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`
` IN THE UNITED STATES DISTRICT COURT
` FOR THE NORTHERN DISTRICT OF ILLINOIS
` EASTERN DIVISION
`
`Trading Technologies )
`International, Inc., )
` Plaintiff, )
` )
` vs. ) No. 04 CV 5312
` )
`eSpeed, Inc., eSpeed International )
`Ltd., Ecco LLC and EccoWare Ltd., )
` Defendants. )
`- - - - - - - - - - - - - - - - - -)
`Trading Technologies )
`International, Inc., )
` Plaintiff, )
` )
` vs. ) No. 05 CV 1079
` )
`Refco Group, Ltd., LLC, et al., )
` Defendants. )
`- - - - - - - - - - - - - - - - - -)
`Rosenthal Collins Group, LLC, )
` Plaintiff- )
` Counterclaim Defendant, )
` )
` vs. ) No. 05 CV 4088
` )
`Trading Technologies )
`International, Inc., )
` Defendant- )
` Counterclaimant. )
`- - - - - - - - - - - - - - - - - -)
`Trading Technologies )
`International, Inc., )
` Plaintiff, )
` )
` vs. ) No. 05 CV 4120
` )
`GL Consultants, Inc., )
`and GL Trade SA, )
` Defendants. )
`- - - - - - - - - - - - - - - - - -)
`
`Page 1 of 12
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`TRADING TECH EXHIBIT 2228
`IBG et al. v. TRADING TECH. - CBM2016-00054
`
`
`
` IN THE UNITED STATES DISTRICT COURT
` FOR THE NORTHERN DISTRICT OF ILLINOIS
` EASTERN DIVISION
`
`Trading Technologies )
`International, Inc., )
` Plaintiff, )
` )
` vs. ) No. 04 CV 5312
` )
`eSpeed, Inc., eSpeed International )
`Ltd., Ecco LLC and EccoWare Ltd., )
` Defendants. )
`- - - - - - - - - - - - - - - - - -)
`Trading Technologies )
`International, Inc., )
` Plaintiff, )
` )
` vs. ) No. 05 CV 1079
` )
`Refco Group, Ltd., LLC, et al., )
` Defendants. )
`- - - - - - - - - - - - - - - - - -)
`Rosenthal Collins Group, LLC, )
` Plaintiff- )
` Counterclaim Defendant, )
` )
` vs. ) No. 05 CV 4088
` )
`Trading Technologies )
`International, Inc., )
` Defendant- )
` Counterclaimant. )
`- - - - - - - - - - - - - - - - - -)
`Trading Technologies )
`International, Inc., )
` Plaintiff, )
` )
` vs. ) No. 05 CV 4120
` )
`GL Consultants, Inc., )
`and GL Trade SA, )
` Defendants. )
`- - - - - - - - - - - - - - - - - -)
`
`Page 1 of 12
`
`TRADING TECH EXHIBIT 2228
`IBG et al. v. TRADING TECH. - CBM2016-00054
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`
`
`Page 2
`
`Trading Technologies )
`International, Inc., )
` Plaintiff, )
` )
` vs. ) No. 05 CV 4137
` )
`Peregrine Financial Group, Inc., )
`and TradeMaven, LLC, )
` Defendants. )
`- - - - - - - - - - - - - - - - - -)
`Trading Technologies )
`International, Inc., )
` Plaintiff, )
` vs. ) No. 05 CV 4811
` )
`CQGT, LLC and CQG, Inc., )
` Defendants. )
`- - - - - - - - - - - - - - - - - -)
`Trading Technologies )
`International, Inc., )
` Plaintiff, )
` )
` vs. ) No. 05 CV 5164
` )
`FuturePath Trading, LLC, )
` Defendant. )
`
` Videotaped deposition of SCOTT L. JOHNSTON,
`taken before NADINE J. WATTS, CSR, RPR, and Notary
`Public, pursuant to the Federal Rules of Civil Procedure
`for the United States District Courts pertaining to the
`taking of depositions, at Suite 3500, 35 West Wacker
`Drive, in the City of Chicago, Cook County, Illinois, at
`9:02 o'clock a.m. on the 27th day of June, A.D., 2006.
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`TRADING TECH EXHIBIT 2228
`IBG et al. v. TRADING TECH. - CBM2016-00054
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`Page 3
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` There were present at the taking of this
`deposition the following counsel:
` McDONNELL, BOEHNEN, HULBERT & BERGHOFF, LLP by
` MR. MATTHEW SAMPSON
` 300 South Wacker Drive
` Chicago, Illinois 60606
` (312) 913-2134
` on behalf of the Plaintiff;
` WINSTON & STRAWN, LLP BY
` MR. IVAN POULLAOS
` 35 West Wacker Drive
` Chicago, Illinois 60601
` (312) 558-6214
` on behalf of the Defendant;
` FAEGRE & BENSON, LLP by
` MS. NINA Y. WANG
` 3200 Wells Fargo Center
` 1700 Lincoln Street
` Denver, Colorado 80203
` (303) 607-3802
` on behalf of CQGT, LLC and CQG, Inc.;
` ADDUCCI, DORF, LEHNER, MITCHELL &
` BLANKENSHIP, PC by
` MR. RANDALL L. MITCHELL
` 150 North Michigan Avenue
` Suite 2130
` Chicago, Illinois 60601
` (312) 781-2804
` on behalf of The Witness.
`
`ALSO PRESENT: Mr. Donald Peterson, videographer
`
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`Page 3 of 12
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`TRADING TECH EXHIBIT 2228
`IBG et al. v. TRADING TECH. - CBM2016-00054
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` MR. MITCHELL: My name is Randall Mitchell from the
`firm of Adducci, Dorf, Lehner, Mitchell & Blankenship,
`and I'm appearing today on behalf of the witness
`Mr. Johnston.
` THE VIDEOGRAPHER: Will the court reporter please
`swear in the witness.
` SCOTT L. JOHNSTON,
`called as a witness herein, having been first duly
`sworn, was examined upon oral interrogatories and
`testified as follows:
` EXAMINATION
` by Mr. Poullaos:
` MR. POULLAOS: Q Good morning, sir.
` A Good morning.
` Q Could you just state your name for the record
`very briefly.
` A Scott Lockwood Johnston.
` Q Okay. And, sir, could you tell me where you
`live?
` A 1031 Woodbine in Oak Park, Illinois.
` Q Sir, have you ever been involved in a lawsuit
`before?
` A I've been on a jury of a court case.
` Q Okay. Have you ever been a party, a litigant to
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`TRADING TECH EXHIBIT 2228
`IBG et al. v. TRADING TECH. - CBM2016-00054
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`a lawsuit?
` A No.
` Q Okay. Have you been deposed before?
` A No.
` Q Great. I'll go over a few of the ground rules
`here. As you can probably already tell, I'll be asking
`some questions. It's just important that you give
`audible answers so that the court reporter can take down
`your testimony and also so that the video can pick up
`your voice.
` And from time to time, your attorney may object
`to questions I ask. It's for matters of form and it's
`to be ruled on later on. And so if you understand the
`question, you can go ahead and answer it unless your
`attorney instructs you otherwise. But generally you can
`still go ahead and answer the question if you understand
`it.
` And if you don't understand a question, feel
`free to ask me to repeat it or clarify. And,
`conversely, if I ask a question, you answer it, I'll --
`we can assume that you understood it. Is that fair?
` A Sure.
` Q Okay. And also I'll try and take a break every
`now and then, but if you need to take a break, just let
`
`Page 5 of 12
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`TRADING TECH EXHIBIT 2228
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`me know and we can go off the record and take a break.
` A Okay.
` Q Sir, are you -- One final thing. Can you think
`of any reason why you can't testify as to the truth
`today?
` A No.
` Q Okay.
` MR. MITCHELL: Let me just say for the record that
`Mr. Johnston had some back surgery within the last
`couple of weeks, so it's possible he may need to take a
`break more often than normal. He can't sit too long.
` MR. POULLAOS: That's fine. Just let us know.
` THE WITNESS: All right. Thank you.
` MR. POULLAOS: Q Sir, are you aware that there's a
`lawsuit between eSpeed and other entities and Trading
`Technologies?
` A Yes.
` Q Okay. And what is your understanding of that
`litigation?
` A That TT has sued these guys for infringement of
`one or many of its patents.
` Q Okay. And do you know what those patents relate
`to?
` A I'm most familiar with the click trading patent.
`
`Page 6 of 12
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`TRADING TECH EXHIBIT 2228
`IBG et al. v. TRADING TECH. - CBM2016-00054
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` Q Okay. What is your understanding of that
`patent?
` A Not much. Just that TT and Harris have patented
`a method of a fixed price axis where people click on
`that fixed price axis to trade.
` Q Okay. How did you become aware of this lawsuit?
` A I think Harris told me he was going to initiate
`lawsuits with people who he thought might infringe on
`the patent.
` Q And by Harris you mean Harris Brumfield?
` A Yes.
` Q When did he tell you that?
` A I don't remember exactly, but it was somewhere
`in 2004.
` Q Okay. How did you become aware of the patents
`that you just talked about?
` A How did I become aware of them? I guess Harris
`told me that he had patents.
` Q And would this have also been sometime in 2004?
` A I think so.
` Q Have you ever seen the patents?
` A I saw the one on the Web through IBM's patent
`server. Harris had asked me to look at his patents and
`tell me what -- tell him what I thought, and so I found
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`Page 7 of 12
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`TRADING TECH EXHIBIT 2228
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`that one, looked it over and told him it looked like a
`patent.
` Q When did he ask you to look at his patents?
` A That was probably the summer of 2004.
` Q Okay. Any idea why he asked you to do that?
` A He probably asked me because I knew something
`about trading.
` Q Okay. Did you have any particular expertise in
`patents?
` A No, definitely not.
` Q And what did you tell him about the patent
`specifically other than it looked like a patent?
` A I believe I told him that it looked like there
`were some unique and different ideas in his patent.
` Q Were you opining on the validity of the patent?
` A No, just whether or not there were unique and
`different things in that patent versus other things that
`I had seen. Not as patents, but as technology.
` Q I see. What about the things that you read in
`the patent did you think were unique and different?
` A It was mostly the fact that the price axis was
`fixed and you could click across the axis to access
`different prices.
` Q What do you mean by the price axis was fixed?
`
`Page 8 of 12
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`TRADING TECH EXHIBIT 2228
`IBG et al. v. TRADING TECH. - CBM2016-00054
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`Page 69
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`is from the investor Web site. The CME publishes daily
`bulletins available to anybody where you can see volume
`information per contract.
` Q Okay. And then you said that based on my
`experience, I believe that Trading Technologies' MD
`Trader product, which was launched in the fall of 2000,
`was a significant factor contributing to the electronic
`volume growth at the CME. Do you see that?
` A I do.
` Q What do you mean based on your experience?
` A In knowing who was using which front ends; i.e.,
`most of the large traders that I knew of were using TT
`software.
` Q Was that the case in the summer of 2000?
` A It was growing by then.
` Q And how did you know which large traders were
`using which front end?
` A Traders would tell me what they were using.
` Q Going to paragraph four, it says that after the
`fall of 2000 you noticed that the volume being traded
`electronically by Kingstree Trading, LLC, proprietary
`trading firm, had exploded. Do you see that?
` A Uh-huh.
` Q Again, what do you mean by exploded?
`
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` A Risen very quickly.
` Q How did you know that the volume being traded by
`Kingstree had risen very quickly?
` A Because I knew their trading volume because I
`worked at the Exchange.
` Q I guess that's my question. Did you track and
`monitor trading volume by firm?
` A That was available. Kingstree was of interest
`because they had grown so quickly. So because they grew
`quickly, I paid attention to them.
` Q When did Kingstree grow very quickly?
` A It was that year 2000, 2001.
` Q Do you know if their quick growth could have
`been a reason for their trading volume exploding?
` MR. SAMPSON: Objection to form.
` THE WITNESS: When I say quick growth, I mean quick
`growth in volume.
` MR. POULLAOS: Q Oh. So when you said that
`Kingstree had grown quickly, you mean their volume?
` A Correct.
` Q Okay. Well, so I guess my question again is,
`did you or the CME monitor volume trading by firm? I
`know you said data was available, but did you actively
`monitor it?
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` A I did not.
` Q How did it come to your attention then that the
`Kingstree volume had exploded?
` A I don't remember, but I know that I watched them
`in particular.
` Q You just don't recall why you watched them in
`particular?
` A Right.
` Q Okay. The next sentence says that in around May
`of 2001, along with you -- I'll just read it. In around
`May of 2001 I, along with several other CME employees,
`went on a field trip to Kingstree's offices in Evanston.
`Do you see that?
` A Yes. In Evanston? That's wrong. They're
`actually not in Evanston.
` Q Okay. Where are they?
` A They're in Chicago.
` Q Okay. Were you invited by Kingstree to take a
`field trip?
` A I don't remember if I was invited or if I asked.
` Q Do you recall if you had a contact at Kingstree?
` A I do recall.
` Q Who was that contact?
` A Chuck McElvain.
`
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` Q How long did you spend at Kingstree when you
`went on your field trip?
` A It was probably an hour or two.
` Q And you said that this was the first time you
`had actually seen TT's MD Trader; is that right?
` A Yes.
` Q How do you recall that it was in May of 2001?
` A I don't know how I recall it now, but when I
`wrote this declaration, it was a little closer to May of
`2001.
` Q Do you know if you have any documents relating
`to that field trip?
` A I know that I do not have any documents.
` Q The next sentence says that upon this visit you
`were struck by the fact that Kingstree Traders were all
`frenetically trading on a front end that looked
`different from what I had seen before. Do you see that?
` A Yes. Yes.
` Q How did it look different from what you had seen
`before?
` A The difference was they were clicking on a
`screen and executing trades without any pop up to fill
`in prices and quantities and affirm that the order was
`to be sent.
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`Page 12 of 12
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`TRADING TECH EXHIBIT 2228
`IBG et al. v. TRADING TECH. - CBM2016-00054
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