of the fact that many of these documents are still,
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`quote, under the protective order, I can't quote
`
`them specifically. But, I mean, you mentioned, I
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`think, it was quite a few documents. I mean, most
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`of these documents are, frankly, very short. And
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`they're very relevant, I mean, the type that make it
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`into closing arguments in cases going to issues of
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`obviousness and other things.
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` In fact, in addition to, you know,
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`not just secondary considerations, some of the
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`documents are directly related to, I would say
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`directly related to, nonobviousness; not, you know,
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`only falling under the category of secondary
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`considerations.
`
` And I can give one example
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`specifically. And this is not, by any means, our
`
`best example, but it is just one that happens to be
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`marked confidential. They marked many of the other
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`documents confidential and we haven't reached an
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`agreement yet.
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` And so this specific document, which
`
`is TS0111352, is part of the manual describing their
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`product. Their product is called the Matrix
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`product. It's the product that came out, you know,
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`according to us, in competition with our invention
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`several years after we released our invention.
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` And in that document, this is a quote
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`from their document: "The Matrix window provides
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`users with an exciting new view of the market,
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`including an innovative graphical display of market
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`depth and trade activity for a given instrument
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`along with lightning fast order execution with its
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`one-click trading capability. This combination
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`allows for unprecedented market feel and efficiency
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`for the frequent trader."
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` So the only reason I'm able to quote
`
`that is because we've been having quite a few
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`disputes between the parties on what we're allowed
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`to talk about on this call. Most of the other
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`documents have been labeled confidential. We don't
`
`agree necessarily with that labeling considering
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`these are documents going back ten years. This
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`product was released in 2003 or '04.
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` But I will say that many of the other
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`documents from our perspective are more relevant
`
`than that document. They're internal documents.
`
`The one I just read to you was something that was
`
`released publicly. But there are actually internal
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`documents that get into significant detail about the
`
`advantages of the invention and other things.
`
` There's really no quick way for me to
`
`summarize all of the relevant documents on this
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`call. I'm just trying to give you a flavor. But,
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`you know, when Mr. Rodkey says there's 140 or so --
`
`and I'm not really sure of the exact total right
`
`now, it's somewhere between 100 and 200 total that
`
`we've identified -- I mean, in my mind -- and I know
`
`I'm making argument here -- these are special
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`documents, these are documents that we rarely see --
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`okay? -- in a case because it's, frankly, showing
`
`the importance of the invention and contradicting
`
`their positions.
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` And there are some other things that
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`we cannot say at this point that make them even more
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`relevant --
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` JUDGE PLENZLER: I think, though,
`
`based on the --
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` MR. BORSAND: -- but the other side
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`has refused to let us say it on this call.
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` JUDGE PLENZLER: I think, though,
`
`based on the example you've provided, it seems like
`
`the information you're looking for is more in line
`
`with additional discovery.
`
` I know there are two things going on
`
`here. You know, one is you're saying that a lot of
`
`the stuff is routine discovery; and the other is
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`even if it's not, you want additional discovery.
`
` But routine discovery is pretty
`
`narrow. I mean, it's specific information
`
`inconsistent with the position advanced and it's not
`
`really supposed to be broadly directed toward
`
`something in general.
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` MR. BORSAND: Can I comment on that,
`
`though? I will say that, first of all, we have to
`
`understand two things about the context of this.
`
`There's something special about the context of this
`
`case and I don't know, you know, how well it is
`
`known to Your Honors, which is that we are in a very
`
`highly specialized industry where these tools that
`
`we're selling, you know, the development teams are
`
`significant. There's a lot of thought that goes
`
`into them.
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` JUDGE PETRAVICK: Excuse me. Excuse
`
`me. This is Judge Petravick. Right now the issue
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`is whether your discovery request is routine
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`discovery or additional discovery.
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` MR. BORSAND: No. I understand.
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` JUDGE PETRAVICK: And I believe that
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`Judge Plenzler just pointed out that our Garmin v.
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`Cuozzo case specifies that routine discovery is
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`narrow. It is directed --
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` MR. BORSAND: I understand.
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` JUDGE PETRAVICK: -- to specific
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`information known to responding parties being
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`inconsistent with the position advanced and not
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`broadly directed to any subject area in general with
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`which the requesting party hopes to discover such
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`inconsistency.
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` MR. BORSAND: Correct.
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` JUDGE PETRAVICK: So can we please
`
`address the issue of additional discovery?
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` MR. BORSAND: Yes.
`
` JUDGE PETRAVICK: And right now all
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`we're going to talk about is whether we're going to
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`authorize a motion for additional discovery or not.
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` MR. BORSAND: Okay.
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` JUDGE PETRAVICK: We are not going to
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`necessarily talk about the merits.
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` MR. BORSAND: Yes. I apologize. I
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`was trying to get to that and I apologize. I'm kind
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`of a little under the weather and not feeling very
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`well right now.
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` JUDGE PETRAVICK: That's okay.
`
` MR. BORSAND: So I believe -- and I
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`know all these things are subject to argument --
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`that this does meet that standard because the
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`witness who was just deposed, Mr. Bartleman, for two
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`days last week is the president of the company and
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`he knows all of this. He was never made aware of
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`any obligation to provide contrary evidence.
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` And we believe -- at least I
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`believe -- that this evidence we're talking about,
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`while it certainly would meet the second -- and I'm
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`sorry if I'm not using the right words, but -- the
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`second tier of additional discovery, but I believe
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`it certainly meets the first because it's so
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`directly relevant and so contrary to their position
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`and known by their top executive. That's our
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`position.
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` So I believe it does meet the first
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`tier. I understand that it's a narrow tier. But at
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`least certain of these documents to me, I can't
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`imagine if you saw them -- at this point we have the
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`disadvantage that we're not able to give you a full
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`explanation -- that, you know, you wouldn't at least
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`recognize we have an argument that it even meets
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`that higher standard.
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` JUDGE PLENZLER: Okay. I think I'd
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`like to hear from counsel for Petitioner
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`TradeStation if I could.
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` MS. GORDON: Thank you, Judge
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`Plenzler. I'd like to hand it over first to Adam
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`Kessel to address some of the statements that Patent
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`Owner made relative to the District Court that we
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`would like to --
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` JUDGE PLENZLER: Can I just ask you
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`one initial quick question first? I just want to
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`understand the nature of I guess the protective
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`order in the District Court. It sounds like the
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`documents are TradeStation's documents; is that
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`correct?
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` MS. GORDON: Yes. And I'm going to
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`let Mr. Kessel answer these questions because he's
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`most familiar with the protective order.
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` JUDGE PLENZLER: Okay.
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` MS. GORDON: So Adam.
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` MR. KESSEL: Yes. Hello. This is
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`Adam Kessel. I'm admitted pro hoc in these
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`proceedings and I'm here mainly to speak to the
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`litigation issues. I can speak both to the
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`protective order as well as the order that was
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`discussed right at the beginning of the call.
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` I just wanted to correct something.
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`My understanding -- and I just reread the
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`transcripts as we were talking -- was that the
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`discovery that wrapped up after the stay order was
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`not for the purpose of secondary considerations in
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`this CBM. Mr. Rodkey is not in the litigation so I
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`don't fault him for anything.
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` But what happened was the Court
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`entered a stay order. TT filed an emergency motion
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`to compel previously scheduled depositions that were
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`about to happen and the Court agreed, the Court said
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`you had an agreement to do this so you're going to
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`do this, and then the stay will go into effect at
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`6:00 p.m. on June 10th.
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` I could not find anything in the two
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`hearings on this issue where the Court said you're
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`going to have these depositions so that you can use
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`the discovery in the CBM. That's what he wanted,
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`but that was not anywhere in the transcript or in
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`the two docket notes on the litigation.
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` MR. BORSAND: This is Mr. Borsand. I
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`believe that's incorrect, but we'd have to go find
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`the transcript. It's specifically identified
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`relevant to this proceeding.
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` JUDGE PLENZLER: All right. I think
`
`we --
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` MR. RODKEY: This is Mr. Rodkey. I
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`can point you to that if it would help.
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` JUDGE PLENZLER: How about if we hold
`
`onto that for a minute until I'm done speaking with
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`Petitioners' counsel? I just want to get my couple
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`questions addressed here first.
`
` The first one was I think Ms. Gordon
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`answered about these documents belonging to
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`TradeStation. I'm wondering if the protective order
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`in any way prevents TradeStation, if it so chooses,
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`from producing these documents in this proceeding or
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`is TradeStation able to, as I would guess, do what
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`they'd like with documents.
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` MR. KESSEL: Right. So the
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`protective order itself specifically carves out use
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`in any proceeding other than the litigation,
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`including co-pending PTAB proceedings.
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` Of course, documents that are merely
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`proprietary to TradeStation could be reproduced
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`separate from the litigation without violating that
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`protective order. However, we have reviewed I think
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`it's up to a few hundred now forum posts and
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`technical documents that TT have identified and they
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`all appear to be classic kind of litigation
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`damages/inducement/infringement documents; nothing
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`on point for the patents.
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` This is kind of an attempt to prove
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`infringement in the CBM which, you know, I know a
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`little bit about these proceedings and that seems to
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`be totally outside the scope.
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` JUDGE PLENZLER: All right. So it
`
`seems like you think that these documents aren't
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`really relevant to this proceeding. But is there
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`another reason why you're averse to producing the
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`documents?
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` MS. GORDON: Well, Your Honor, yes.
`
`So maybe I can address it. I think the issue here
`
`is that I think Patent Owner's request is nebulous
`
`and really open-ended because, in fact, right before
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`this call we got another e-mail demanding 30 or 40
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`more documents. In the statement that they've
`
`identified 140, we've only been told of 86 documents
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`so far. So the requests keep coming.
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` Furthermore, most of these requests
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`relate to secondary considerations, but they're
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`asking for it in all five proceedings, where only
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`three of the proceedings even have obviousness
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`grounds of unpatentability at issue.
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` The other thing is that most of these
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`documents --
`
` JUDGE PLENZLER: I mean, if there's
`
`secondary consideration, these issues, you know,
`
`typically they're lumping them together; right? So
`
`if there are three proceedings that have obviousness
`
`grounds, it seems like secondary considerations are
`
`relevant, doesn't it?
`
` MS. GORDON: To three, but they're
`
`asking for the same discovery to be applied to two
`
`additional proceedings that do not have any
`
`obviousness grounds and we think that's improper.
`
` JUDGE PLENZLER: Okay.
`
` MS. GORDON: Furthermore, of the 86
`
`that we've been told of, most of them, almost all of
`
`them relate to the TradeStation product itself and
`
`some of them are requests to port the product to
`
`another platform, which we don't find how that's
`
`relevant to any substantive issue in this
`
`proceeding. And, in fact, one of these documents is
`
`somebody's resume. So there's a lot of documents
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`and the substantive value to these proceedings is
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`unclear.
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` Furthermore, if they're evidence of
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`praise or copying, you know, Mr. Borsand read some
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`typical marketing statements about features, but
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`what he didn't explain was how this statement
`
`related to any elements of the claims or even any
`
`features of the Trading Technologies product; right?
`
` They've not established that there's
`
`any connection between these documents and the
`
`claimed features. And each of these proceedings has
`
`different claims. So they haven't made that
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`connection. There's just not good cause to justify
`
`the type of discovery they're asking.
`
` And this open-ended request to access
`
`the database, I mean, that's just pure speculation.
`
`And that's exactly one of the things that Congress
`
`said they wanted to avoid, is the open-ended, broad,
`
`oppressive discovery techniques in these
`
`proceedings.
`
` So we don't see that any of these
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`documents have any relationship or are useful in any
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`way to a substantive contention of Trading
`
`Technologies in these proceedings.
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` Furthermore, the timing of this is a
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`little bit suspect. Trading Technologies knew the
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`feature of the TradeStation product for a long time,
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`since the beginning of this litigation. It's public
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`how the system operates. In fact, a number of these
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`documents that they listed for discovery they've had
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`in their possession since 2010.
`
` So there's no reason why they waited
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`for so long to come to the Board to request
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`additional discovery, particularly copying, which is
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`going to be an infringement trial within the CBM,
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`which is overly burdensome for the Board and for the
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`parties.
`
` JUDGE PLENZLER: Well, they have the
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`documents in their possession, though, is that
`
`correct, at the District Court? At least the
`
`portion that they've identified as being from the
`
`District Court discovery. I know they've indicated
`
`they think others are out there based on that.
`
` MR. BORSAND: That's correct, we have
`
`some in our possession.
`
` JUDGE PLENZLER: All right. So,
`
`Ms. Gordon, there are no documents then that
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`TradeStation thinks they would be willing to produce
`
`in this proceeding? It seems like all your
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`arguments are based on just, you know, whether or
`
`not they're relevant. Is that correct? Or are you
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`concerned with confidential information?
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` MS. GORDON: Right. So I think we're
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`concerned, first of all, that most of these
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`documents are marked confidential or highly
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`confidential, so we're concerned about the release
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`of our confidential information, particularly when
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`it has no bearing on the issues in these
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`proceedings. So we don't think we should be forced
`
`to put our confidential information at risk of
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`disclosure for a real fishing expedition by Trading
`
`Technologies.
`
` Moreover, we're concerned about
`
`opening the door. As I said, these discovery
`
`requests continue to come, and they're open-ended;
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`and we think that this discovery request will then
`
`lead to more discovery requests for technical
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`details of our product, which we think is
`
`inappropriate.
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` JUDGE PLENZLER: Okay.
`
` MR. BORSAND: Your Honor, may I
`
`respond?
`
` JUDGE PLENZLER: Is this Mr. Borsand?
`
` MR. BORSAND: Yes.
`
` JUDGE PLENZLER: All right, sure,
`
`just very briefly, and then I'm going to huddle with
`
`Judge Petravick.
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` MR. BORSAND: I appreciate that.
`
`And, again, I only can give an example here.
`
`There's no way to go through all of these here. But
`
`one example, which I can't get into the details of
`
`because they've marked it confidential, is an
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`internal requirements document for the product
`
`Matrix. That's the name of their product that we
`
`say violates our patent. This was authored by the
`
`current president of the company, the person who was
`
`deposed.
`
` This document -- I'm just
`
`paraphrasing now because they will not let me quote
`
`it -- heaps praise on the invention tied to the
`
`specific claim features in glowing terms that I
`
`can't really say now because we haven't resolved
`
`protective order issues and actually comparing it
`
`and describing its advantages over conventional
`
`tools.
`
` We believe, this is just one example
`
`under any rational reading, this document
`
`contradicts the positions they're taking in this
`
`case on nonobviousness.
`
` And I know it's very hard to talk
`
`about this with you in the abstract because you
`
`don't have the document in front of you. But
`
`Veritext Legal Solutions
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