`
`
`TRADING TECHNOLOGIES
`INTERNATIONAL, INC.,
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE NORTHERN DISTRICT OF ILLINOIS
`EASTERN DIVISION
`)
`
`)
`No. 10 C 715 (Consolidated with:
`)
`10 C 716, 10 C 718, 10 C 720,
`)
`10 C 721, 10 C 726, 10 C 882,
`)
`10 C 883, 10 C 884, 10 C 885,
`)
`10 C 929, 10 C 931)
`)
`
`)
` Judge Virginia M. Kendall
`)
`)
`)
`)
`
`
`
`
`
` Plaintiff,
` v.
`
`BCG PARTNERS, INC,
`
` Defendant.
`
`
`
`
`
`MEMORANDUM OPINION AND ORDER
`
`In early 2010, Plaintiff Trading Technologies International, Inc. (“TT”) filed a number of
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`cases in this District alleging infringement of various patents concerning electronic trading
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`software used on electronic commodity exchanges. The Court consolidated these cases in 2011.
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`See Dkt. No. 73. After a number of amended pleadings, early summary judgment practice, and
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`an appeal to the Federal Circuit, Defendants TD Ameritrade, IBG LLC, and TradeStation1
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`(collectively, the “Moving Defendants”) filed motions seeking a stay of this case pursuant to
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`Section 18(b) of the America Invents Act (“AIA”) pending the United States Patent and
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`Trademark Office’s (“PTO”) review of a number of the asserted patents. See Dkt. Nos. 545, 549,
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`and 558. For the following reasons, the Court grants the motions to stay. The consolidated cases
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`are stayed in their entirety.
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`BACKGROUND
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`
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`The instant motions stem from five petitions filed by TD Ameritrade on May 19 and 20,
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`2014 with the PTO seeking review under the transitional program for covered business method
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`1 Defendants Sungard and CQG filed position statements stating that they did not oppose the motion to stay. See
`Dkt. Nos. 548 and 553. No defendant has objected to a stay being entered.
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`
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`Page 1 of 11
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`TRADING TECH EXHIBIT 2113
`IBG ET AL. v. TRADING TECH
`CBM2016-00032
`
`
`
`Case: 1:10-cv-00715 Document #: 583 Filed: 03/25/15 Page 2 of 11 PageID #:26073
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`patents (“CBM review”) of U.S. Patent Nos. 7,533,056 (“the ‘056 Patent”); 7,685,055 (“the ‘055
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`Patent”); 6,772,132 (“the ‘132 patent”); 7,676,411 (“the ‘411 Patent”); and 6,766,304 (“the ‘304
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`Patent”) (collectively, the “CBM Patents”). TD Ameritrade challenged the patentability of all of
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`the claims within the CBM Patents, arguing, among other things, that they are patent ineligible
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`under 35 U.S.C. § 101. On December 2, 2014, the PTO determined that the petitions for (1) the
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`‘056 Patent, (2) the ‘055 Patent, (3) the ‘132 Patent, and (4) the ‘411 Patent demonstrate that it is
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`more likely than not that all of the challenged claims are patent ineligible under 35 U.S.C. § 101
`
`and therefore instituted CBM review of the 118 challenged claims.2 The PTO declined to
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`institute CBM review of the claims within the ‘304 Patent. CQG filed a petition with the PTO for
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`CBM review of the ‘132 and ‘204 Patents on January 9, 2015.
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`LEGAL STANDARD
`
`
`
`Section 18 of the AIA provides for the establishment of transitional post-grant review
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`proceedings to reexamine the validity of covered business method patents. Leahy-Smith America
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`Invents Act, Pub. L. No. 112-29, § 18, 125 Stat. 284 (Sept. 16, 2011). The AIA also establishes
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`protocol with respect to related patent infringement actions and authorizes the district courts to
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`stay such parallel litigation under certain circumstances. Specifically, § 18(b)(1) states:
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`If a party seeks a stay of a civil action alleging infringement of a
`patent under section 281 of title 35, United States Code, relating to
`a transitional proceeding for that patent, the court shall decide
`whether to enter a stay based on--
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`(A) whether a stay, or the denial thereof, will simplify the
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`issues in question and streamline the trial;
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`(B) whether discovery is complete and whether a trial date
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`has been set;
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`(C) whether a stay, or the denial thereof, would unduly
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`prejudice the nonmoving party or present a clear tactical
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`advantage for the moving party; and
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`2 The PTO additionally concluded that it is more likely than not that all of the claims of the ‘056 Patent and all but
`one of the claims of the ‘055 Patent are unpatentable under 35 U.S.C. § 103.
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`Page 2 of 11
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`Case: 1:10-cv-00715 Document #: 583 Filed: 03/25/15 Page 3 of 11 PageID #:26074
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`
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`Id. The statutory test thus closely resembles the stay analysis courts have applied in assessing a
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`(D) whether a stay, or the denial thereof, will reduce the
`burden of litigation on the parties and on the court.
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`motion to stay pending inter partes or ex part reexamination by the PTO. See, e.g., Genzyme
`
`Corp. v. Cobrek Pharm., Inc., No. 10 CV 00112, 2011 WL 686807, at *1 (N.D. Ill. Feb. 17,
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`2011) (applying three-factor stay test that considers “whether a stay will (1) unduly prejudice or
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`tactically disadvantage the non-moving party, (2) simplify the issues in questions and streamline
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`the trial, and (3) reduce the burden of litigation on the parties and on the court”); JAB Distribs.,
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`LLC v. London Luxury, LLC, No. 09 C 5831, 2010 WL 1882010, at *1 (N.D. Ill. May 11, 2010).
`
`
`
`The AIA’s inclusion of the fourth factor was included, in part, to favor the granting of
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`stays. See, e.g., Segin Sys., Inc. v. Stewart Title Guar. Co., 30 F. Supp. 3d 476, 480 (E.D. Va.
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`2014) (fourth factor “designed to place a thumb on the scales in favor of a stay”); Market-Alerts
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`Pty. Ltd. v. Bloomberg Fin. L.P., 922 F. Supp. 2d 486, 489-90 (D. Del. 2013) (fourth factor
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`included “to ease the movant’s task of demonstrating the need for a stay”). Congress signed the
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`AIA into law on September 16, 2011, and CBM review came into effect in September 2012.
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`DISCUSSION
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`
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`The Moving Defendants seek a stay of the litigation brought against them, arguing that
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`the PTO’s decision on the CBM patents will thoroughly streamline the future litigation and affect
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`the other asserted patents due to similar claim terms, inventors, and prior art shared amongst the
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`patents. TT opposes the motion, primarily contending that because the PTO instituted review on
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`only four of the fifteen patents in issue, any simplification is minimal and a stay is therefore
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`unwarranted. But because the PTO instituted CBM review on 118 of the approximately 400
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`claims at issue in this litigation and PTO reasoning and determinations will necessarily affect
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`how the Court views the remaining claims, the Court concludes that a stay of the consolidated
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`Page 3 of 11
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`
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`Case: 1:10-cv-00715 Document #: 583 Filed: 03/25/15 Page 4 of 11 PageID #:26075
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`cases is most efficient for the parties, best conserves judicial resources, and avoids piecemeal
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`litigation. The Court’s decision is bolstered by the fact that at least one of the CBM Patents is
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`asserted against each remaining defendant to this litigation. Here, the factors of the AIA test
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`weigh in favor of a stay.
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`
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`
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`A.
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`Simplification of the Issues
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`Section 18(b)(1)(A) instructs the Court to consider “whether a stay, or the denial thereof,
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`will simplify the issues in question and streamline the trial.” Pub. L. No. 112-29, § 18(b)(1)(A).
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`As courts in this district have previously noted, staying a patent infringement case pending
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`administrative review of the asserted patents’ validity can simplify litigation in several ways:
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`1. All prior art presented to the Court will have been first
`considered by an expert PTO examiner;
`2. The reexamination may alleviate discovery problems relating to
`the prior art;
`3. The suit will likely be dismissed if the reexamination results in
`effective invalidity of the patent;
`4. The outcome of the reexamination may encourage settlement;
`5. The record of the reexamination would likely be entered at trial
`and thus reduce the complexity and length of the litigation;
`6. The reexamination will facilitate limitation of issues, defenses,
`and evidence in pre-trial conferences;
`7. Litigation costs to the parties and the Court will likely be
`reduced.
`
`Genzyme, 2011 WL 686807, at 3-4 (quoting Emhart Indus., Inc. v. Sankyo Seiki Mfg. Co., Ltd.,
`
`No. 85 C 7565, 1987 WL 6314, at 2 (N.D. Ill. Feb. 2, 1987); see also, e.g., Tap Pharm. Prods.,
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`Inc. v. Atrix Labs., Inc., No. 03 C 7822, 2004 WL 422697, at *1 (N.D. Ill. Mar. 3, 2004) (stay
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`warranted because “[t]here is a significant chance that the PTO will either invalidate this patent
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`or drastically decrease its scope [due to reexamination] . . . [creating] a very real possibility that
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`the parties will waste their resources litigating over issues that will ultimately be rendered moot
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`by the PTO’s findings”).
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`Page 4 of 11
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`Case: 1:10-cv-00715 Document #: 583 Filed: 03/25/15 Page 5 of 11 PageID #:26076
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`
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`These benefits exist even if only some of the litigated claims are undergoing CBM
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`review. See Versata Software, Inc. v. Callidus Software, Inc., 771 F.3d 1368, 1371-72 (Fed. Cir.
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`2014) (although the simplification factor “weighs more strongly in favor of stay when all of the
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`litigated claims” are being reviewed, “stays can be warranted even when a CBM proceeding does
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`not address all asserted patents, claims, or invalidity defenses”), vacated, No. 2014-15683; see
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`also Versata Software, Inc. v. Dorado Software, Inc., No. 2:13-cv-00920-MCE-DAD, 2014 WL
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`1330652, at *3 n.2 (E.D. Cal. Mar. 27, 2014) (staying case where CBM review granted for only
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`one of three asserted patents and for less than all claims); Destination Maternity Corp. v. Target
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`Corp., 12 F. Supp. 3d 762, 769 (E.D. Pa. 2014) (“courts have found significant potential for issue
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`simplification even in cases where some but not all of the asserted claims are subject to PTO
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`review”); Genzyme, 2011 WL 686807, at *3 (stay warranted even though “certain issues may
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`remain in dispute even upon conclusion of the reexamination proceedings”). In this case, the
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`PTO expressly determined that all of the claims in the ‘056 Patent, the ‘055 Patent, the ‘132
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`Patent, and the ‘411 Patent are more likely than not unpatentable. See Dkt. No. 572 Exs. A-D.
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`The PTO further determined that the claims within the ‘056 and ‘055 Patents are more likely
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`than not unpatentable on two separate, alternative grounds. See VirtualAgility Inc. v.
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`Salesforce.com, Inc., 759 F.3d 1307, 1314 (Fed. Cir. 2014) (evidence in the record weighed
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`“heavily in favor of a stay” in part because the PTO determined that all of the challenged claims
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`were more likely than not unpatentable on two grounds). Because the CBM review could dispose
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`entirely of four of the asserted patents and 118 of the asserted claims, this factor weighs in favor
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`of a stay.
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`3 The Federal Circuit vacated its opinion on February 27, 2015, after recognizing that the original opinion was
`issued one day after the parties filed a joint request to dismiss the appeal. The vacate order did not disavow the
`reasoning of the original opinion. While the Court is aware that the vacated opinion is not binding, the Court finds
`its reasoning persuasive nonetheless.
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`Page 5 of 11
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`Case: 1:10-cv-00715 Document #: 583 Filed: 03/25/15 Page 6 of 11 PageID #:26077
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`
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`Additionally, CBM review of the four CBM patents will undoubtedly shape future claim
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`construction and litigation with respect to the other asserted patents. TT argues at length that the
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`Court should deny the stay because eleven patents, regardless of the CBM review, will remain at
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`issue. TT’s position fails to recognize that even though some issues and claims will remain after
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`CBM review, the cancellation of any claim “could significantly alter this action by clarifying and
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`narrowing the claims and defenses available” to the parties here. Dorado, 2014 WL 1330652, at
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`*2. The fact that the PTO is reviewing only a subset of the asserted patents, while lessening the
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`potential simplification of the issues, does not eliminate the benefit of a stay in order to avoid
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`duplicitous litigation on potentially moot claims and issues. See VirtualAgility, 759 F.3d at 1314
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`(disposing of the entire litigation is “the ultimate simplification of issues”). Moreover, TD
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`Ameritrade points out, and TT does not dispute, that a majority of the non-CBM Patents share
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`several common claim terms with the four CBM Patents. See Dkt. No. 561 at 8. Accordingly, the
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`PTO’s decisions will likely provide guidance on a number of the issues concerning the non-CBM
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`Patents. See, e.g., Old Reliable Wholesale, Inc. v. Cornell Corp., 635 F.3d 539, 548 (Fed. Cir.
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`2011) (“PTO has acknowledged expertise in evaluating prior art and assessing patent validity”);
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`SenoRx, Inc. v. Hologic, Inc., No. 12-173-LPS-CJB, 2013 WL 144255, at *4 (D. Del. Jan. 11,
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`2013) (courts benefit from the PTO’s analysis of prior art that is later presented in litigation
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`regardless of the outcome of the review).
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`
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`Finally, the Court does not find that the non-petitioning defendants’ refusal to consent to
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`be estopped from raising arguments offered during CBM review eliminates the simplification of
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`the issues. A reading of the AIA leads to the conclusion that Congress explicitly chose to estop
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`petitioners of CBM review while allowing any party to a case to seek a stay pending CBM
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`review. See Pub. L. No. 112-29, §§ 6(e)(1), 18(b)(1). Moreover, a review of the Senate’s hearing
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`Page 6 of 11
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`Case: 1:10-cv-00715 Document #: 583 Filed: 03/25/15 Page 7 of 11 PageID #:26078
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`on the AIA confirms that whether or not a party to a patent proceeding agrees to be estopped
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`from raising a co-defendant’s arguments is irrelevant to the stay analysis. See 157 Cong. Rec.
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`S1360, 2011 WL 797877 (daily ed. Mar. 8, 2011) (statement of Sen. Schumer) (“By codifying
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`the exclusive set of factors that courts are to consider when granting stays, the [AIA] precludes
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`courts from inventing new factors such as extra-statutory estoppel tests.”).
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`
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`Because the PTO instituted review on all of the claims in four asserted patents, “there
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`will . . . be [at least] some amount of simplification for the court and the parties.” Cf. Moneycat
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`Ltd. v. Paypal Inc., No. 14 CV 02490 JST, 2014 WL 5689844, at *3 (N.D. Cal. Nov. 4, 2014). A
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`stay here could eliminate the need to litigate 118 of TT’s claims and prevent the parties from
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`litigating any defenses that may ultimately be mooted or significantly altered by a PTO decision.
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`Therefore, the first factor weighs in favor of a stay.
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`
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`B.
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`Stage of Litigation
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`This factor weighs heavily in favor of staying the consolidated cases. “Staying a case at
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`an early juncture ‘can be said to advance judicial efficiency and maximize the likelihood that
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`neither the Court nor the parties expend their assets addressing invalid claims.’ ” Trading Techs.,
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`Inc. v. CQG, Inc., No. 05 CV 4811, 2015 WL 161639, at *2 (N.D. Ill. Jan. 13, 2015) (quoting
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`Market-Alerts, 922 F. Supp. 2d at 494). Although the consolidated cases were filed over four
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`years ago, the parties have not engaged in any discovery beyond, at the most, initial disclosures
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`between TT and some of the defendants.4 The Court ruled on a number of summary judgment
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`motions early in the proceedings, but these motions were brought before discovery began and the
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`case stagnated while the Federal Circuit considered an appeal. Since the Federal Circuit’s
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`mandate issued on December 4, 2013, the parties have exchanged no discovery and no schedule
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`4 TT asserts that it has exchanged initial disclosures with four of the defendants to date. TD Ameritrade disputes this
`characterization, arguing that there has been no discovery whatsoever in any of the consolidated cases since TT
`expanded its infringement claims. Either way, the discovery in the consolidated cases is in its infancy.
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`Page 7 of 11
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`Case: 1:10-cv-00715 Document #: 583 Filed: 03/25/15 Page 8 of 11 PageID #:26079
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`has been set. Because the consolidated cases, despite their age, have not progressed with
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`discovery nor begun claim construction, this factor strongly favors staying the cases. Compare
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`VirtualAgility, 759 F.3d at 1317 (stage of litigation factor favored stay where “discovery had not
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`yet begun and no trial date had been set”); Dorado, 2014 WL 1330652, at *3 (factor supported
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`stay because court had not entered a scheduling order and the parties had only exchanged initial
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`disclosures); and Norred v. Medtronic, Inc., No. 13-2061, 2014 WL 554685, at *2 (D. Kan. Feb.
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`12, 2014) (granting stay where case was “still in its early stages”); with Trading Techs., 2015
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`WL 161639, at *2 (factor weighed strongly against a stay because the case was 73 days from
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`trial, pretrial dates were set, claim construction was complete, and only rebuttal experts were left
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`outstanding). The stage of the litigation therefore strongly supports a stay.
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`C.
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`Undue Prejudice or Tactical Advantage
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`When assessing the third factor in determining whether to grant a stay pending CBM
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`review, courts consider a variety of factors to determine the prejudice to the non-movant,
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`“including the timing of the stay request, the status of review proceedings, and the relationship
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`between the parties.” Trading Techs., 2015 WL 161639, at *3. TD Ameritrade asserts that a stay
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`would not unduly prejudice TT or provide TD Ameritrade with a tactical advantage because it
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`filed its CBM petitions soon after the Federal Circuit’s mandate came down and there is no
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`evidence in the record of dilatory motive. TT argues primarily that it would be unduly prejudiced
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`by a stay because TD Ameritrade is a direct competitor and TD Ameritrade improperly waited to
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`submit its CBM petitions to the PTO. Because the Court notes that the parties are competitors,
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`but TT never sought preliminary injunctive relief and there is no evidence that TD Ameritrade
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`submitted its petitions when it did only to delay, this factor weighs neither for nor against a stay.
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`Page 8 of 11
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`Case: 1:10-cv-00715 Document #: 583 Filed: 03/25/15 Page 9 of 11 PageID #:26080
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`
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`Here, the PTO’s review of the CBM Patents is required to be completed by December
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`2015, so the delay is not extreme. Moreover, the potential for delay, by itself, does not establish
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`undue prejudice. See VirtualAgility, 759 F.3d at 1319; Trading Techs., 2015 WL 161639, at *3;
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`Genzyme, 2011 WL 686807, at *3 (“Any delay that inheres in the reexamination process does
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`not by itself constitute undue prejudice.”). While evidence of a dilatory motive may counsel
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`against a stay, the record does not establish that TD Ameritrade acted maliciously by filing its
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`CBM petitions. TT contends that TD Ameritrade could have pursued CBM review since
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`September 2012, and its failure to do so until May 2014 constitutes gamesmanship. But CBM
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`review became available only after TT appealed this Court’s Order invalidating four of the
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`asserted patents, including the ‘056 and ‘411 Patents. The Federal Circuit resolved the appeal
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`and issued its mandate on December 4, 2013, and TD Ameritrade filed its CBM petitions in May
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`2014. Considering the number of claims at issue, such a length of time was not unreasonable. See
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`VirtualAgility, 759 F.3d at 1319 (noting that defendant filed for CBM review less than four
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`months after infringement action instituted); Zillow, Inc. v. Trulia, Inc., No. C12-1549JLR, 2013
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`WL 5530573, at *7 (W.D. Wash. Oct. 7, 2013) (not unreasonable for party to defer seeking
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`CBM review until motion affecting challenged patents was resolved). TT’s argument that it will
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`suffer prejudice in the event of a stay because of evidentiary loss is similarly unpersuasive. See
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`VirtualAgility, 759 F.3d at 1319 (“It is undoubtedly true . . . that with age and the passage of
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`time, memories may fade and witnesses may become unavailable. Without more, however, these
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`assertions are not sufficient to justify a conclusion of undue prejudice.”).
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`Moreover, TT’s cries of undue prejudice are belied by its approach to this litigation. TT
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`never sought a preliminary injunction and waited more than a year after TD Ameritrade released
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`its accused technology to institute its infringement action. TT’s earlier conduct therefore
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`Page 9 of 11
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`Case: 1:10-cv-00715 Document #: 583 Filed: 03/25/15 Page 10 of 11 PageID #:26081
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`contradicts its contentions that a stay now would cause undue prejudice. See id. at 1319-20
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`(while not dispositive, “patentee’s delays in pursuing suit and seeking preliminary injunctive
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`relief belie its claims that it will be unduly prejudiced by a stay”); see also, e.g., Zillow, 2013
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`WL 5530573, at *6 (“attempts by a patentee to argue undue prejudice are undermined if the
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`patentee has elected not to pursue preliminary injunctive relief”); Ever Win Intern. Corp. v.
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`Radioshack Corp., 902 F. Supp. 2d 503, 511 (D. Del. 2012) (“Plaintiff never sought a
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`preliminary injunction, which suggests that any prejudice to Plaintiff that might result from
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`delaying the ultimate resolution of this dispute is not as severe as it contends.”); BodyMedia, Inc.
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`v. Basis Science, Inc., No. 12–cv–133 (GMS), 2013 WL 2462105, at *1, n. 1 (D. Del. June 06,
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`2013); Hill–Rom Servs., Inc. v. Stryker Corp., No. 1:11–cv–1120–JMS–DKL, 2012 WL
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`5878087, at *2 (S.D. Ind. Nov. 20, 2012) (“[A]ttempts by a patentee to argue undue prejudice are
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`undermined if it has elected not to pursue a preliminary injunction.”); JAB Distribs., 2010 WL
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`1882010, at *4 (“Plaintiff’s claim that it will suffer irreparable harm is undermined by the fact
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`that its complaint . . . does not seek preliminary injunctive relief”). The Court nevertheless notes,
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`however, that TT and TD Ameritrade are competitors and “competition between parties can
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`weigh in favor of finding undue prejudice.” VirtualAgility, 759 F.3d at 1318. This factor
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`therefore weighs neither for nor against a stay.
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`D.
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`Burden of Litigation
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`The Court finds that this factor also favors a stay. If the PTO cancels some or all of the
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`claims in the four CBM Patents, then those claims will no longer be at issue. See Ignite USA,
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`LLC v. Pac. Mkt. Int’l, LLC, No. 14 C 856, 2014 WL 2505166, at *4 (N.D. Ill. May 29, 2014).
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`The PTO may also narrow claims in response to prior art, which may not only affect the CBM
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`Patents, but a majority of the other asserted patents that utilize similar claim terms.
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`Page 10 of 11
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`Case: 1:10-cv-00715 Document #: 583 Filed: 03/25/15 Page 11 of 11 PageID #:26082
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`Without a stay, “simultaneous proceedings present substantial risks that the parties and
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`[C]ourt will expend resources unnecessarily.” Id. The PTO has made the preliminary conclusion
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`that all of the claims in the ‘056, ‘055, ‘132, and ‘411 Patents are more likely than not
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`unpatentable. Without a stay, if the PTO maintains this position, the parties will have engaged in
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`unnecessary litigation of up to 118 asserted claims. Accordingly, the Court concludes that a
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`likely reduced litigation burden also favors a stay of the consolidated cases.
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`CONCLUSION
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`For the reasons stated herein, the Court grants the Moving Defendants’ Motions to Stay
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`and stays the consolidated cases in their entirety.
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`________________________________________
`Virginia M. Kendall
`United States District Court Judge
`Northern District of Illinois
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`Date: 3/25/2015
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`Page 11 of 11