Case: 1:05-cv-04811 Document #: 1043 Filed: 02/17/15 Page 1 of 13 PageID #:39534
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE NORTHERN DISTRICT OF ILLINOIS
`EASTERN DIVISION
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`Trading Technologies International, Inc.,
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`Plaintiff,
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`Civil Action No. 05-CV-4811
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`Judge Sharon Johnson Coleman
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`Magistrate Judge Sidney I. Schenkier
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`CQG’S REPLY BRIEF REGARDING THE PATENT-INELIGIBILITY /
`INVALIDITY OF THE TT PATENTS-IN-SUIT UNDER 35 U.S.C. § 101
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`CQG, Inc. and CQGT, LLC,
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`v.
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`Defendants.
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`Page 1 of 13
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`TRADING TECH EXHIBIT 2058
`IBG ET AL. v. TRADING TECH
`CBM2015-00182
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`Case: 1:05-cv-04811 Document #: 1043 Filed: 02/17/15 Page 2 of 13 PageID #:39535
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`TABLE OF CONTENTS
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`Page
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`I.
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`II.
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`III.
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`IV.
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`CQG Does Not Ignore Substantive Claim Elements .......................................................... 1
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`The Court Can and Should Consider the PTAB’s Decision to Institute Review of the ‘132
`Patent................................................................................................................................... 2
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`DDR Holdings is Inapposite; The ’132 And ’304 Patents’ Claimed Invention Is Not
`“Rooted In Computer Technology” .................................................................................... 3
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`The Novelty of the Claimed Invention or TT’s “MD Trader” Software Over Any
`Particular Prior Art is Irrelevant ......................................................................................... 6
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`V. Whether the Claimed Invention is “Technological” Or A “Technological Solution to a
`Technical Problem” Is Irrelevant ........................................................................................ 6
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`VI.
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`Conclusion .......................................................................................................................... 8
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`i
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`TABLE OF AUTHORITIES
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`Page
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`Cases
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`Alice Corp. Pty. Ltd. v. CLS Bank Int’l.,
`134 S. Ct. 2347 (2014) ........................................................................................................ 1, 2, 8
`buySAFE, Inc. v. Google, Inc.,
`765 F.3d 1350, 1351 (Fed. Cir. 2014) ........................................................................................ 8
`CyberSource Corp. v. Retail Decisions, Inc.,
`654 F.3d 1366 (Fed. Cir. 2011) .............................................................................................. 4, 5
`DDR Holdings, LLC v. Hotels.com, L.P.,
`773 F.3d 1245 (Fed. Cir. 2014) .................................................................................................. 3
`Digitech Image Techs. v. Elecs. for Imaging, Inc.,
`758 F.3d 1344 (Fed. Cir. 2014) .................................................................................................. 8
`Enfish, LLC v. Microsoft Corp.,
`No. 12-cv-07360, 2014 WL 5661456 (C.D. Cal. Nov. 3, 2014) ................................................ 8
`Loyalty Conversion Sys. Corp. v. Am. Airlines Inc.,
`No. 13-CV-655, 2014 WL 4364848 (E.D. Tex. Sept. 3, 2014) .................................................. 5
`Parker v. Flook,
`437 U.S. 584 (1978) .................................................................................................................... 6
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`Statutes
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`35 U.S.C. § 101 ...................................................................................................................... passim
`35 U.S.C. § 102 ............................................................................................................................... 6
`35 U.S.C. § 103 ............................................................................................................................... 6
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`Other Authorities
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`AIA § 18(d)(1) ................................................................................................................................ 7
`Pub. L. No. 112-29, 125 Stat. 284 .................................................................................................. 7
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`Rules
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`37 C.F.R. § 42.301(b) ..................................................................................................................... 7
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`ii
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`Case: 1:05-cv-04811 Document #: 1043 Filed: 02/17/15 Page 4 of 13 PageID #:39537
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`In its Opposition Brief (Dkt. 962, “Opp.”), TT does not dispute:
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`(1) that patent-eligibility under § 101 is purely an issue of law;
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`(2) that the question of § 101 patent-eligibility of the ’132 and ’304 patents is ripe for
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`determination now and does not require the Court to await a jury trial record;
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`(3) that courts have routinely decided § 101 patent-eligibility as early as the pleading stage,
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`i.e., on Rule 12 motions;
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`(4) that it is appropriate for the Court to focus on representative claims (see Opp. at 6); or
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`(5) that claim 1 of the ’132 and ’304 patents is representative for purposes of the § 101
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`analysis.
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`However, rather than focusing on the two-step analysis mandated by the Supreme Court in
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`Alice Corp. Pty. Ltd. v. CLS Bank Int’l., 134 S. Ct. 2347 (2014), TT spends much of its Opp.
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`arguing that the claimed invention—or its purported commercial embodiment, TT’s “MD Trader”
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`software—is different from and novel over prior art trading systems. This misses the point of a
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`§ 101 analysis. The purported novelty and unobviousness (or lack thereof) of the ’132 and ’304
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`patents are irrelevant to a § 101 analysis. They are germane to different statutory requirements for
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`patentability; it would be error to base a § 101 decision on these considerations.
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`Meanwhile, TT almost completely ignores Enfish v. Microsoft, where claims highly
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`analogous to the ’132 and ’304 patents were invalidated under § 101, as explained in detail in
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`CQG’s Opening Brief.
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`I.
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`CQG DOES NOT IGNORE SUBSTANTIVE CLAIM ELEMENTS
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`TT claims that CQG “does not address the details of any of the claims of the patents-in-
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`suit,” “ignores all of the substantive elements of the body of the claims,” and “fails to address any
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`of these claim elements, alone or in combination.” Opp. at 4, 6. This is demonstrably wrong:
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`CQG’s Opening Brief (Dkt. 898, “Br.”) spends 5 pages demonstrating that substantive limitations
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`in the body of the claims (both independent and dependent) fail to add an “inventive concept,” as
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`required by Alice step two. Br. at 8–13.
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`II.
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`THE COURT CAN AND SHOULD CONSIDER THE PTAB’S DECISION TO
`INSTITUTE REVIEW OF THE ‘132 PATENT
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`TT wrongly urges that the decision of the USPTO Patent Trial and Appeal Board (PTAB) to
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`institute a covered business method (CBM) review of the ’132 patent under § 101 “should be given
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`no weight” because, in TT’s view, it is “only a preliminary decision” and “unreliable because it
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`predated DDR.” Opp. at 19–20. The PTAB’s written, reasoned decision speaks for itself:1
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`We determine that the Petition demonstrates it is more likely than not that the
`challenged claims are unpatentable under 35 U.S.C. § 101.
`. . .
`On this record, we are persuaded by Petitioner that claim 1 is directed to the
`abstract idea of placing an order based on observed market information, as
`well as updating the market information.
`. . .
`Thus, claim 1 does no more than simply instruct the practitioner to
`implement the abstract idea on a GUI. To be patent-eligible, a claim cannot
`simply state the abstract idea and add the words “apply it.” On this record,
`we agree with Petitioner that claim 1 does not recite additional elements or
`combinations of elements that add significantly more to the abstract idea so
`as to claim patent-eligible subject matter.
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`(Ex. 52 at 2, 14–15, CBM2014-00135 Institution Decision.) It is true the PTAB’s decision to
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`institute review is preliminary (in that it has not yet finally invalidated the claims), but TT is wrong
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`to otherwise criticize it. Review was instituted only after a three-judge PTAB panel3 considered
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`TT’s 65-page Patent Owner Preliminary Response (Ex. 4, “POPR”) (accompanied by 4 videos and
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`1 TT argues in its Opp. and Responses & Objections to CQG’s Statement of Undisputed Material Facts (Dkt. 966, “TT
`SOMF Resp.”) that the standard for instituting a CBM review is “significantly lower” than “more likely than not.”
`TT SOMF Resp. at 4; Opp. at 20 n.14. TT’s emphasis on the statutory language “if such information [presented in
`the petition for review] is not rebutted” simply underscores that TT had the opportunity to rebut in its POPR, which it
`took full advantage of. In any event the PTAB’s decision speaks for itself. (Ex. 5 at 2.)
`2 Numeral exhibit citations are to the exhibits to the Declaration of Kenneth R. Adamo (Dkt. 899), filed with CQG’s
`Opening Brief. Lettered exhibits are filed concurrently herewith.
`3 The three Administrative Patent Judges comprising the panel have over 30 years of collective Patent Office
`experience. (Ex. C.)
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`2
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`80 exhibits comprising over 1,500 pages), in which TT reprised much of the same evidence and
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`argument it offers here. TT even requested rehearing of the institution decision (Ex. A), in response
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`to which the PTAB confirmed its earlier conclusions and affirmed its decision to institute, noting
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`that the claimed invention:
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`is directed to a method of displaying market information, setting trade order
`parameters, and sending a trade order to an electronic exchange.
`. . .
`[T]he only hardware recited in claim 1 is a display and an input device,
`which both were known technology.
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`(Ex. B4 at 7, Reh’g Decision.) Also, TT’s rehearing request, and the PTAB’s denial of it, came
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`after the Federal Circuit’s decision in DDR Holdings. As a result, TT’s complaints about the timing
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`of the PTAB’s decisions vis-à-vis DDR Holdings ring hollow.
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`To be clear, CQG does not claim that the PTAB’s decision to institute review and its
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`subordinate findings about the claimed invention’s patent-ineligibility are binding on this Court or
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`somehow constitute res judicata. But they are nevertheless admissible under FRE 803(8), and are
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`consistent with, and confirmatory of, the arguments CQG advances. They merit this Court’s due
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`consideration.
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`III. DDR HOLDINGS IS INAPPOSITE; THE ’132 AND ’304 PATENTS’ CLAIMED
`INVENTION IS NOT “ROOTED IN COMPUTER TECHNOLOGY”
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`TT leans heavily on DDR Holdings as a lifeline for patent-eligibility. See Opp. at 15–17.
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`But the claims of the ’132 and ’304 patents are very different from those at issue in DDR Holdings.
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`There, the claims at issue were “rooted in computer technology in order to overcome a problem
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`specifically arising in the realm of computer networks.” DDR Holdings, LLC v. Hotels.com, L.P.,
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`773 F.3d 1245, 1257 (Fed. Cir. 2014). Those claims were found to be patent-eligible specifically
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`because they did not “adher[e] to the routine, conventional functioning of Internet hyperlink
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`4 The PTAB did not issue its decision on TT’s rehearing request until the day CQG filed its opening brief (February 2).
`As such, CQG could not have addressed the PTAB’s decision on the rehearing request before this Reply.
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`3
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`protocol”—that is, they were a departure from the conventional functioning of computer
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`technology. Id.
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`In contrast, the ’132 and ’304 patents rely on purely conventional computer technology
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`operating in a purely conventional way; the shared specification of the patents explains the claimed
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`invention is preferably implemented on a generic “computer or electronic terminal,” and can be
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`implemented “on any existing or future terminal or device.” (Ex. 1, ’132 at 4:4–9, 3:64–65; Ex. 2,
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`’304 at 4:1–2, 4:8–10.) There is nothing in the patents’ specification or claims suggesting that the
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`“computer or electronic terminal” operates in an unconventional manner. Nor do the patents even
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`remotely purport to alter the functioning of the networks connecting trading terminals with
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`commodity exchanges or the commodity exchanges themselves. That the patents are not “rooted in
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`computer technology” is confirmed by TT’s own assertion that “the claimed tool is implemented
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`graphically [on a computer] merely because of the state of technology today—it would be possible
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`to implement a comparable tool mechanically.” (Ex. 4 at 24, 30, CBM2014-135 POPR.5) A patent
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`that can be implemented “mechanically” ipso facto cannot be “rooted in computer technology.”
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`Further confirming that the patents are not “rooted in computer technology” is that the
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`recited method of displaying market information and facilitating trades can “be performed . . . by a
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`human using a pen and paper.” CyberSource Corp. v. Retail Decisions, Inc., 654 F.3d 1366, 1372
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`(Fed. Cir. 2011). The patents’ tabular organization of market data can clearly be presented on
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`paper, the only (trivial and irrelevant) difference being that it would be far slower for a human
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`being to erase and update market information on a piece of paper compared to having a computer
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`do it. It is also well known that prior to the advent of electronic trading, traders did in fact execute
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`commodities trades using pen and paper. The claims in CyberSource (held patent-ineligible under
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`5 Emphasis (bold, italics, and/or underline) added unless otherwise noted.
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`4
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`§ 101) are particularly analogous: they claimed a method of detecting credit card fraud that
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`generically required “obtaining information about other [credit card] transactions that have utilized
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`an Internet address that is identified with the credit card transaction,” “construct[ing] a map of [the]
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`credit card numbers,” and “utilizing the map . . . to determine if the credit card transaction is valid.”
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`CyberSource, 654 F.3d at 1372. The ’132 and ’304 patent claims similarly require just “obtaining
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`information” (i.e., about commodity prices), “constructing a map” (i.e., a tabular format display of
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`the market information), and “utilizing the map” (i.e., using the display of market information to
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`submit a trade order). Indeed, the specification of both patents uses language strikingly similar to
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`that in CyberSource: “[t]he present invention processes [market] information and maps it through
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`simple algorithms and mapping tables to positions in a theoretical grid . . . or any other comparable
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`mapping technique for mapping data to a screen.” (Ex. 1, ’132 at 4:62–66; Ex. 2, ’304 at 4:66–
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`5:3.) As in CyberSource, the patents’ collection and “mapping” of information onto the GUI in a
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`particular way is patent-ineligible because all the steps can be “performed . . . by a human using a
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`pen and paper.” CyberSource, 654 F.3d at 1372.
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`As in other cases holding patents ineligible under § 101, nothing in the ’132 or ’304 patents
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`“purports to improve the functioning of the computer itself, and the computer components of the
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`claims add nothing that is not already present in the steps of the claimed methods, other than the
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`speed and convenience of basic computer functions such as calculation, communication, and the
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`display of information.” Loyalty Conversion Sys. Corp. v. Am. Airlines Inc., No. 13-CV-655, 2014
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`WL 4364848, at *9 (E.D. Tex. Sept. 3, 2014). What the patents claim are “all functions that are
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`readily within the capacity of a human to perform without computer aid.” Id. at *10.
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`IV.
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`THE NOVELTY OF THE CLAIMED INVENTION OR TT’S “MD TRADER”
`SOFTWARE OVER ANY PARTICULAR PRIOR ART IS IRRELEVANT
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`TT argues at length that the claimed invention, and TT’s “MD Trader” software (which
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`purportedly embodies the claimed invention), is novel and non-obvious over prior art trading
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`interfaces. Opp. at 1–7, 13. Such arguments do not make out a proper § 101 analysis under Alice.
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`Conclusions about novelty and non-obviousness relate to other requirements for patentability—
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`namely those prescribed by §§ 102 and 103—not to § 101. See Parker v. Flook, 437 U.S. 584, 588
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`(1978) (§ 101 analysis “does not involve the familiar issues of novelty and obviousness that
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`routinely arise under §§ 102 and 103”). TT pays lip service to this principle (Opp. at 15), yet still
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`distracts the Court with extensive argument and voluminous “evidence” about the alleged novelty
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`and non-obviousness of its trading GUI—including inventor testimony (Opp. at 3), the
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`(inadmissible hearsay) report of TT’s retained expert6 (Opp. at 1, 4, 14, 16), and the (also
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`inadmissible hearsay) purported “widespread praise” received by TT’s “MD Trader” software
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`(Opp. at 1, 16, Ex. A ¶ 30).
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`This entire line of argument is a red herring and the Court should disregard it.
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`V. WHETHER THE CLAIMED INVENTION IS “TECHNOLOGICAL” OR A
`“TECHNOLOGICAL SOLUTION TO A TECHNICAL PROBLEM” IS
`IRRELEVANT
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`TT repeatedly argues that the claimed invention of the ’132 and ’304 patents is
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`“technological” or solves a “technological solution to a technical problem.” See Opp. at 1, 4–6, 8,
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`16. For example, TT expounds at length about human-computer interaction (HCI) being a
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`“technical” discipline and NASA having a division devoted to solving HCI problems. Opp. at 8–9.
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`First, even if interesting, this all is totally irrelevant because the test for patent-eligibility does not
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`6 CQG objects to the extensive “evidence” attached to TT’s Opp., as much of it is inadmissible hearsay. For example,
`TT attached and repeatedly cited the report of its own retained expert Christopher Thomas. It is black letter law that
`an expert’s report is inadmissible hearsay. TT also improperly skirted the Court’s 20-page limit for its Opp. (see Dkt.
`892) with its 10-page chart of “Record Support for TT’s Opposition Brief regarding § 101.” Opp. at Ex. M.
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`ask whether the claimed invention is “technological” or whether the field of invention is
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`“technical.”7 In arguing that the patents are “technological” or a “technological solution to a
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`technical problem” TT seems to confuse the test of § 101 patent-eligibility with part of the
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`jurisdictional inquiry for instituting CBM review at the Patent Office. The America Invents Act
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`(which established CBM proceedings as a form of post-grant review at the Patent Office) precludes
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`CBM review of patents that are “for technological inventions.” AIA § 18(d)(1); Pub. L. No. 112-
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`29, 125 Stat. 284. The Patent Office promulgated regulations interpreting this to mean a patent that
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`“solves a technical problem using a technical solution.” 37 C.F.R. § 42.301(b). But whether or not
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`the patents satisfy the “technological invention” exception to CBM review (i.e., whether they
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`“solve[] a technical problem using a technical solution”) is not germane to the questions here
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`relating to patent eligibility under § 101.
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`Second, the PTAB already rejected this precise argument by TT; in instituting § 101-based
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`CBM review, it concluded that:
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`On this record, and taking into account Patent Owner’s argument, we are
`persuaded by Petitioner that the ’132 patent does not solve a technical
`problem with a technical solution.
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`(Ex. 5 at 11.)
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`Third, the patents’ GUI, and the alleged HCI problems it purports to solve, are not “rooted
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`in computer technology” because they relate to how humans receive and interact with visually-
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`presented information, not how a computer itself functions. Cf. DDR Holdings, 773 F.3d at 1257.
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`Fourth, even if the claimed invention here could be characterized as “technological”
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`(contrary to the PTAB’s conclusion) that would not save it from being found patent-ineligible
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`7 TT refers to Judge Mayer’s dissenting view in DDR Holdings that “Alice articulated a technological arts test for
`patent eligibility” (DDR Holdings, 773 F.3d at 1265) and asserts that the patents satisfy “even th[is] stricter test.”
`Opp. at 16. CQG disagrees that the patents would satisfy the “technological arts” test, but in any event this
`standard—whatever its merits—is not the test for patent-eligibility.
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`because the same could be said of many patents that have been invalidated under § 101. The claims
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`in Alice, for example, “require[d] the use of a computer to create electronic records, track multiple
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`transactions, and issue simultaneous instructions; in other words, the computer [was] itself the
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`intermediary” for settlement of the financial transaction. Alice, 134 S.Ct. at 2359. Though this
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`arguably brought the claims into the “technological” arena, it was not enough for patent-eligibility.
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`Similarly, in Digitech Image Techs. v. Elecs. for Imaging, Inc. the claims covered “the
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`generation and use of an ‘improved device profile’ that describes spatial and color properties of a
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`device within a digital image processing system.” 758 F.3d 1344, 1347 (Fed. Cir. 2014). The
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`invention in Digitech sought to solve the problem of spatial and color distortion of an image that
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`results from the peculiarities of different imaging devices (e.g., digital cameras). Id. at 1347–48.
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`This is clearly a “technical” or “technological” problem, yet the patents were still held patent-
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`ineligible under § 101.
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`Likewise, in buySAFE, Inc. v. Google, Inc., the claims were directed to “steps for
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`guaranteeing a party’s performance of its online transaction.” 765 F.3d 1350, 1351 (Fed. Cir.
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`2014). Though limited to “online” (i.e., Internet-based) commercial transactions (id.)—arguably
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`making them “technological”—this again was not enough to render the buySAFE claims patent-
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`eligible. The claims in Enfish (discussed in CQG’s opening brief) too are arguably “technological”
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`in that they nominally recited “a method for storing and retrieving data in a computer memory” and
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`required the computer to “index[] data stored in said table,” but again they were not patent-eligible
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`on that basis. Enfish, LLC v. Microsoft Corp., No. 12-cv-07360, 2014 WL 5661456, at *7 (C.D.
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`Cal. Nov. 3, 2014).
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`VI. CONCLUSION
`The asserted claims of the ’132 and ’304 patents should be found invalid as a matter of law
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`for failing to recite patent-eligible subject matter under § 101.
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`Respectfully submitted,
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`/s/ Kenneth R. Adamo
`Kenneth R. Adamo
`Eugene Goryunov
`KIRKLAND & ELLIS LLP
`300 North Lasalle
`Chicago, IL 60654
`Telephone: (312) 862-2000
`
`Adam G. Kelly
`William Voller III
`William J. Kramer
`LOEB & LOEB LLP
`321 North Clark, Suite 2300
`Chicago, Illinois 60654
`Telephone: (312) 464-3100
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`Attorneys for CQG, Inc. and CQGT, LLC
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`Dated: February 17, 2015
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`Case: 1:05-cv-04811 Document #: 1043 Filed: 02/17/15 Page 13 of 13 PageID #:39546
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`CERTIFICATE OF SERVICE
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`I certify that a copy of the foregoing document was served via the ECF filing system
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`and/or electronic mail on the 17th day of February, 2015:
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`By:
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`/s/ Kenneth R. Adamo
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`Kirkland & Ellis LLP
`300 North La Salle
`Chicago, IL 60654
`Telephone: (312) 862-2000
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`Attorneys for CQG, Inc. and CQGT, LLC
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`February 17, 2015
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