`
`United States Court of Appeals
`for the Federal Circuit
`______________________
`
`TRADING TECHNOLOGIES INTERNATIONAL,
`INC.,
`Plaintiff-Appellee
`
`v.
`
`CQG, INC., CQG, LLC, FKA CQGT, LLC,
`Defendants-Appellants
`______________________
`
`2016-1616
`______________________
`
`Appeal from the United States District Court for the
`Northern District of Illinois in No. 1:05-cv-04811, Judge
`Sharon Johnson Coleman.
`______________________
`
`Decided: January 18, 2017
`______________________
`
`
`ERIKA ARNER, Finnegan, Henderson, Farabow, Gar-
`rett & Dunner, LLP, Reston, VA, argued for plaintiff-
`appellee. Also represented by CORY C. BELL, Finnegan,
`Henderson, Farabow, Garrett & Dunner, LLP, Boston,
`MA; LEIF R. SIGMOND, JR., MICHAEL DAVID GANNON,
`JENNIFER KURCZ, COLE BRADLEY RICHTER, McDonnell,
`Boehnen, Hulbert & Berghoff, LLP, Chicago, IL; STEVEN
`BORSAND, Trading Technologies International, Inc.,
`Chicago, IL.
`
`TS 1042
`TRADESTATION v. TRADING TECHNOLOGIES
`CBM2016-00051
`
`1
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`2
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`TRADING TECHS. INT’L, INC. v. CQG, INC.
`
`
`JOHN C. O'QUINN, Kirkland & Ellis LLP, Washington,
`DC, argued for defendants-appellants. Also represented
`by KENNETH R. ADAMO, EUGENE GORYUNOV, MEREDITH
`ZINANNI, Kirkland & Ellis LLP, Chicago, IL; JOHN A.
`COTIGUALA, ADAM GLENN KELLY, WILLIAM JOSHUA VOLLER
`III, Loeb & Loeb LLP, Chicago, IL.
`
`ANDREW BALUCH, Strain PLLC, Washington, DC, for
`amici curiae Gregory Dolin, Richard A. Epstein, Christo-
`pher Frerking, Irina D. Manta, Adam Mossoff, Kristen J.
`Osenga, Michael Risch, Mark F. Schultz, Ted M. Sichel-
`man, David O. Taylor. Also represented by STEPHEN G.
`NAGY, Strain PLLC, Washington, DC.
`______________________
`
`Before NEWMAN, O’MALLEY, and WALLACH, Circuit
`Judges.
`
`NEWMAN, Circuit Judge.
`The CQG companies appeal the decision of the United
`States District Court for the Northern District of Illinois,
`holding that the asserted claims of U.S. Patents No.
`6,772,132 (“the ’132 patent”) and No. 6,766,304 (“the ’304
`patent”) recite patent-eligible subject matter in terms of
`35 U.S.C. § 101. This appeal relates only to eligibility
`under Section 101. We affirm the district court’s decision.
`DISCUSSION
`Patent owner Trading Technologies International,
`Inc. (“TTI”) charged CQG with infringement of the ’132
`patent and the ’304 patent. CGQ moved for judgment as
`a matter of law, asserting that the claims of these patents
`are directed to patent-ineligible subject matter. The
`district court denied CGQ’s motion, holding that the
`claims are not directed to an abstract idea and also that
`they recite an inventive concept, such that the subject
`matter is patent-eligible under § 101. Trading Techs.
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`2
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`TRADING TECHS. INT’L, INC. v. CQG, INC.
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`3
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`Int’l, Inc. v. CQG, Inc., No. 05-cv-4811, 2015 WL 774655
`(N.D. Ill. Feb. 24, 2015) (“Dist. Ct. op.”). CGQ appeals
`this holding.
`The ’132 and ’304 patents describe and claim a meth-
`od and system for the electronic trading of stocks, bonds,
`futures, options and similar products. The patents ex-
`plain problems that arise when a trader attempts to enter
`an order at a particular price, but misses the price be-
`cause the market moved before the order was entered and
`executed. It also sometimes occurred that trades were
`executed at different prices than intended, due to rapid
`market movement. This is the problem to which these
`patents are directed.
`The patents are for “[a] method and system for reduc-
`ing the time it takes for a trader to place a trade when
`electronically trading on an exchange, thus increasing the
`likelihood that the trader will have orders filled at desira-
`ble prices and quantities.” ’132 patent, Abstract; ’304
`patent, Abstract. The patents describe a trading system
`in which a graphical user interface “display[s] the market
`depth of a commodity traded in a market,[1] including a
`dynamic display for a plurality of bids and for a plurality
`of asks in the market for the commodity and a static
`display of prices corresponding to the plurality of bids and
`asks.” ’132 patent col. 3, ll. 11–16; ’304 patent col. 3, ll.
`15–20. In the patented system bid and asked prices are
`displayed dynamically along the static display, and the
`system pairs orders with the static display of prices and
`prevents order entry at a changed price.
`Both the ’132 and the ’304 patents have the same
`specification, and the district court treated claim 1 in each
`
`
`“A commodity’s market depth is the current bid
`1
`and ask prices and quantities in the market.” ’132 patent
`col. 3, ll. 69–61; ’304 patent col. 3, ll. 63–65.
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`TRADING TECHS. INT’L, INC. v. CQG, INC.
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`patent as representative, as agreed by the parties. We
`illustrate the analysis of § 101 with respect to method
`Claim 1 of the ’304 patent:
`1. A method for displaying market information re-
`lating to and facilitating trading of a commodity
`being traded in an electronic exchange having an
`inside market with a highest bid price and a low-
`est ask price on a graphical user interface, the
`method comprising;
`dynamically displaying a first indicator in one of a
`plurality of locations in a bid display region, each
`location in the bid display region corresponding to
`a price level along a common static price axis, the
`first indicator representing quantity associated
`with at least one order to buy the commodity at
`the highest bid price currently available in the
`market;
`dynamically displaying a second indicator in one
`of a plurality of locations in an ask display region,
`each location in the ask display region correspond-
`ing to a price level along the common static price
`axis, the second indicator representing quantity
`associated with at least one order to sell the com-
`modity at the lowest ask price currently available
`in the market;
`displaying the bid and ask display regions in rela-
`tion to fixed price levels positioned along the
`common static price axis such that when the in-
`side market changes, the price levels along the
`common static price axis do not move and at least
`one of the first and second indicators moves in the
`bid or ask display regions relative to the common
`static price axis;
`displaying an order entry region comprising a plu-
`rality of locations for receiving commands to send
`
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`TRADING TECHS. INT’L, INC. v. CQG, INC.
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`trade orders, each location corresponding to a
`price level along the common static price axis; and
`in response to a selection of a particular location
`of the order entry region by a single action of a
`user input device, setting a plurality of parame-
`ters for a trade order relating to the commodity
`and sending the trade order to the electronic ex-
`change.
`’304 patent col. 12, l. 36–col. 13, l. 3. The ’132 claims are
`directed to similar subject matter covering a method and
`system.
`The Court’s opinion in Alice Corporation Pty. Ltd. v.
`CLS Bank International, 134 S.Ct. 2347 (2014), provides
`the framework for patent-eligibility of business methods.
`The Court explained that a patent’s
`claim falls outside § 101 where (1) it is “directed
`to” a patent-ineligible concept, i.e., a law of na-
`ture, natural phenomenon, or abstract idea, and
`(2), if so, the particular elements of the claim, con-
`sidered “both individually and ‘as an ordered com-
`bination,’” do not add enough to “‘transform the
`nature of the claim’ into a patent-eligible applica-
`tion.”
`Id. at 2355 (citations omitted). Patent eligibility under
`§ 101 is an issue of law, and receives de novo determina-
`tion on appeal.2
`
`
`2 The parties dispute whether the district court
`erred in requiring proof of ineligibility under § 101 by
`clear and convincing evidence. Because our review is de
`novo, and because under either standard the legal re-
`quirements for patentability are satisfied, we need not
`address this dispute.
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`TRADING TECHS. INT’L, INC. v. CQG, INC.
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`The district court first applied Step 1 of this two-step
`framework. The court held that, rather than reciting “a
`mathematical algorithm,” “a fundamental economic or
`longstanding commercial practice,” or “a challenge in
`business,” the challenged patents “solve problems of prior
`graphical user interface devices . . . in the context of
`computerized trading[] relating to speed, accuracy and
`usability.” Dist. Ct. op. at *4 (citations omitted). The
`court found that these patents are directed to improve-
`ments in existing graphical user interface devices that
`have no “pre-electronic trading analog,” and recite more
`than “‘setting, displaying, and selecting’ data or infor-
`mation that is visible on the [graphical user interface]
`device.” Id.
`The district court explained that the challenged pa-
`tents do not simply claim displaying information on a
`graphical user interface. The claims require a specific,
`structured graphical user interface paired with a pre-
`scribed functionality directly related to the graphical user
`interface’s structure that is addressed to and resolves a
`specifically identified problem in the prior state of the art.
`The district court concluded that the patented subject
`matter meets the eligibility standards of Alice Step 1. We
`agree with this conclusion, for all of the reasons articulat-
`ed by the district court, including that the graphical user
`interface system of these two patents is not an idea that
`has long existed, the threshold criterion of an abstract
`idea and ineligible concept, as the court explained in
`Mayo Collaborative Services v. Prometheus Laboratories,
`Inc., 566 U.S. 66, 73 (2012) (the patent must “amount to
`significantly more in practice than a patent upon the
`[ineligible concept itself]”).
`The district court alternatively continued the analysis
`under Alice Step 2, and determined that the challenged
`claims recite an “inventive concept.” The court observed
`that Step 2 “requires something different than pre-AIA §§
`102 and 103.” Dist. Ct. op. at 8. The court identified the
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`TRADING TECHS. INT’L, INC. v. CQG, INC.
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`static price index as an inventive concept that allows
`traders to more efficiently and accurately place trades
`using this electronic trading system. The court distin-
`guished this system from the routine or conventional use
`of computers or the Internet, and concluded that the
`specific structure and concordant functionality of the
`graphical user interface are removed from abstract ideas,
`as compared to conventional computer implementations of
`known procedures. Thus the court held that the criteria
`of Alice Step 2 were also met.
`The district court’s rulings are in accord with prece-
`dent. Precedent has recognized that specific technologic
`modifications to solve a problem or improve the function-
`ing of a known system generally produce patent-eligible
`subject matter. In DDR Holdings, LLC v. Hotels.com,
`L.P., 773 F.3d 1245 (Fed. Cir. 2014), the court upheld the
`patent eligibility of claims “necessarily rooted in computer
`technology” that “overcome a problem specifically arising
`in the realm of computer networks.” Id. at 1257. Similar-
`ly, “claimed process[es] us[ing] a combined order of specif-
`ic rules” that improved on existing technological processes
`were deemed patent-eligible in McRO, Inc. v. Bandai
`Namco Games America Inc., 837 F.3d 1299, 1315 (Fed.
`Cir. 2016). Claims that were “directed to a specific im-
`provement to the way computers operate, embodied in [a]
`self-referential table,” were deemed eligible in Enfish,
`LLC v. Microsoft Corp., 822 F.3d 1327, 1334 (Fed. Cir.
`2016).
`Illustrating the operation of this principle to facts that
`negated patent eligibility, claims “drawn to the idea itself”
`of “out-of-region broadcasting on a cellular telephone,”
`without
`implementing programmatic structure, were
`deemed ineligible in Affinity Labs of Tex. v. DIRECTV,
`LLC, 838 F.3d 1253, 1258 (Fed. Cir. 2016). Similarly,
`claims directed to the “idea of generating a second menu
`from a first menu and sending the second menu to anoth-
`er location” were held patent-ineligible in Apple, Inc. v.
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`TRADING TECHS. INT’L, INC. v. CQG, INC.
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`Ameranth, Inc., 842 F.3d 1229 (Fed. Cir. 2016). Claims
`directed to the “process of gathering and analyzing infor-
`mation of a specified content, then displaying the results,”
`without “any particular assertedly inventive technology
`for performing those functions,” were held ineligible in
`Electric Power Grp., LLC v. Alstom S.A., 830 F.3d 1350,
`1354 (Fed. Cir. 2016). As these cases illustrate, ineligible
`claims generally lack steps or limitations specific to
`solution of a problem, or improvement in the functioning
`of technology.
`For some computer-implemented methods, software
`may be essential to conduct the contemplated improve-
`ments. Enfish, 822 F.3d at 1339 (“Much of the advance-
`ment made
`in
`computer
`technology
`consists of
`improvements to software that, by their very nature, may
`not be defined by particular physical features but rather
`by logical structures and processes.”). Abstraction is
`avoided or overcome when a proposed new application or
`computer-implemented function is not simply the general-
`ized use of a computer as a tool to conduct a known or
`obvious process, but instead is an improvement to the
`capability of the system as a whole. Id. at 1336.
`We reiterate the Court’s recognition that “at some
`level, all inventions . . . embody, use, reflect, rest upon, or
`apply laws of nature, natural phenomena, or abstract
`ideas.” Alice, 134 S. Ct. at 2354, quoting Mayo 566 U.S.
`at 71. This threshold level of eligibility is often usefully
`explored by way of the substantive statutory criteria of
`patentability, for an invention that is new, useful and
`unobvious is more readily distinguished from the general-
`ized knowledge that characterizes
`ineligible subject
`matter. This analysis is facilitated by the Court’s guid-
`ance whereby the claims are viewed in accordance with
`“the general rule that patent claims ‘must be considered
`as a whole’.” Alice, 134 S. Ct. at 2355 n.3, quoting Dia-
`mond v. Diehr, 450 U.S. 175, 188 (1981).
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`TRADING TECHS. INT’L, INC. v. CQG, INC.
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`9
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`As demonstrated in recent jurisprudence directed to
`eligibility, and as illustrated in the cases cited ante, the
`claim elements are considered in combination for evalua-
`tion under Alice Step 1, and then individually when Alice
`Step 2 is reached. See BASCOM Global Internet Services
`v. AT&T Mobility LLC, 827 F.3d 1341 (Fed. Cir. 2016).
`Applying an overview of this evolving jurisprudence, the
`public interest in innovative advance is best served when
`close questions of eligibility are considered along with the
`understanding flowing from review of the patentability
`criteria of novelty, unobviousness, and enablement, for
`when these classical criteria are evaluated, the issue of
`subject matter eligibility is placed in the context of the
`patent-based incentive to technologic progress.
`CONCLUSION
`It is not disputed that the TTI System improves the
`accuracy of trader transactions, utilizing a software-
`implemented programmatic met. For Section 101 purpos-
`es, precedent does not consider the substantive criteria of
`patentability. For Section 101 purposes, the claimed
`subject matter is “directed to a specific improvement to
`the way computers operate,” id., for the claimed graphical
`user interface method imparts a specific functionality to a
`trading system “directed to a specific implementation of a
`solution to a problem in the software arts.” Id. at 1339.
`The district court’s analysis and conclusions conform
`to precedent. The decision that the subject matter
`claimed in the ’132 and ’304 patents is patent-eligible in
`terms of Section 101 is affirmed. No other statutory
`criteria of patentability are before us on this appeal, and
`we state no opinion thereon.
`AFFIRMED
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