`
`KeyCite Yellow Flag - Negative Treatment
` Disagreed With by Berkheimer v. Hewlett–Packard Company, N.D.Ill.,
`December 12, 2016
`
`
`
`2015 WL 774655
`Only the Westlaw citation is currently available.
`United States District Court,
`N.D. Illinois, Eastern Division.
`
`Trading Technologies International, Inc., Plaintiff,
`v.
`CQG, Inc., and CQGT, LLC, Defendants.
`
`Case No. 05–cv–4811
`|
`Signed February 24, 2015
`
`Attorneys and Law Firms
`
`Paul H. Berghoff, Alan Wayne Krantz, Andrea Kay Orth,
`Brandon J. Kennedy, Cole Bradley Richter, James Carl
`Gumina, Jennifer M. Kurcz, Jeremy E. Noe, Kirsten L.
`Thomson, Leif R. Sigmond, Jr., Matthew J. Sampson,
`Michael David Gannon, Michelle Lynn McMullen–Tack,
`Paul S. Tully, S. Richard Carden, McDonnell Boehnen
`Hulbert & Berghoff LLP, George I. Lee, Lee Sullivan
`Shea & Smith, Steven F. Borsand, Trading Technologies
`International, Inc., Chicago, IL, Barry F. Irwin, Irwin IP
`LLC, Burr Ridge, IL, for Plaintiff.
`
`Adam Glenn Kelly, Christopher M. Swickhamer, John
`Anthony Cotiguala, Melaina D. Jobs, William J. Kramer,
`William Joshua Voller, Loeb & Loeb LLP, Eugene
`Goryunov, Kenneth R. Adamo, Kirkland & Ellis LLP,
`Johnnet Simone Jones, Sidley Austin LLP, Kara Eve
`Foster Cenar, Greensfelder, Hemker & Gale, P.C.,
`Mariangela M. Seale, Bryan Cave LLP, Chicago, IL,
`Jared B. Briant, Nina Y. Wang, Faegre Baker Daniels,
`LLP, Denver, CO, Laura A. Wytsma, Terry D. Garnett,
`Loeb & Loeb LLP, Los Angeles, CA, for Defendants.
`
`MEMORANDUM OPINION AND ORDER
`
`SHARON JOHNSON COLEMAN, United States
`District Judge
`
`*1 CQG, Inc. and CQGT, LLC (collectively “CQG”),
`moves for judgment as a matter of law [897] arguing
`that the patents-in-suit, U.S. patent 6,772,132 (“the '132
`patent”) and U.S. patent 6,766,304 (“the '304 patent”), are
`
`patent-ineligible under 35 U.S.C. § 101. For the reasons
`stated below, this Court denies the motion.
`
`Background
`The following facts are not materially in dispute. TT
`is the assignee of both the '132 patent and the '304
`patent. The '132 patent issued in August 2004 and the
`'304 patent issued in July 2004. Both patents claim
`priority to a provisional application filed on March 2,
`2000. Both patents also share the same specification, and
`are directed to “[c]lick based trading with intuitive grid
`display of market depth.” '132 patent, 1:2–3. According
`to the shared detailed description, the invention described
`“provides a display and trading method to ensure fast
`and accurate execution of trades by displaying market
`depth on a vertical or horizontal plane, which fluctuates
`logically up or down, left or right across the plane as
`the price fluctuates.” Id. at 3:54–58. Because the analysis
`of claims under 35 U.S.C. § 101 is the same regardless
`of claim type, i.e. method claim, system claim, computer
`readable medium claim, etc., this Court may analyze one
`representative claim from each of the asserted patents.
`Alice Corp. Pty. v. CLS Bank Int'l, 134 S.Ct. 2347, 2359–
`60 (2014).
`
`Representative claim 1 of the '132 patent recites:
`
`1. A method of placing a trade order for a commodity
`on an electronic exchange having an inside market with
`a highest bid price and a lowest ask price, using a
`graphical user interface and a user input device, said
`method comprising:
`
`setting a preset parameter for the trade order
`
`displaying market depth of the commodity, through
`a dynamic display of a plurality of bids and a
`plurality of asks in the market for the commodity,
`including at least a portion of the bid and ask
`quantities of the commodity, the dynamic display
`being aligned with a static display of prices
`corresponding thereto, wherein the static display of
`prices does not move in response to a change in the
`inside market;
`
`displaying an order entry region aligned with the
`static display prices comprising a plurality of
`areas for receiving commands from the user
`input devices to send trade orders, each area
`
` © 2017 Thomson Reuters. No claim to original U.S. Government Works.
`
`1
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`IBG 1080
`IBG v. TT
`CBM2016-00054
`
`
`
`Trading Technologies International, Inc. v. CQG, Inc., Not Reported in F.Supp.3d (2015)
`
`corresponding to a price of the static display of
`prices; and
`
`trade order relating to the commodity and sending
`the trade order to the electronic exchange.
`
`selecting a particular area in the order entry region
`through single action of the user input device with
`a pointer of the user input device positioned over
`the particular area to set a plurality of additional
`parameters for the trade order and send the trade
`order to the electronic exchange.
`
`Representative claim 1 of the '304 patent recites:
`
`1. A method for displaying market information relating
`to and facilitating trading of a commodity being traded
`in an electronic exchange having an inside market with
`a highest bid price and a lowest ask price on a graphical
`user interface, the method comprising:
`
`On December 4, 2014, the Patent Trials and Appeals
`Board (“PTAB”) instituted a Covered Business Method
`Review (“CBMR”) proceeding of the '132 patent, finding
`that it was more likely than not that all claims of the '132
`patent recited patent-ineligible subject matter. However,
`the same day, the PTAB declined to institute a CBMR
`of the '304 patent. As a result, CQG filed a motion
`with this Court requesting a stay in light of the CBMR
`proceeding for the '132 patent. 1 This Court denied the
`motion to stay. CQG appealed that decision to the Federal
`Circuit Court of Appeals which, on February 5, 2015,
`affirmed this Court's order. This Court allowed briefing
`on the eligibility issue under section 101 and heard oral
`arguments on February 23, 2015.
`
`*2 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 corresponding to
`a price level along the common static price axis, the
`second indicator representing quantity associated
`with at least one order to sell the commodity at the
`lowest ask price currently available in the market;
`
`displaying the bid and ask display regions in relation
`to fixed price levels positioned along the common
`static price axis such that when the inside 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
`plurality of locations for receiving commands to
`send 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 parameters for a
`
`Legal Standard
`At the outset, this Court acknowledges that the section 101
`jurisprudence is a recently evolving and unsettled area of
`law as it applies particularly to software patents. There is
`some dispute over the level of proof required in a section
`101 patent-eligibility inquiry. CQG asserts that “[a]s a
`matter of law, patent-eligibility is not subject to the ‘clear
`and convincing’ burden of proof.” (Dkt. 898 at 3) (quoting
`Microsoft Corp. v. i4i Ltd. P'ship, 131 S.Ct. 2238, 2253
`(2011) (Breyer, Scalia, Alito, JJ, concurring)). TT submits
`that rather than a preponderance of the evidence burden
`of proof the appropriate standard should be “clear and
`convincing.” (Dkt. 962 at 11) (quoting Card Verification
`Solutions, LLC v. Citigroup Inc., 2014 WL 4922524, at *5
`(N.D. Ill. Sept. 29, 2014)).
`
`*3 This Court recognizes the persuasiveness of Justice
`Breyer's reasoning that because the section 101 eligibility
`inquiry is purely a question of law and there is no statutory
`presumption of eligibility, it should not be subject to the
`clear and convincing burden of proof. However, 35 U.S.C.
`§ 282 provides that patents are presumed valid and it is
`well established that a party seeking to overcome that
`presumption must do so by clear and convincing evidence.
`See Nystrom v. Trex Co., 424 F.3d 1136, 1149 (Fed. Cir.
`2005). This Court is “duty-bound to apply the law as
`enacted by Congress and signed by the President, and
`in light of the Federal Circuit's interpretation thereof.
`Defendants have not presented any authority indicating
`that the presumption of validity no longer applies to
`
` © 2017 Thomson Reuters. No claim to original U.S. Government Works.
`
`2
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`Trading Technologies International, Inc. v. CQG, Inc., Not Reported in F.Supp.3d (2015)
`
`challenges to a patent's validity under section 101.” 2
`CertusView Techs., LLC v. S & N Locating Servs., LLC,
`2015 U.S. Dist. LEXIS 7126, *42 n.6, Slip Copy, 2015
`WL 269427 (E.D. Va. Jan. 21, 2015). Accordingly, this
`Court concludes that, until the Federal Circuit or the
`United Supreme Court mandates otherwise, CQG must
`show by clear and convincing evidence that the patents-
`in-suit claim patent-ineligible subject matter.
`
`Discussion
`Section 101 provides that “Whoever invents or discovers
`any new and useful process, machine, manufacture,
`or composition of matter, or any new and useful
`improvement thereof.” 35 U.S.C.A. § 101. Supreme
`Court precedents provide three specific exceptions to
`section 101's principles of patentability: “laws of nature,
`physical phenomena, and abstract ideas.” Diamond v.
`Chakrabarty, 447 U.S. 303, 309 (1980). Alice articulates a
`two-step process to determine whether claims of a patent
`are within the realm of patent-eligible subject matter. Alice
`Corp., 134 S.Ct. at 2354 (relying on Mayo Collaborative
`Servs. v. Prometheus Labs., 132 S.Ct. 1289, 1303, 1294
`(2012). This Court must first determine whether the
`claims of the asserted patents are directed to a patent-
`ineligible concept: laws of nature, physical phenomena,
`and abstract ideas. Alice Corp., 134 S.Ct. at 2355; see
`also Mayo, 132 S.Ct. at 1296–1297. This Court must then
`“consider the elements of each claim both individually
`and ‘as an ordered combination’ to determine whether the
`additional elements ‘transform the nature of the claim’
`into a patent-eligible application.” Alice, 134 S.Ct. at 2355
`(quoting Mayo, 132 S.Ct. at 1298, 1297). This second step
`requires a search for an “ ‘inventive concept,’ or some
`element or combination of elements sufficient to ensure
`that the claim in practice amounts to ‘significantly more’
`than a patent on an ineligible concept.” DDR Holdings,
`LLC v. Hotels.com, L.P., 773 F.3d 1245, 1255 (Fed. Cir.
`2014) (quoting Alice, 134 S.Ct. at 2355). Finally, as Alice
`makes clear, the claims “do more than simply instruct the
`practitioner to implement the abstract idea” on a generic
`computer either separately or as an ordered combination.
`Alice, 134 S.Ct. at 2359.
`
`1. Abstract Idea
`This Court must first determine whether the claims at
`issue are directed to an abstract idea. DDR Holdings, 773
`F.3d at 1256–1257. CQG argues that the claims of both
`the '132 patent and the '304 patent “recite the abstract
`
`idea of placing an order for a commodity on an electronic
`exchange, based on observed market information, as well
`as updating the market information.” Dkt. 898 at 1. As a
`result, CQG maintains, “the abstract idea is nothing more
`than ‘a fundamental economic practice long prevalent in
`our system of commerce.’ ” Id. (quoting Alice, 134 S.Ct. at
`2356). TT asserts that the claims of the patents in suit are
`not directed to an abstract idea, but to an improvement
`in computer technology. However, TT maintains that
`assuming arguendo that the claims do recite an abstract
`idea, the claims “do not seek to tie up the alleged abstract
`idea such that others cannot practice it.” Dkt. 962 at 13.
`
`*4 Here, neither the claims in the '132 patent nor the
`claims in the '304 patent are directed to a mathematical
`algorithm. See Gottschalk v. Benson, 409 U.S. 63, 64
`(1972) (holding that mathematical algorithms, even those
`implemented on a computer, are abstract ideas). The
`claims similarly do not “recite a fundamental economic or
`longstanding commercial practice,” DDR Holdings, 773
`F.3d at 1257, as electronic trading has only been viable
`for a couple of decades, and its analog predecessor, open
`outcry trading systems, operate in a significantly different
`fashion. The claims of the patents also do not address a
`challenge in business. Rather, the claims at issue in both
`patents profess to solve problems of prior graphical user
`interface devices (GUIs), in the context of computerized
`trading, relating to speed, accuracy and usability.
`
`CQG argues that: “[t]he Asserted Claims recite the
`abstract idea of placing an order for a commodity
`on an electronic exchange, based on observed market
`information, as well as updating the market information.”
`Dkt. 898 at 1. CQG further contends that the
`elements recited in the claims merely perform basic
`functions relating to electronic commodity trading and
`updating market information using unidentified and
`generic computer components. CQG further asserts that,
`“the functions recited in the Asserted Claims—setting,
`displaying, and selecting—are all ‘purely conventional’
`and cannot save the claims.” Id. at 2 (quoting Alice, 134
`S.Ct. at 2359).
`
`If the claims simply provided for “setting, displaying, and
`selecting” data or information, CQG would be correct in
`its assessment that the claims are directed to an abstract
`idea. However, CQG ignores much of the details of the
`representative claims. Neither the claims of the '304 patent
`nor the claims of the '132 patent are directed to solely
`
` © 2017 Thomson Reuters. No claim to original U.S. Government Works.
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`3
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`Trading Technologies International, Inc. v. CQG, Inc., Not Reported in F.Supp.3d (2015)
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`“setting, displaying, and selecting” data or information
`that is visible on the GUI device. Rather, the claims are
`directed to solving a problem that existed with prior art
`GUIs, namely, that the best bid and best ask prices would
`change based on updates received from the market. There
`was a risk with the prior art GUIs that a trader would
`miss her intended price as a result of prices changing from
`under her pointer at the time she clicked on the price cell
`on the GUI. The patents-in-suit provide a system and
`method whereby traders may place orders at a particular,
`identified price level, not necessarily the highest bid or the
`lowest ask price because the invention keeps the prices
`static in position, and allows the quantities at each price
`to change.
`
`This issue did not arise in the open outcry systems, i.e. the
`pre-electronic trading analog of the '304 and '132 patents'
`claims. In live trading “pits,” traders would use verbal
`communication and hand signals to transfer information
`about buy and sell orders. In an open outcry system, bids
`and offers would be made in the open market giving all
`of the participants a chance to compete for an order with
`the best price. There is no question that electronic trading
`is much different than trading in open outcry pits. The
`speed, quantity and variety of trades that can be made
`by a single trader over an electronic system are no doubt
`markedly different than those trades a single trader can
`make in the open outcry system. This Court concludes,
`in part, from the apparent differences between the analog
`versions of trading and electronic trading that the claims
`of the patents in suit are not directed to the abstract idea
`of “placing an order for a commodity on an electronic
`exchange.” Dkt. 898 at 1.
`
`The asserted claims similarly do not preempt every way
`of “placing an order for a commodity on an electronic
`exchange,” as systems for doing so existed before this
`invention, and systems exist now that allow traders to
`buy and sell commodities on electronic exchanges without
`infringing the claims of the patents in suit. Therefore,
`CQG has not met its burden of proving by clear and
`convincing evidence that the patents in suit are directed to
`an “abstract idea.”
`
`2. Inventive Concept
`*5 Even if this Court were to find that the claims
`of the patents in suit are directed to an abstract idea,
`the second part of the Alice framework, considering
`the claim elements “both
`individually and
`‘as an
`
`ordered combination’ to determine whether the additional
`elements ‘transform the nature of the claim’ into a patent-
`eligible application,” leads this Court to one conclusion:
`the claims recite an inventive concept. Alice, 134 S.Ct. at
`2355. CQG spent much of its argument, on paper and
`in court, expounding on the “conventional” nature of
`trading GUIs. Yet, this argument seems more appropriate
`for a pre-AIA §§ 102 or 103 validity challenge (for failing
`to be novel or nonobvious in light of the prior art). The
`“inventive concept” step of the Alice analysis requires
`something different than pre-AIA §§ 102 and 103. This
`step requires courts to locate an element or a combination
`of elements in the claims “sufficient to ensure that the
`patent in practice amounts to significantly more than a
`patent upon the [ineligible concept] itself.” Alice, 134 S.Ct.
`at 2355 (quoting Mayo, 132, S.Ct. at 1294).
`
`To ensure patents are not granted when the subject matter
`to which the claims are directed completely preempts an
`idea, “[a] claim that recites an abstract idea must include
`‘additional features' to ensure ‘that the [claim] is more
`than a drafting effort designed to monopolize the [abstract
`idea].’ ” Id. at 2357 (quoting Mayo, 132 S.Ct. at 1297).
`It is important to note, “the mere recitation of a generic
`computer cannot transform a patent-ineligible abstract
`idea into a patent-eligible invention,” Id. at 2358, thus, the
`recitation of a GUI in the claims of the patents in suit does
`not automatically impart patent eligibility.
`
`In searching for the “inventive concept,” by analyzing
`the claim elements both individually and as an ordered
`combination, this Court need not delve further than
`identify the clause in the claims which has raised a flurry
`of commotion throughout these proceedings: the static
`price index. The '132 patent recites a “dynamic display
`being aligned with a static display of prices corresponding
`thereto,” and the '304 patent recites “each location in
`the bid display region corresponding to a price level
`along a common static price axis.” This element of the
`representative claims is what adds the “inventive concept”
`to the patents-in-suit. While not declaring that the “static
`price axis” is the defining characteristic of the patents
`which was not known in the prior art before the date
`of invention (which is only proper under a §§ 102 or
`103 analysis), it seems to be the “inventive concept” that
`allowed some traders the ability to more efficiently and
`accurately place trades on electronic trading systems.
`
` © 2017 Thomson Reuters. No claim to original U.S. Government Works.
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`4
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`Trading Technologies International, Inc. v. CQG, Inc., Not Reported in F.Supp.3d (2015)
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`As such, even if this Court found that the patents were
`directed to an abstract idea, under the second part of the
`Alice test, this Court finds that at least the “static price
`axis” element of the patents in suit was an “inventive
`concept,” which eliminated some problems of prior GUIs
`relating to speed, accuracy and usability, therefore the
`patents-in-suit claim patent eligible subject matter under
`the Alice framework. DDR Holdings, 773 F.3d at 1259.
`When the elements of the claims of both the '304 patent
`and the '132 patent are “taken together as an ordered
`combination, the claims recite an invention that is not
`merely the routine or conventional use” of computers
`or the Internet. DDR Holdings, 773 F.3d at 1259. This
`Court disagrees with CQG's assessment of DDR Holdings
`as inapposite. Instead, this Court finds that because the
`claims of both the '132 patent and the '304 patent are
`“necessarily rooted in computer technology in order to
`overcome a problem specifically arising in the realm of”
`computers, like the asserted claims in DDR Holdings, the
`
`claims here satisfy the requirements of 35 U.S.C. § 101. See
`773 F.3d at 1257.
`
`CONCLUSION
`Because the claims are directed to a technological
`improvement of GUIs, the invention embodied within
`the claims of both the '132 patent and the '304 patent is
`not directed to an abstract idea, and even if they were,
`an element of the claims recite an inventive concept, the
`claims recite patent eligible subject matter under 35 U.S.C.
`§ 101.
`
`*6 IT IS SO ORDERED.
`
`All Citations
`
`Not Reported in F.Supp.3d, 2015 WL 774655
`
`Footnotes
`1
`The patents were before the PTAB on a petition filed by TD Ameritrade, a party in another lawsuit proceeding in this
`court. CQG filed its own petition with the USPTO for a covered business method patent review for each of the patents-
`in-suit on January 9, 2015.
`CQG points to another concurrence to show that no presumption of eligibility should attach to a § 101 analysis.
`Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 720 (Fed. Cir. Nov. 14, 2014) (Mayer, J, concurring)).
`
`2
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`End of Document
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`© 2017 Thomson Reuters. No claim to original U.S. Government Works.
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` © 2017 Thomson Reuters. No claim to original U.S. Government Works.
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