Paper No. ______
`Filed: April 12, 2017
`
`
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`
`
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`
`
`IBG LLC;
`INTERACTIVE BROKERS LLC;
`TRADESTATION GROUP, INC.; and
`TRADESTATION SECURITIES, INC.,
`
`Petitioners,
`
`v.
`
`TRADING TECHNOLOGIES INTERNATIONAL, INC.,
`
`Patent Owner.
`
`
`
`CBM2016-00051
`U.S. Patent 7,904,374
`
`
`
` PATENT OWNER’S OPPOSITION TO PETITIONERS’
`MOTION TO EXCLUDE
`
`
`
`
`Filed: April 12, 2017
`
`
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`
`
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`
`
`IBG LLC;
`INTERACTIVE BROKERS LLC;
`TRADESTATION GROUP, INC.; and
`TRADESTATION SECURITIES, INC.,
`
`Petitioners,
`
`v.
`
`TRADING TECHNOLOGIES INTERNATIONAL, INC.,
`
`Patent Owner.
`
`
`
`CBM2016-00051
`U.S. Patent 7,904,374
`
`
`
` PATENT OWNER’S OPPOSITION TO PETITIONERS’
`MOTION TO EXCLUDE
`
`
`
`
`
`CBM2016-00051
`U.S. Patent 7,904,374
`
`
`TABLE OF CONTENTS
`
`I.
`
`INTRODUCTION ........................................................................................... 1
`
`II.
`
`STANDARD .................................................................................................... 1
`
`III.
`
`eSPEED/CQG TRANSCRIPTS (EXHIBITS 2211, 2220, 2222,
`2287, and 2292-2296) ...................................................................................... 1
`
`IV. TRADER DECLARANTS (EXHIBIT 2223) ................................................. 4
`
`A.
`
`Exhibit 2223 is authentic ....................................................................... 4
`
`B.
`
`Exhibit 2223 is not hearsay ................................................................... 5
`
`V. ANIMATION (EXHIBIT 2214) ..................................................................... 6
`
`VI. THOMAS DECLARATION (EXHIBIT 2169, ¶¶ 71, 79-80,
`83-86, 92-95, 100-102) .................................................................................... 8
`
`A.
`
`The Board Is Equipped to Properly Assess Mr. Thomas’
`Testimony .............................................................................................. 8
`
`B. Mr. Thomas’ Testimony Is Used to Further Appropriate
`Objectives .............................................................................................. 9
`
`C.
`
`D.
`
`The objected-to statements prove the evidence is not
`hearsay .................................................................................................10
`
`Petitioner’s objections go to the weight of the evidence,
`not their admissibility ..........................................................................11
`
`E.
`
`Papers submitted from other proceedings are proper ..........................11
`
`VII. DOCUMENTS PRODUCED IN DISTRICT COURT CASES
`(EXHIBITS 2206-07, 2415-16, 2250, 2279-82) ...........................................11
`
`VIII. CONCLUSION ..............................................................................................13
`
`
`
`i
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`CBM2016-00051
`U.S. Patent 7,904,374
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`I.
`
`INTRODUCTION
`
`37 C.F.R. § 42 governs these proceedings, and it “shall be construed to
`
`secure the just, speedy, and inexpensive resolution of every proceeding.” § 42.1(b).
`
`The “just” requirement mandates that the Board consider all of the evidence
`
`introduced by Patent Owner Trading Technologies International, Inc. (“TT”).
`
`II.
`
`STANDARD
`
`As the movant, Petitioners bear the burden of proving that the challenged
`
`exhibits are inadmissible. Liberty Mutual Insurance Co. v. Progressive Casualty
`
`Insurance Co., CBM2012-00002, Paper 66 at 59 (January 23, 2014); 37 C.F.R. §
`
`42.20(c). Petitioners have failed to meet this burden. As a matter of policy, the
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`Board disfavors excluding evidence; “it is better to have a complete record of the
`
`evidence submitted by the parties than to exclude particular pieces.” Id. at 60-61.
`
`III. eSPEED/CQG TRANSCRIPTS
`(EXHIBITS 2211, 2220, 2222, 2287, and 2292-2296)
`
`Exhibits 2211, 2220, 2287, and 2292–2296 are admissible because they are
`
`sworn deposition testimony from district court cases.
`
`Federal Rule of Evidence 807 provides a “residual exception” to the hearsay
`
`rule. To fall under the exception, a “statement must: (1) have equivalent
`
`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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`1
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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).
`
`The Board’s recent Final Written Decision in Apple Inc. v. VirnetX Inc. is
`
`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
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`evidence “chose not to seek the opportunity to cross examine the declaration
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`testimony,” which the Board had defined to include the district court trial and
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`deposition testimony, the Board explained why the residual exception of Federal
`
`Rule of Evidence 807 rendered the evidence admissible. Id. at 68-70.
`
`Although, in Apple, the Board, cautioned that the residual exception is to be
`
`reserved for “exceptional cases,” Id. at 69 (citing Conoco Inc. v. Dep’t of Energy,
`
`99 F.3d 387, 392 (Fed. Cir. 1996), as amended on rehearing in part (Jan. 2,
`
`1997)), tribunals are often “accorded wide discretion in applying the residual
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`hearsay exception.” Id. (citing Doe v. United States, 976 F.2d 1071, 1076–77 (7th
`
`Cir. 1992), cert. denied 510 U.S. 812 (1993); United States v. North, 910 F.2d 843,
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`909 (D.C. Cir. 1990) 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 Apple, IPR2015-00811,
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`Paper 44 at 69-70. “The vast majority of testimony in inter partes reviews is
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`admitted in paper form, as a declaration, instead of as live witness testimony.
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`Thus, whether or not testimony is specifically created for a specific IPR or is
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`created for another proceeding, if the declaration is sworn testimony and the
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`witness is available for cross-examination, the testimony bears the same guarantees
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`of trustworthiness.” Id. at 70. Here, like in Apple, TT’s testimonial evidence from
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`district court is sworn testimony and the witnesses would have been available for
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`cross-examination had Petitioners sought such cross examination. Thus, TT’s
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`testimonial evidence from district court has the same circumstantial guarantees of
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`trustworthiness as those declarations actually 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. It is in the interests of justice to admit the evidence
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`because TT will otherwise be deprived of due process.
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`3
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`IV. TRADER DECLARANTS (EXHIBIT 2223)
`
`A. Exhibit 2223 is authentic
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`Federal Rule of Evidence 901(a) states that the authentication requirement is
`
`satisfied if the proponent presents “evidence sufficient to support a finding that the
`
`item is what the proponent claims it is.” Here, Exhibit 2223 contains sufficient
`
`evidence to support a finding that it is authentic. The trader declarations contain
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`distinct characteristics found on the page, including dates, docket numbers, real
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`names, and signatures that are sufficient to support a finding that the exhibit is
`
`what TT claims it to be. (See, e.g., QSC Audio Products, LLC v. Crest Audio, Inc.,
`
`IPR2014-00127, Paper 43 at 12 (April 29, 2015) (“[H]aving considered and
`
`weighed the distinctive characteristics of the articles and the circumstances
`
`surrounding their retrieval from the AES E-Library, we find that [the references]
`
`are what they appear to be”); see also Motorola Mobility, LLC v. Intellectual
`
`Ventures I, LLC, CBM2015-00004, Paper No. 33 at 15 (March 21, 2016) (“the
`
`distinctive characteristics found on the tile page, table of contents, and copyright
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`page of Exhibit 2011 are sufficient to support a finding that the exhibit is what
`
`Patent Owner claims it to be.”).
`
`Further, no “declaration from the author . . . is required to support a finding
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`that the document is what it claims to be.” EMC Corp. v. Personal Web Tech.,
`
`LLC, et al., IPR2013-00087, Paper No. 69 at 38 (May 15, 2014). Petitioners have
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`4
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`failed to provide any substantial reason to doubt the authenticity of the exhibit;
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`indeed, there is none. See id. at 42 (“[The movant] does not present sufficient or
`
`credible evidence to the contrary”).
`
`Finally, Petitioners’ challenge to the exhibit (e.g., “The exhibits contain, for
`
`example, statements by individuals regarding their opinions concerning TT’s
`
`alleged commercial embodiments” (Paper No. 37 at 4)) are more appropriately
`
`addressed as questions of sufficiency of proof, not admissibility. Such challenges
`
`should be raised in the case-in-chief, not a Motion to Exclude. See EMC Corp. v.
`
`ACQIS LLC, IPR2014-01469, Paper 56 at 20 (March 8, 2016).
`
`B.
`
`Exhibit 2223 is not hearsay
`
`Exhibit 2223 is not hearsay at least because it is not offered for the truth of
`
`the matter asserted. Exhibit 2223 was offered as evidentiary support of certain
`
`objective indicia of non-obviousness, such as evidence of a problem, unexpected
`
`results, skepticism, praise, and copying. Truth of the specific statements in the
`
`declarations is irrelevant. See CA, Inc. v. Simple.com, Inc., 780 F.Supp.2d 196,
`
`227-228 (E.D.N.Y. Mar. 5, 2009) (“The Meininger email is not hearsay because it
`
`is not being offered for the truth of its contents. The Meininger email contains
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`statements claiming that the Meininger web page: (1) is ‘a REAL use for
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`DHTML’; (2) behaves just like ‘windowmaker’; (3) is ‘ALL done with javascript
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`and DHTML’; and (4) is ‘VERY graphics intensive,’ etc. However, the Meininger
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`5
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`email is not being offered to prove the veracity of the foregoing statements.”
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`(citations omitted)). Furthermore, as is the case with Petitioners’ objection to the
`
`authenticity of the exhibit, their objection relating to hearsay is more appropriately
`
`addressed as questions of sufficiency of proof, not admissibility.
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`V. ANIMATION (EXHIBIT 2214)
`
`As discussed in Section IV.A, Federal Rule of Evidence 901(a) states that
`
`the authentication requirement is satisfied when the proponent presents “evidence
`
`sufficient to support a finding that the item is what the proponent claims it is.”
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`FRE 901(a). Here, as with Exhibit 2223, the exhibit objected to contains sufficient
`
`evidence to support a finding that it is authentic. The animation contains distinct
`
`characteristics found on the page, including a title stating “Invention Solved the
`
`Problem,” which is sufficient to support a finding that the exhibit is what TT
`
`claims it to be: an animation illustrating that the claimed invention solves a
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`particular problem of prior art GUIs.
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`Further, this exhibit is admissible under Federal Rule of Evidence 1006,
`
`which states a party “may use a summary, chart, or calculation to prove the content
`
`of voluminous writings, recordings, or photographs that cannot be conveniently
`
`examined in court. The proponent must make the originals or duplicates available
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`for examination or copying, or both, by other parties at a reasonable time and
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`6
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`place. And the court may order the proponent to produce them in court.” FRE
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`1006.
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`Courts require the offering party to satisfy four elements when determining
`
`the admissibility of evidence under FRE 1006: (1) the underlying evidence is so
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`voluminous as to make comprehension difficult and inconvenient, although not
`
`necessarily literally impossible; (2) the underlying evidence itself must be
`
`admissible, although the offering party need not actually enter them; (3) the party
`
`introducing the evidence must make the underlying evidence reasonably available
`
`for inspection and copying; and (4) the evidence must be accurate and
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`nonprejudicial. See, e.g., United States v. Hemphill, 514 F.3d 1350, 1359 (D.C.
`
`Cir. 2008).
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`Here, (1) the animation depicts one example of how the claimed invention
`
`operates, which makes comprehension of the ‘374 claimed features easier for the
`
`Board; (2) the animation demonstrates features of the ‘374 patent, which is
`
`admissible; (3) the animation was made reasonably available for inspection and
`
`copying because it was served on Petitioners; and (4) the animation is accurate and
`
`nonprejudicial because Thomas testified that they depict the claimed invention
`
`solving particular problems, and because the Board is well-equipped to discern
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`what the sketch and animations are portraying. See Ex. 2169, ¶ 82.
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`7
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`Additionally, the exhibit is not hearsay at least because it is not offered for
`
`the truth of the matter asserted. This exhibit was offered as evidence of objective
`
`indicia of non-obviousness, such as evidence of a problem and unexpected results.
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`Specifically, the animation was offered to show how the ‘374 claims addressed
`
`problems in prior art GUIs. The underlying truth of the animation is irrelevant.
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`Exhibit 2214 is not hearsay for at least this reason and thus the Board should
`
`consider this exhibit.
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`VI. THOMAS DECLARATION
`(EXHIBIT 2169, ¶¶ 71, 79-80, 83-86, 92-95, 100-102)
`
`Petitioners fail to support their assertion that Christopher Thomas’ testimony
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`“exceed[s] the proper boundaries of expert testimony.” See Paper 31 at 7. None of
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`the case law cited by Petitioners applies to PTAB proceedings. Instead, it focuses
`
`on issues specific to juries.
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`A. The Board Is Equipped to Properly Assess Mr. Thomas’
`Testimony
`
`The primary reason for excluding expert testimony is juries. Indeed, the
`
`principles underlying Marvel Characters, Inc. v. Kirby, cited by Petitioners, relate
`
`to the effect that hearsay, relied upon by an expert, may have on a jury. 726 F.3d
`
`119, 136 (2d Cir. 2013) (citing Nimely v. City of New York, 414 F.3d 381, 397-98
`
`(2d Cir. 2005) and Malletier v. Dooney & Bourke, Inc., 525 F. Supp. 2d 558, 666
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`(S.D.N.Y. 2007)). Such principles do not apply here. “[U]nlike a lay jury, the
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`8
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`Board . . . has significant experience in evaluating expert testimony. Accordingly,
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`the danger of prejudice in this proceeding is considerably lower than in a
`
`conventional district court trial.” Lupin Ltd., v. Senju Pharm. Co., Ltd., IPR2015-
`
`01097, Paper 70 at 44 (9/12/2016).
`
`B. Mr. Thomas’ Testimony Is Used to Further Appropriate
`Objectives
`
`In this case, Mr. Thomas’ statements are not improper expert testimony,
`
`because an expert is allowed leeway to use hearsay reasonably. Indeed, Marvel,
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`cited by Petitioners, acknowledges that the rules grant experts leeway with respect
`
`to hearsay evidence, and that an expert could, “for example, help to identify, gauge
`
`the reliability of, and interpret evidence that would otherwise elude, mislead, or
`
`remain opaque to a layperson.” Marvel, 726 F.3d at 135. Marvel further
`
`contemplates that “such a witness might offer background knowledge or context
`
`that illuminates or places in perspective past events.” Id. at 136. Mr. Thomas is
`
`doing just that—helping interpret evidence that would otherwise elude, mislead, or
`
`remain opaque to a layperson, and offering background knowledge or context that
`
`illuminates or places in perspective past events.
`
`For example, paragraphs 83-86 and 89-92 – characterized by Petitioners as
`
`describing and characterizing what motivated the inventors to develop the claimed
`
`subject matter, and describing the development of a commercial embodiment –
`
`9
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`U.S. Patent 7,904,374
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`provide such background and context. Notably, these paragraphs use Exhibits
`
`2212 and 2213 as demonstratives to illustrate the points discussed, not for any
`
`hearsay purpose or any other purpose that would require further authentication than
`
`that by Mr. Thomas himself.
`
`Moreover, “an expert is permitted to disclose hearsay for the limited purpose
`
`of explaining the basis for his expert opinion.” United States v. Dukagjini, 326
`
`F.3d 45, 58 (2d Cir. 2003). That is what Mr. Thomas is doing here. For example,
`
`in paragraphs 94-96, 102, and 103, Mr. Thomas relies upon the experience of
`
`others as a basis for his opinion of the state of electronic trading and how MD
`
`Trader fit into it.
`
`C. The objected-to statements prove the evidence is not hearsay
`
`Rather than rely on evidence as hearsay, Mr. Thomas articulates the effect
`
`the evidence would have had on a person of ordinary skill in the art. The Board
`
`has recognized this distinction in other proceedings, and it should do so here.
`
`Lindsay Corp. v. Valmont Indus., Inc., IPR2015-01039, Paper 37 at 44 (Sep. 14,
`
`2016) (“The [statements] are not hearsay because Petitioner offers those statements
`
`for the effect they would have had on a person of ordinary skill in the art, not for
`
`the truth of the matter asserted.”).
`
`10
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`U.S. Patent 7,904,374
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`D.
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`Petitioner’s objections go to the weight of the evidence, not their
`admissibility
`
`“A strong public policy exists for making information filed in a non-jury,
`
`quasijudicial administrative proceeding available to the public, especially in an
`
`inter partes review, which determines the patentability of claims in an issued
`
`patent. The Board has discretion to assign appropriate weight to evidence.” Baby
`
`Trend, Inc., v. Wonderland Nurserygoods Co., Ltd., IPR2015-00841, Paper 77 at
`
`88 (Jun. 27, 2016). Petitioners’ arguments thus overstep the appropriate remedy for
`
`faults in expert testimony. At most, Petitioners’ arguments relate to the
`
`appropriate weight to assign the evidence, not its admissibility.
`
`E.
`
`Papers submitted from other proceedings are proper
`
`Finally, Petitioners argue that neither the Federal Rules nor the Board’s rules
`
`permit expert testimony based on evidence from a different proceeding. Paper 31
`
`at 9. Petitioners are wrong. As discussed in Section III, it does not matter what
`
`proceeding the evidence is from; Mr. Thomas can properly rely on the evidence.
`
`VII. DOCUMENTS PRODUCED IN DISTRICT COURT CASES
`(EXHIBITS 2206-07, 2415-16, 2250, 2279-82)
`
`There is sufficient evidence that the exhibits are what TT claims them to be.
`
`The exhibits all contain distinct characteristics that support a finding that they are
`
`authentic under Federal Rule of Evidence 901(a), at least because the exhibits are
`
`labelled with docket numbers or exhibit numbers. These distinct characteristics are
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`11
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`U.S. Patent 7,904,374
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`sufficient to support a finding that the exhibits are what they are claimed to be –
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`admissible documents from district court cases. See QSC Audio Products,
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`IPR2014-00127, Paper 43 at 12.
`
`Further, TT’s statements explaining the discovery procedures TT used to
`
`acquire the exhibits are sufficient to show the exhibits are what TT claims them to
`
`be. Petitioners have failed to provide any substantial reason to doubt the
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`authenticity of the exhibit, as there is none. Petitioners merely state that TT’s
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`declarations “do not cure the evidentiary issue under FRE 901 as they do not
`
`explain that the document is what it is claimed to be.” Paper 31 at 9.
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`Indeed, Petitioners do not deny these documents are what TT claims them to
`
`be. All of the district court evidence bears the production numbers associated with
`
`the respective parties from the various district court cases. And with regard to
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`Petitioners’ own documents, which bear production numbers associated with
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`Petitioners themselves, Petitioners do not claim that the documents are not, in fact,
`
`their own documents. These documents are authentic because they are the same
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`documents produced by Petitioners in those district court cases.
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`Finally, Petitioners’ authenticity challenges to the exhibits are more
`
`appropriately addressed as questions of sufficiency of proof, not admissibility. As
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`stated in Section IV.A, such challenges should be raised in the case-in-chief, not a
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`Motion to Exclude. See EMC Corp., IPR2014-01469, Paper 56 at 20.
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`12
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`VIII. CONCLUSION
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`For these reasons, the Board should deny Petitioners’ motion to exclude.
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`Respectfully submitted,
`
`MCDONNELL BOEHNEN HULBERT &
`BERGHOFF LLP
`
`
`
`Date: April 12, 2017
`
`/Jennifer M. Kurcz/
`
`Jennifer M. Kurcz,
`Back-Up Counsel, Reg. No. 54,481
`
`Counsel for Patent Owner
`
`300 South Wacker Drive
`Chicago, Illinois 60606
`(312) 913-0001
`
`
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`CERTIFICATION OF SERVICE
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`Pursuant to 37 CFR §§ 42.6(s)(4) and 42.205(b), the undersigned certified
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`that on April 12, 2017, a complete and entire copy or this PATENT OWNER’S
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`MOTION TO EXCLUDE was provided via email to the Petitioners by serving
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`correspondence address of record as follows
`
`John C. Phillips
`phillips@fr.com
`
`Kevin Su
`su@fr.com
`
`Michael T. Rosato
`mrosato@wsgr.com
`
`CBM41919-0013CP1@fr.com
`
`PTABInbound@fr.com
`
`Dated: April 12, 2017
`
`By:
`
`/Cole B. Richter/
`Cole B. Richter,
`Counsel for Patent Owner,
`Reg. No. 65,398
`
`14
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