Paper No.
`Filed: December 20, 2016
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`
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`UNITED STATES PATENT AND TRADEMARK OFFICE
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`
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
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`
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`IBG LLC, and INTERACTIVE BROKERS LLC, Petitioners
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`v.
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`TRADING TECHNOLOGIES INTERNATIONAL, INC.
`Patent Owner
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`
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`CBM2016-00009
`Patent No. 7,685,055 B2
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`
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`PATENT OWNER’S OPPOSITION TO PETITIONERS’
`MOTION TO EXCLUDE
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`

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`TABLE OF CONTENTS
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`CBM2016-00009
`U.S. Patent 7,685,055 B2
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`I.
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`INTRODUCTION ........................................................................................... 1
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`II.
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`STANDARD .................................................................................................... 2
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`III. TT'S TESTIMONIAL EVIDENCE FROM DISTRICT COURT
`IS ADMISSIBLE (EXHIBITS 2292-2296) .................................................... 3
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`A. Nothing justifies treating TT's testimonial evidence from
`district court differently from Petitioners' testimonial
`evidence from district court (i.e., the 2005 Kawashima
`deposition transcript - Exhibit 1011) ..................................................... 3
`
`B.
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`TT's testimonial evidence from district court is
`admissible under Federal Rule of Evidence 807 ................................... 4
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`IV. CHRISTOPHER THOMAS’ DECLARATION IS
`ADMISSIBLE (EXHIBIT 2169 ¶¶ 127-128) ................................................. 6
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`A. Mr. Thomas’ testimony is used to further appropriate
`objectives ............................................................................................... 7
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`B.
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`C.
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`The objected-to statements are not hearsay .......................................... 8
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`Petitioners’ objections go to the weight of the evidence,
`not their admissibility ............................................................................ 9
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`D.
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`Papers submitted from other proceedings are proper ............................ 9
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`V.
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`THE GOULD-BEAR AND ABILOCK DECLARATIONS
`(EXHIBITS 2168, 2334, AND 2339) ARE RELEVANT TO
`THIS PROCEEDING ...................................................................................... 9
`
`A.
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`The Gould-Bear Declaration (Exhibit 2168)....................................... 10
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`B.
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`The Abilock Declarations (Exhibits 2334 and 2339) .......................... 11
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`VI. COURT DOCUMENTS ARE ADMISSIBLE (EXHIBITS
`2030 and 2032) .............................................................................................. 12
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`VII. CONCLUSION .............................................................................................. 13
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`CBM2016-00009
`Patent No. 7,685,055
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`I.
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`INTRODUCTION
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`37 C.F.R. § 42 governs these proceedings, and it “shall be construed to
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`secure the just, speedy, and inexpensive resolution of every proceeding.” § 42.1(b).
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`The “just” requirement mandates that the Board consider all of the evidence
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`introduced by Patent Owner Trading Technologies International, Inc. (“TT”).
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`Much of TT’s evidence comes from the same district court litigation as
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`Petitioners’ Exhibit 1011, the transcript of a 2005 deposition of Atsushi
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`Kawashima on which Petitioners rely to allege the prior art status of TSE (Exhibit
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`1007). Petitioners provide no basis or justification for the Board to treat TT’s
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`evidence from district court any differently from their own. TT took steps to
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`ensure its evidence could come into the proceedings in a “just” way.
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`First, unlike Petitioners, who ignored the Federal Rules of Evidence and 37
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`C.F.R. § 42.52(a), in introducing the 2005 Kawashima deposition transcript into
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`these proceedings, TT previously sought to have certain Federal Rules of Evidence
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`waived in the proceedings. Paper 22, Board’s Order, at 2. Petitioners opposed this
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`request despite the fact that it would have cured the hearsay problem associated
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`with the 2005 Kawashima deposition transcript. The Board denied the request. See
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`id. at 3-4.
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`Second, TT sought additional discovery in the form of subpoenas to
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`facilitate depositions that would reproduce here the evidence it (and Petitioners)
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`CBM2016-00009
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`already had from district court. Id. at 4. Petitioners again opposed, and the Board
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`denied TT’s request because it was “speculative.” Id. at 5. Left with no other
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`options, TT introduced its evidence from district court in the same way that
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`Petitioners introduced their evidence from district court. There is no rule that
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`prevented TT from doing so. Petitioners could have challenged TT’s evidence by
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`cross-examining its witnesses. They simply chose not to.
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`While the Board should consider all of TT’s evidence directly, at a
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`minimum, it was proper for TT’s expert to rely on the evidence, so it must remain
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`in the record. Ignoring the evidence would be unjust and would deprive TT of due
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`process.
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`II.
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`STANDARD
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`As the movant, Petitioners bear the burden of proving that the challenged
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`exhibits are inadmissible. Liberty Mutual Insurance Co. v. Progressive Casualty
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`Insurance Co., CBM2012-00002, Paper 66 at 59 (January 23, 2014); 37 C.F.R. §
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`42.20(c). Petitioners failed to meet their burden, and the Board disfavors
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`excluding evidence as a matter of policy; “it is better to have a complete record of
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`the evidence submitted by the parties than to exclude particular pieces.”
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`CBM2012-00002, Paper 66 at 60-61.
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`III. TT'S TESTIMONIAL EVIDENCE FROM DISTRICT COURT IS
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`ADMISSIBLE (EXHIBITS 2292-2296)
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`Exhibits 2292–2296 are transcripts of sworn deposition testimony. All are
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`from district court, many from the same litigation as the 2005 Kawashima
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`deposition transcript, TT v. eSpeed, Inc.
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`A. Nothing justifies treating TT's testimonial evidence from district
`court differently from Petitioners' testimonial evidence from
`district court (i.e., the 2005 Kawashima deposition transcript -
`Exhibit 1011)
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`Before filing its Patent Owner responses, TT requested additional discovery
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`in the form of subpoenas to proactively facilitate Petitioners’ cross examination of
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`the witnesses behind TT’s testimonial evidence from district court. Paper 2,
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`Board’s Order, at 4. Rather than seizing this opportunity, Petitioners opposed TT’s
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`request. Id. And the Board denied TT’s request because “[t]he need for any
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`subpoenas . . . was speculative.” Id. at 5. At the time, the Board pointed out that the
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`request was premature because “[TT didn’t] know what evidence [it would] rely
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`on, whether the petitioner [would] object to such evidence or have the need to
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`cross examine [the] people.” Ex. 2107 at 44:16-45:3.
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`Ultimately, TT never needed to repeat its request for additional discovery in
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`the form of subpoenas, because Petitioners made a litigation choice to not even
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`request cross examination to challenge any of TT’s testimonial evidence from
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`district court. Petitioners’ litigation choice does not change the fact that TT’s
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`testimonial evidence from district court is just as reliable as Petitioners’ testimonial
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`evidence from district court and should, therefore, be admitted in these proceedings
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`if the 2005 Kawashima deposition transcript is admitted.
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`B.
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`TT's testimonial evidence from district court is admissible under
`Federal Rule of Evidence 807
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`Federal Rule of Evidence 807 provides a “residual exception” to the hearsay
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`rule. The Board’s recent Final Written Decision in Apple Inc. v. VirnetX Inc. is
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`instructive on the rule’s applicability to TT’s testimonial evidence from district
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`court. IPR2015-00811, Paper 44 at 68-70 (Sep. 8, 2016). In Apple, the Board
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`addressed the admissibility of evidence just like TT’s: declarations that were
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`prepared for other proceedings and district court trial and deposition testimony. Id.
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`at 68. After recognizing that the party challenging the admissibility of the evidence
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`“chose not to seek the opportunity to cross examine the declaration testimony,”
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`which the Board had defined to include the district court trial and deposition
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`testimony, the Board explained why the residual exception of Federal Rule of
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`Evidence 807 rendered the evidence admissible. Id. at 68-70.
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`To fall under the exception, a “statement must: (1) have equivalent
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`circumstantial guarantees of trustworthiness; (2) be offered as evidence of a
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`material fact; (3) be more probative on the point for which it is offered than any
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`other evidence that the proponent can obtain through reasonable efforts; and (4) be
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`in the interests of justice to admit.” Id. at 69 (citing Fed. R. Evid. 807). As
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`recognized by the Board in Apple, the residual exception is to be reserved for
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`“exceptional cases.” Id. at 69 (citing Conoco Inc. v. Dep’t of Energy, 99 F.3d 387,
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`392 (Fed. Cir. 1996), as amended on rehearing in part (Jan. 2, 1997)). But “[t]rial
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`courts are accorded wide discretion in applying the residual hearsay exception.” Id.
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`(citing Doe v. United States, 976 F.2d 1071, 1076–77 (7th Cir. 1992), cert. denied
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`510 U.S. 812 (1993); United States v. North, 910 F.2d 843, 909 (D.C. Cir. 1990)
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`cert. denied 500 U.S. 941 (1991)).
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`TT’s testimonial evidence from district court has the same circumstantial
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`guarantees of trustworthiness as the testimony at issue in Apple, as well as those
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`declarations actually created for these proceedings. See id. at 69-70. “The vast
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`majority of testimony in inter partes reviews is admitted in paper form, as a
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`declaration, instead of as live witness testimony. Thus, whether or not testimony is
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`specifically created for a specific IPR or is created for another proceeding, if the
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`declaration is sworn testimony and the witness is available for cross-examination,
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`the testimony bears the same guarantees of trustworthiness.” Id. at 70. Here, like
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`in Apple, TT’s testimonial evidence from district court is sworn testimony and the
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`witnesses would have been available for cross-examination had Petitioners sought
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`such cross examination. Thus, TT’s testimonial evidence from district court has
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`the same circumstantial guarantees of trustworthiness as those declarations actually
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`created for these proceedings.
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`As required by Federal Rule of Evidence 807, TT’s testimonial evidence
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`from district court is also offered as evidence of a material fact, more probative on
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`the point for which it is offered than any other evidence that TT could obtain
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`through reasonable efforts, and in the interests of justice to admit. This evidence is
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`more probative than any other evidence that TT could obtain through reasonable
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`efforts because Petitioners opposed and the Board denied TT’s efforts to obtain
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`more probative evidence through additional discovery in the form of subpoenas.
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`See supra Section III.A. And it is in the interests of justice to admit the evidence
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`because TT will otherwise be deprived of due process. In addition, if the Board
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`were to admit Petitioners’ evidence of the same type (i.e., the 2005 Kawashima
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`deposition transcript) but exclude TT’s evidence, TT would be unfairly prejudiced.
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`Accordingly, the Board should admit TT’s testimonial evidence from district court
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`in these proceedings if the 2005 Kawashima deposition transcript is admitted in
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`these proceedings.
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`IV. CHRISTOPHER THOMAS’ DECLARATION IS ADMISSIBLE
`(EXHIBIT 2169 ¶¶ 127-128)
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`Petitioners fail to support their assertion that TT’s expert Christopher
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`Thomas’ testimony “exceed[s] the proper boundaries of expert testimony.” See
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`Paper 49 at 5-6. None of the case law cited by Petitioners applies to PTAB
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`proceedings. Instead, it is applicable on issues specific to juries.
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`The primary reason for excluding expert testimony is danger of confusion
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`among juries. Indeed, the principles set forth in United States v. Dukagjini, cited by
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`Petitioners, relate to the prejudicial effect that hearsay, relied upon by an expert,
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`may have on a jury. 326 F.3d 45, 58 (2d Cir. 2002). Such principles do not apply
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`here. “[U]nlike a lay jury, the Board … has significant experience in evaluating
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`expert testimony. Accordingly, the danger of prejudice in this proceeding is
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`considerably lower than in a conventional district court trial.” IPR2015-01097,
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`Paper 70 at 44 (September 12, 2016) (denying Patent Owner’s motion to exclude).
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`A. Mr. Thomas’ testimony is used to further appropriate objectives
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`In this case, Mr. Thomas statements are not improper expert testimony
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`because an expert is permitted to use hearsay reasonably. Indeed, Dukagjini, cited
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`by Petitioners, acknowledges that the rules grant experts considerable leeway with
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`respect to hearsay evidence, and that “an expert is permitted to disclose hearsay for
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`the limited purpose of explaining the basis for his expert opinion … but not as
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`general proof of the truth of the underlying matter.” Dukagjini, 326 F.3d at 58.
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`Dukagjini further contemplates that “an expert witness may rely on hearsay
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`evidence while reliably applying expertise to that hearsay evidence.” Id. That is
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`what Mr. Thomas is doing here. For example, in objected-to paragraphs 127-128,
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`Mr. Thomas relies upon experiences of others as bases for his opinion that the
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`claimed invention is technical. Indeed, Mr. Thomas testifies that “[i]n another
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`example, Dr. Mellor, a technical expert for CQG, testified that the ‘underlying
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`technology in this case is the graphic user interface.’” Exhibit 2169 at ¶ 127. Mr.
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`Thomas further testifies that “[i]n fact, I am not aware of a single expert in any of
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`the cases taking the position that the invention is not technological.” Id. at ¶ 128.
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`Thus, Mr. Thomas was simply relying on other expert’s statements to reliably
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`apply his own expertise. See Dukagjini, 326 F.3d at 58.
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`B.
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`The objected-to statements are not hearsay
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`Rather than rely on evidence as hearsay, Mr. Thomas articulates the effect
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`the evidence would have had on a person of ordinary skill in the art (“POSITA”).
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`Indeed, this is precisely the role of an expert: to opine from the perspective of a
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`POSITA. For example, Mr. Thomas states “[b]ased on my own experience, GUI
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`tools are technical in nature, and indeed the entire electronic trading industries
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`considers GUI tools as being technology.” Exhibit 2169 at ¶ 128. Mr. Thomas
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`further describes how other experts in the field believe the invention is technical in
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`nature. See id. Thus, the statements in the objected to paragraphs 127-128 are not
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`offered for the truth, but for the effect the statements would have on a POSITA.
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`The Board has recognized this distinction in other proceedings, and it should
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`do so here. Lindsay Corp. v. Valmont Industries, Inc., IPR2015-01039, Paper 37 at
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`44 (September 14, 2016) (“The [statements] are not hearsay because Petitioner
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`offers those statements for the effect they would have had on a person of ordinary
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`skill in the art, not for the truth of the matter asserted.”).
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`C.
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`Petitioners’ objections go to the weight of the evidence, not their
`admissibility
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`“A strong public policy exists for making information filed in a non-jury,
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`quasijudicial administrative proceeding available to the public, especially in an
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`inter partes review, which determines the patentability of claims in an issued
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`patent. The Board has discretion to assign appropriate weight to evidence.” Baby
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`Trend Inc. v. Wonderland Nurserygoods Co., Ltd., IPR2015-00841, Paper 77 at 88
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`(June 27, 2016). As such, Petitioners’ arguments overstep the appropriate remedy
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`for faults in expert testimony. At most, Petitioners’ arguments relate to the
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`appropriate weight to assign the evidence, not its admissibility.
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`D.
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`Papers submitted from other proceedings are proper
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`Finally, Petitioners argue that neither the Federal Rules nor the Board’s rules
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`permit expert testimony based on evidence from a different proceeding. Paper 49 at
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`6. Petitioners are wrong. As discussed in Section III, it does not matter what
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`proceeding the evidence is from; Mr. Thomas can properly rely on the evidence.
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`See IPR2015-00811, Paper 44 at 68.
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`V. THE GOULD-BEAR AND ABILOCK DECLARATIONS (EXHIBITS
`2168, 2334, AND 2339) ARE RELEVANT TO THIS PROCEEDING
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`Both the Federal Circuit and the Board have recognized that there is a “low
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`threshold for relevancy”. OddzOn Prods., Inc. v. Just Toys, Inc., 122 F.3d 1396,
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`1407 (Fed.Cir.1997); Laird Techs., Inc. v. GrafTech Int'l Holdings, Inc., Case
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`IPR2014–00025, slip op. at 44 (PTAB Mar. 25, 2015) (Paper 45)). Indeed, all that
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`is required for admissibility is a “tendency to make a fact more or less probable
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`than it would be without the evidence.” Fed. R. Evid. 401. Both the Gould-Bear
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`and Abilock declarations meet this standard.
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`A. The Gould-Bear Declaration (Exhibit 2168)
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`This exhibit is offered for the relevant purpose of patent eligibility. Indeed,
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`as Petitioners point out, Mr. Gould-Bear did not review the ‘055 patent or its
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`claims in Exhibit 2168. However, the ‘055 patent is a continuation-in-part claiming
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`priority to U.S. Patent No. 6,772,132 (‘132 Patent), which Mr. Gould-Bear did
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`review and base his testimony on. Exhibit 2168 at ¶ 1. Regardless of whether Mr.
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`Gould-Bear indicated his testimony was applicable to the ‘055 patent, his analysis
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`and opinions were directed to the same patent family. The ‘132-family, and indeed
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`the ‘055 patent, claims, inter alia, bid/ask indicators that move relative to a price
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`axis in response to market changes. See, e.g., Exhibit 1001, 9:12-16.
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`For example, Mr. Gould-Bear states “the TT Patents’ claims are directed to
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`technologies that provide technical solutions to technical problems. Specifically,
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`they are each directed to the construction, makeup, and functionality of a GUI.”
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`Exhibit 2168 at ¶ 48. This statement is equally applicable to the ‘055 patent
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`because the ‘055 patent is likewise directed to the construction, makeup, and
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`functionality of a GUI and shares common elements with the ‘132 patent analyzed
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`by Mr. Gould-Bear. Thus, Mr. Gould-Bear’s testimony regarding the claims of
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`‘132 patent and other TT patents are directly relevant to this proceeding.
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`B.
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`The Abilock Declarations (Exhibits 2334 and 2339)
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`These exhibits are offered for the relevant purpose of explaining the
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`meaning of particular elements of TSE solely when translated from Japanese to
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`English. This is highly relevant given that Petitioners are relying on a 1998 manual
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`originally written in Japanese. Petitioners’ use flawed logic to object to the use of
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`Mr. Abilock’s testimony, relying on the fact that Mr. Abilock was not testifying
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`from a POSITA’s perspective. This is irrelevant. Mr. Abilock’s testimony was
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`directed to identifying and clarifying ambiguous portions of TSE when translated
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`from Japanese to English. Paper 32 at 61-63, 68, 78. Mr. Abilock’s identification
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`of these ambiguities is relevant to a § 103 analysis because if underlying portions
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`of TSE are ambiguous when translated, then a POSITA would not have relied on
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`TSE.
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`Further, while Mr. Abilock wasn’t testifying to the understanding of a
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`POSITA, he was testifying as to the basic meaning of certain portions of TSE. TT
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`relied on Mr. Abilock’s testimony to determine the meaning of certain elements of
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`TSE. See, e.g., Paper 32 at 62 (“As such, the number of price levels of the
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`compressed mode is the same as the number of price levels of the uncompressed
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`mode”). The number of price levels is relevant to the obviousness determination.
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`Additionally, Mr. Thomas relied on Mr. Abilock’s declaration to opine on
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`what a POSITA would have understood by reading TSE. See, e.g., Exhibit 2169 at
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`¶ 100 (“Mr. Abilock examined the English version of the TSE document and its
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`underlying Japanese source text and concluded that in TSE, the number of
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`locations for displaying price values does not change between the compressed
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`mode and uncompressed mode, even though the number of prices displayed may
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`differ between the two modes.”). The Abilock testimony is an important part of
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`Mr. Thomas’ testimony.
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`Thus, Mr. Abilock’s declaration is relevant and the Board should consider it.
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`At most, Petitioners’ arguments relate to the appropriate weight to assign the
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`evidence, not its admissibility. See Section IV.C.
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`VI. COURT DOCUMENTS ARE ADMISSIBLE (EXHIBITS 2030 and
`2032)
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`These exhibits are offered for the relevant purpose of showing how another
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`party and a jury reacted to the evidence in these proceedings. See, e.g., Paper 11 at
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`71. Specifically, TT offered Exhibits 2030 and 2032 for the purpose of
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`disqualifying TSE as prior art. Petitioners’ state the evidence is irrelevant because
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`it relates to a different proceeding and to a patent with a different priority date.
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`Paper 49 at 3-4. These arguments carry no weight because whether the evidence
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`was from a different proceeding or in relation to a different patent is irrelevant
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`when determining whether TSE qualifies as prior art. TSE’s prior art status doesn’t
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`depend on what it is asserted against or where it is asserted. Thus, Exhibits 2030
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`and 2032 are relevant to this proceeding.
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`Further, Exhibits 2030 and 2032 are not hearsay because they are not offered
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`for the truth of the matter asserted and because they qualify as public records under
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`Fed. R. Evid. 803(8). They were prepared by a jury and court, authorized by law,
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`and recorded in the public office of the U.S. Court for the Northern District of
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`Illinois. Thus, they are admissible under Fed. R. Evid. 803(8).
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`VII. CONCLUSION
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`For these reasons, the Board should deny Petitioners’ motion to exclude.
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`While the Board should consider TT’s evidence directly, at a minimum, it was
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`proper for TT’s expert to rely on the evidence, so it must remain in the record.
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`Dated: December 20, 2016
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`By:
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`/Jennifer M. Kurcz/
`Jennifer M. Kurcz,
`Back-Up Counsel
`Reg. No 54,481
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`CERTIFICATE OF SERVICE
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`CBM2016-00009
`Patent No. 7,685,055
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`The undersigned hereby certifies that a copy of the foregoing PATENT
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`OWNER’S OPPOSITION TO PETITIONERS’ MOTION TO EXCLUDE
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`was served on December 20, 2016, via email directed to counsel of record for the
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`Petitioners at the following:
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`Robert E. Sokohl
`rsokohl-PTAB@skgf.com
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`Lori A. Gordon
`lgordon-PTAB@skgf.com
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`Richard M. Bemben
`rbemben-PTAB@skgf.com
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`PTAB@skgf.com
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`
`
`
`
`
`/Cole B. Richter/
`Cole B. Richter, Back-Up Counsel
`Reg. No. 65,398
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`Dated: December 20, 2016
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`By:
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`14