`
`
`
`IBG 1011
`CBM of U.S. Patent No. 7,412,416 B2
`
`
`
`lies in the field of the engineering, design, and development of trading interfaces, such as those
`
`used in electronic trade execution systems and proprietary trading systems.
`
`7.
`
`I have been actively trading on exchanges worldwide and managing portfolios of
`
`futures, commodities, stocks, and stock indexes since 1992.
`
`In 1996, I began developing trading
`
`decision and execution systems. At that time, my trading became completely reliant on the
`
`systems that I had developed. Ultimately, this led to my career in technology as a Chief
`
`Technology Officer (CTO) for several large trading companies and Managing Director of a large
`
`Canadian bank.
`
`8.
`
`As CTO in 1997, I designed and developed an internet quote system that was used
`
`by the Chicago Mercantile Exchange.
`
`In 1998, I designed and developed for a Chicago-based
`
`Futures Commission Merchant, named LFG, the first web browser based trade order entry
`
`system for the U.S. commodity markets known as “Futuresonline”. From late 1999 until 2002, I
`
`was the CTO for Stafford Trading, a proprietary trading company in Chicago, Illinois, USA,
`
`which was one of the largest market makers on the U.S. equity option exchanges. In this
`
`capacity, I managed a staff of roughly one hundred individuals and an annual technology budget
`
`in excess of fifteen million dollars. This staff included approximately 40 software developers, 40
`
`network and server engineers, and 20 support staff. During this time, I also designed a new
`
`desktop order entry system to replace a legacy system for the traders at Stafford Trading.
`
`In
`
`March of 2002, this firm was acquired by Toronto Dominion Bank (the “Bank”), a large
`
`Canadian bank, and post acquisition, 1 served until August 2003 as a Managing Director and
`
`CTO ofthe new entity at the Bank.
`
`I subsequently returned to trading and continued to further
`
`develop trading systems that I had begun using several years earlier.
`
`In 2006, I started my own
`
`trading group at the Bank, while still serving as a Managing Director, and actively traded a long-
`
`Page 2 of 61
`
`Page 2 of 61
`
`
`
`short portfolio of U.S. Equities and U.S. equity index futures.
`
`9.
`
`In October of2008, I became a founder ofa proprietary trading firm in Chicago,
`
`named Pembroke Trading LLC, specializing in algorithmic trading of futures markets.
`
`In this
`
`capacity, I was responsible for designing and managing the development of the user interfaces
`
`and electronic trading platforms and infrastructure for testing and executing trading strategies in
`
`live markets.
`
`10.
`
`In May of 201 1, I started my own proprietary trading firm, Maridunum Capital,
`
`L.L.C., which specializes in automated algorithmic trading of Futures Markets. In this capacity,
`
`I am responsible for designing all trading software and algorithms for the company.
`
`Additionally, I am responsible for programming portions of the software.
`
`II.
`
`INFORMATION CONSIDERED
`
`11.
`
`In forming my opinions, I have read the patents-in-suit in the present case.
`
`I have
`
`reviewed the file histories along with the references cited during the prosecution of the patents.
`
`I
`
`have read briefs from the parties including the briefs relating to summary judgment of non-
`
`infringement.
`
`I am also familiar with the operation of the accused products, use of such
`
`products, and CQG’s role in inducing and contributing to such use based on evidence in this
`
`case, including for example, CQG’s answers to TT’s interrogatories, CQG user manuals, help
`
`files, handover documents, operable samples of CQG’s DOMTrader, deposition transcripts from
`
`Messrs. Braman, Katin, Shterk, and Stavros, Mr. Goodwillie’s declaration, various documents
`
`produced by CQG (including but not limited to transaction data, pivot tables, customer
`
`experience logs, internal CQG emails, and other CQG documents discussing the Accused
`
`Products and TT and its patents), and the parties’ contentions regarding infringement/non-
`
`infringement.
`
`I am also familiar with the opinions of non-infringement that CQG has produced
`
`in this case, and am prepared to offer my opinion as to why these opinions are incorrect.
`1
`
`4_
`
`Page 3 of 61
`
`Page 3 of 61
`
`
`
`12.
`
`Further, I participated in the TT v. eSpeed litigation, providing expert reports and
`
`both deposition and trial testimony, and am familiar with such information.
`
`I am familiar with
`
`CQG’s Markman briefing and the testimony and reports of its expert, Richard Ferraro.
`
`I have
`
`reviewed the court's claim construction memorandum and order from TT v. eSpeed, and the
`
`Federal Circuit opinion that affirmed the Court’s claim construction, as well as CQG’s recent
`
`request for additional terms to be construed and their corresponding constructions.
`
`I have
`
`reviewed various documents and opinions from the eSpeed case, including the motion in limine
`
`ruling on single action dated September 12, 2007, the jury verdict, and I am familiar with my
`
`prior reports and testimony from eSpeed.
`
`I am familiar with the various fees in the electronic
`
`trading industry.
`
`I have reviewed information from the TT v. eSpeed litigation that sets forth the
`
`Various fees in the electronic trading industry. PTX 470; MH0000479-80. Because of my prior
`
`involvement in eSpeed, I have an understanding of both the testimony and the evidence proffered
`
`during that trial.
`
`I also am familiar with the operation of the eSpeed graphical user interfaces
`
`(“GUIs”) that were at issue in that litigation.
`
`I also am aware of the use of MD Trader by others in
`
`the trading industry. For example, I have reviewed numerous declarations from various industry
`
`personnel including traders that demonstrate the pioneering nature of the TT patents in suitl.
`
`In
`
`addition to the above, I have personally traded on electronic exchanges using TT products,
`
`including MD Trader.
`
`1 have also talked to others regarding the use ofthe TT product, including
`
`MD Trader.
`
`I have also spoken with other experts in the field about how MD Trader is used.
`
`In
`
`addition, I have read the report of Dr. Mark Holder from the TT v. eSpeed case.
`
`13.
`
`Additionally, I have read the summary judgment briefing and declarations from
`
`l TTXO0020829, TTXOO06l 397-398, TTX0006l407-412, TTX0006l420-42] , TTX0006l434-435,
`TTX0006l454-455, TTXO006l527-554, TTXOO06l 557-576, TTXOO06l 581 -582, TTXOO06l 588-589,
`TTXO32l9340-34] , TTX03222252-254, TTX03254900.
`
`4
`
`Page 4 of 61
`
`Page 4 of 61
`
`
`
`the RCG v. TTcase on the issue ofinfringement, as well as Judge Dow’s opinion on
`
`infringement.
`
`I am also familiar with my expert report from the RCG case.
`
`I have also reviewed
`
`the summary judgment briefing and declarations from the TT v. GL case on the issue of
`
`infringement.
`
`I have reviewed Judge Holderman’s opinion from the GL Trade v. TT case.
`
`III.
`
`BACKGROUND OF THE INDUSTRY
`
`14.
`
`The electronic trading industry is made up of various participants. These
`
`participants include the exchanges, Futures Commissions Merchants (“FCMs”), technology
`
`providers, such as Independent Software Vendors (“ISVs”) whose primary business is to provide
`
`front end order entry software, trading firms and individual traders.
`
`I may describe the roles of
`
`these various participants. All of the participants identified above provide complimentary
`
`services and work together to facilitate the execution of trades. The norm in the industry is for
`
`traders to pay on a per transaction basis to execute a trade. TT is an example of an ISV.
`
`Examples of more well diversified vendors include CQG and Bloomberg. Examples of an FCM
`
`include RCG and Goldman Sachs. Examples of an exchange include the CME and Eurex.
`
`15.
`
`Since at least the early 1990s, the industry participants identified above have been
`
`investing in creating and providing front end order entry software. The technology providers
`
`include ISVs and more well diversified vendors that provide various technology, including front
`
`end order entry software. Many FCMs (such as RCG and Goldman Sachs), and exchanges (such
`
`as DTB/Eurex in the 1990s, the CME in the 1990s through the early 2000s and the
`
`Intercontinental Exchange ("ICE”) today) have provided their own front end order entry
`
`software. Furthermore, many trading firms and individual traders have invested in their own
`
`technology creating their own front end order entry software. All ofthe participants identified
`
`above compete against each other with respect to front end order entry software.
`
`16.
`
`I may testify regarding the nature ofthe competition between the various
`5
`
`Page 5 of 61
`
`Page 5 of 61
`
`
`
`participants identified in Paragraph 14. For example, FCMs and exchanges that provide front
`
`end order entry software have an advantage over ISVs because they have the ability to leverage
`
`off of their core businesses. The more well diversified vendors also have’an advantage over
`
`ISVs because they have the ability to leverage off of their other businesses (for example, CQG
`
`provides charting/analytics software and Bloomberg provides news and other services).
`
`17.
`
`I may also provide background testimony regarding the history of trading and
`
`electronic trading. This may include an explanation regarding how trades were conducted prior
`
`to electronic trading (e.g., trading in the pits) and about the transition to electronic trading.
`
`I may
`
`also explain the types of tradeable objects that can be traded. For example, I may provide
`
`background regarding what is a futures contract and what is an underlying cash product.
`
`I may
`
`further testify regarding the purpose of futures markets (e.g., to provide price discovery and risk
`
`transfer).
`
`I may also testify about the various types of traders in the market and the roles they
`
`play (e.g., hedgers and speculators), as well as provide examples ofhedging (e.g., fuel hedging
`
`contracts used by airlines, mortgages, etc.).
`
`18.
`
`I may also testify about the importance of volume to the industry and about the
`
`trading volumes at the top derivative exchanges. The invention provided the added benefit to
`
`exchanges and FCMs of causing traders to trade more volume. For example, the former CTO of
`
`the Chicago Mercantile Exchange (“CME”), Scott Johnston, testified that a major contributor to
`
`the CME’s dramatic volume growth from 2000 to 2002 was MD Trader (TT’s commercial
`
`embodiment ofthe invention). Johnston Decl., at 1B; Johnston Dep. Tr., at 69-71. This was also
`
`testified to by James Zellinger, the former Executive Vice President of Operations for Fuji
`
`Futures (a division of Fuji bank) and founder ofAdvantage Futures, LLC. (Zellinger Decl., 1] l0l
`
`have reviewed Mr. _Grisafi’s declaration, which he also claims that MD Trader increased the
`
`Page 6 of 61
`
`Page 6 of 61
`
`
`
`volumes of futures such as the E-Mini by magnitudes.
`
`I may also testify regarding the types of
`
`fees typically charged for trading. This includes regulatory fees, commissions charged by FCMs,
`
`and fees charged by exchanges. Additionally, I may talk about trading costs, including slippage.
`
`Slippage is the difference between the price at which the trader wants to execute a trade, versus
`
`the price at which the trade is actually executed.
`
`IV.
`
`THE BACKGROUND OF THE PATENTS-IN-SUIT
`
`19.
`
`Prior to the invention of the patents-in-suit, there was a well-accepted
`
`conventional wisdom regarding the design of a trading interface for order entry. For example, it
`
`was conventional to provide the ability to enter orders using order entry tickets. With order entry
`
`tickets, a trader fills out a ticket and then clicks on a send button (and/or a confirmation button)
`
`provided on the ticket to send an order to an exchange. This method was widely known as being
`
`very accurate for order entry, but also widely known as being very slow.
`
`20.
`
`With respect to trading interfaces that permitted users to enter orders by directly
`
`interfacing with displayed prices (e. g., through the use of a mouse), the vast majority of trading
`
`interfaces were dynamic screens. Such dynamic screens displayed the best bid price and best ask
`
`price at designated locations on the screen. Some of such dynamic screens permitted single
`
`action order entry that consisted of a trader pre-setting a default quantity and then clicking (e.g.,
`
`using a single—click or a double-click) on a dynamic screen to cause a trade order to be sent to the
`
`exchange at the pre-set quantity.
`
`2].
`
`Figure 2 ofthe patents-in-suit (reproduced with annotations below) illustrates an
`
`example of one such common dynamic screen, also referred to as a market grid.
`
`Page 7 of 61
`
`Page 7 of 61
`
`
`
`
`
`
`
`Best Ask Price is
`Always Displayed
`
`Here
`
`Best Bid Price is
`
`Always Displayed
`Here
`
`
`
`22.
`
`The dynamic screen of Figure 2 represents a screenshot for a market.
`
`In the
`
`figure, bid prices are provided in the BidPrc column 203 and ask prices are displayed in the
`
`AskPrc column 204 column adjacent to the BidPrc column. The best bid price that is currently
`
`available in the market is always displayed at the top of column 203, and other bids that are also
`
`currently available in the market are provided progressively descending the BidPrc column 203.
`
`Similarly, the best ask price that is currently available in the market is always displayed at the
`
`top of column 204, and other asks that are currently available in the market are displayed
`
`progressively descending the AskPrc column 204. The inside market is understood (and defined
`
`by the patents-in-suit) as meaning the best bid price and best ask price available in the market.
`
`23.
`
`The screen shown in Figure 2 is dynamic with respect to the display of prices
`
`because each and every time the inside market changes, the price values within the cells ofthe
`
`top row in columns 203 and 204 will change. More particularly, the value in the best bid price
`
`cell changes every time an update reflecting a change to the best bid price available in the market
`
`is received, and the value in the best ask price cell changes every time an update reflecting a
`
`change to the best ask price available in the market is received. The other displayed bid and ask
`
`prices similarly change based on updates in the market. Therefore, the prices are constantly
`
`Page 8 of 61
`
`Page 8 of 61
`
`
`
`changing in response to changes in the market. However, the location (or cells) designated for
`
`the inside market remains in the same top row of the display of prices.
`
`In other words, though
`
`the values for the prices are changing in the cells, the dynamic display maintains the inside
`
`market at the same location in those top two cells. Thus, the dynamic screen of Figure 2 fixes
`
`the inside market for a commodity in a specified location (i.e., in the top cells).
`
`24.
`
`Prior to the invention of the patents-in-suit, dynamic screens of the sort shown in
`
`Figure 2 represented the engrained conventional wisdom regarding how electronic trading
`
`screens were designed. While most dynamic screens have a format similar to what is shown in
`
`Figure 2 (where the best bid and ask prices are provided side-by-side), at the time of the
`
`invention there were also similar dynamic screens that displayed the prices vertically (e.g., with
`
`the best ask price being displayed above the best bid price). However, such screens similarly
`
`displayed the best bid and best ask prices only at designated locations on the screen. There were
`
`two main design criteria for trading screens at that time: 1) increasing speed and accuracy, and
`
`2) conserving screen real estate. The dynamic screen fit both of these design criteria and
`
`provided numerous advantages.
`
`25.
`
`While various features may have varied from one dynamic screen to another
`
`dynamic screen, there was one constant:
`
`the inside market was displayed in a fixed, designated
`
`location to emphasize focus on the primary target for the traders — the inside market. This is
`
`because, prior to the invention, the most common types of orders were orders made at the inside
`
`market (commonly referred to as “market orders” or “market type orders”). Since the location of
`
`the inside market is always known, the trader may easily spot the target, regardless of changes in
`
`the market. At any given time, the trader could look at the screen and immediately know the
`
`current state ofthe market. Thus, dynamic screens allow the trader to quickly enter market type
`
`Page 9 of 61
`
`Page 9 of 61
`
`
`
`orders at the current market by clicking on (i.e., single- or double-click) the location for the best
`
`bid (or best ask). For these types of orders, the dynamic screen is very accurate. There also was
`
`no quicker way that such an order could be sent to the exchange. So, prior to the invention, the
`
`conventional wisdom was to set the inside market as a fixed target on a dynamic screen.
`
`26.
`
`The second design consideration -— conserving screen “real estate” -- was
`
`important because traders had numerous types of information provided on the limited space of
`
`the trading screen, including multiple markets for products to be traded, various price charts,
`
`numerous news feeds, etc. It was critical to minimize space so that the market for each product
`
`could be displayed, as well as to reduce the amount of mouse movement between products. The
`
`dynamic screens satisfied this criteria because the bid and ask prices for a product are provided
`
`in proximate locations.
`
`In addition, the number of displayed bid and ask prices beyond the inside
`
`market may be adjusted to further minimize the amount of screen real estate required for a
`
`product. That is, the screen real estate for a product can be reduced to simply four pieces of
`
`market data: (i.e., a best bid price/quantity and a best ask price/quantity). The other rows in
`
`Figure 2 are not necessary to see the current market and, therefore, do not need to be displayed.
`
`Thus, the dynamic screen allowed mouse movement by the user within a product, as well as
`
`between products, to be minimized.
`
`27.
`
`There were numerous examples of dynamic screens in the futures space prior to
`
`the patents-in—suit, including but not limited to:
`
`0
`
`0
`
`lntex (1994) trading screen;
`
`SPATS (1987) screen;
`
`0 GLOBEX I (1992) trading screens;
`
`0 LIFFE APT (1989) trading screens;
`0
`the OSD screen ofthe LIFFE APT system;
`
`0 MEFF (1997) dynamic screen;
`
`0 TT’s X_TRADER;
`
`0
`
`Project A trading screens;
`
`10
`
`Page 10 of 61
`
`Page 10 of 61
`
`
`
`o
`0
`
`eSpeed trading screens;
`Patsystems trading screens;
`
`0 Globex II trading screens;
`0 DTB/Eurex trading screens;
`
`0 Ecco trading screens;
`
`0 RTS trading screens; and
`
`o EasyScreen trading screens
`
`28.
`
`In 2001, I designed an order entry interface for Stafford Trading, and later used by
`
`TD Bank, which used a dynamic screen similar to that of Figure 2. There also were hundreds of
`
`these types of dynamic screens used in other asset classes, including bonds and equities (e. g.,
`
`NASDAQ level 2 type dynamic trading screens). Still today, this style of dynamic screen is a
`
`common type of order entry screen in all asset classes other than futures.
`
`V.
`
`THE UTILITY AND ADVANTAGES OF THE PATENTED INVENTION
`
`29.
`
`In my opinion, the invention of the patents-in-suit was revolutionary and changed
`
`the industry. The invention provided significant advantages over the prior art by combining a
`
`“static display of prices” or “static price axis” with single action order entry. In contrast to
`
`dynamic screens, where the location of the inside market remains constant and the values
`
`displayed at those locations change with each and every inside market update, the static display
`
`of prices includes price levels that do not change with a change in the inside market. Instead, the
`
`indicators for the inside market change location or move relative to the static display of prices.
`
`30.
`
`By combining a static display ofprices with single action order entry, the
`
`inventors ofthe patents-in-suit went against the prevailing and overwhelming conventional
`
`wisdom at the time. For example, instead of having the market in a fixed location with the prices
`
`changing in that fixed location, the inventors fixed the location ofthe prices and made the inside
`
`market move relative to the fixed prices on the price axis. The price axis was static, so that the
`
`prices do not normally flip, as with the dynamic style screen of Figure 2, causing the trader to
`
`l
`
`l
`
`Page 11 of 61
`
`Page 11 of 61
`
`
`
`miss his or her intended price before the order is sent.
`
`31.
`
`The inventors were primarily concerned with addressing the problem in dynamic
`
`screens whereby traders would miss their intended prices as a result of the prices changing from
`
`under the trader’s cursor before an order is sent. E.g., Brumfield Trial Tr., at 682-706. As a
`
`result, the combination of static screens and single action order entry increased the likelihood
`
`that the user would get his desired price for non-market type orders and provided for fast order
`
`entry by keeping the price level static when the inside market changes.
`
`32.
`
`After a period of initial skepticism, the invention broke through to become the
`
`prominent trading tool in the futures trading space. E. g., Geannopulos 201 1 Dep. Tr., at 113-14;
`
`McElveen Decl., at 1] 7; Burns Dep Tr., at 242-44. The invention received widespread
`
`praise. For example, over 30 prominent traders and leaders in the futures industry signed
`
`declarations under the penalty of perjury attesting to the importance of the patented invention to
`
`electronic trading, declaring, for example:
`
`0
`
`o
`
`0
`
`0
`
`0
`
`o
`
`0
`
`0
`
`o
`
`0
`
`0
`
`0
`
`0
`
`“Mr. Brumfield had a unique vision and [MD Trader] was ingenious” (Glickman, Decl., 1]
`
`6)
`
`“significantly reduces the mental calculations required by the preexisting systems” (Id. at
`
`‘l 5)
`
`“much faster than any order entry system I had used before” (Thomas Burns Decl., 1] 7)
`
`“created a paradigm change in the way that active traders traded” (Feltes Decl., 1] 5)
`
`“fast and accurate order entry and management” (Johnson Decl., 1] 7)
`
`“more intuitive and easy to use than other systems” (Ryan Decl., 1] 4)
`
`“changed the way electronic trading was done” (Anthony Decl., 1] 6)
`
`“made it much easier to see how the market was moving” (Oryhon Decl., 1] 4)
`
`“allowed traders to .
`
`.
`
`. react quicker” (Id. at 1] 5)
`
`“radically different than the types of trading tools that were available at that time”
`
`(Monieson Decl., 1] 7)
`
`“far superior” (Clark Decl., 1]1] 4-5)
`
`“allowed a trader to recognize opportunities much quicker” (Cahnman Decl., 1] 8)
`
`“a world ofdifference” (Thomas Burns Decl., 1] 5)
`
`12
`
`Page 12 of 61
`
`Page 12 of 61
`
`
`
`o
`
`“[traders] saw the great advantages of using MD Trader and now could not switch back”
`
`(Moore Decl., 4)
`
`0
`
`o
`
`0
`
`o
`
`0
`
`“far superior for the active trader because it was fast” (Zellinger Decl.,1] 5)
`
`“a very significant departure from the .
`
`.
`
`. [systems available]” (Grisafi Decl., 1] 6)
`
`“allow for a trader to be more aggressive and more confident” (Anthony Decl., 1] 6)
`
`“a revolutionary product providing great benefits to electronic traders” (Oryhon Decl., 1]
`
`6)
`
`“revolutionary .
`
`. .not just an incremental improvement.” (Kidd Decl., 1] 8)
`
`o The differences between MD Trader and previous systems resulted “in MD Trader being
`
`o
`
`0
`
`o
`
`o
`
`0
`
`0
`
`0
`
`an invaluable tool to traders.” (Grisafi Decl., 1] 5)
`
`“a stroke of genius and I had not seen anything like it before” (Martin Decl., 1] 8)
`
`“different .
`
`.
`
`. from anything I had ever seen before” (Leone Decl., 1] 3)
`
`“a major improvement .
`
`.
`
`. so significant that I cannot put a price on its value” (Parker
`
`Decl., 1] 4)
`
`“displayed the ebbs and flows of a market in a way that I could easily see” (Thomas
`
`Burns Decl., 1] 6)
`
`Prior to TT’s launch of MD Trader “no one suggested anything remotely like MD
`
`Trader” (Feltes Decl., 1] 8)
`
`“whoever came up with .
`
`.
`
`. MD Trader was truly ‘thinking outside of the box’” (Oryhon
`
`Decl., 1] 6)
`
`“MD Trader provided a significant change to the order entry screens that were prevalent
`
`at the time of its release. Prior to the release of MD Trader, traders did not even perceive
`
`a problem with the old tools they were using. Only after seeing the benefits of MD
`
`Trader
`
`did
`
`people
`
`like myself
`
`realize
`
`the
`
`shortcomings of
`
`the preexisting
`
`systems.” (Schuman Decl., 1] 12)
`
`0 MD Trader was a “superior tool to the other systems available at the time.” (Zellinger
`
`Decl., 1] 4)
`
`0
`
`0
`
`“MD Trader was the first application designed to be used as a true trading tool by the
`
`trader to enhance trading.” (Zellinger Decl., 1] 5)
`
`“MD Trader proved to be a significant advance in performance.” (Marlovics Decl., 1] 8)
`
`0 MD Trader was “great.” (Gancer Decl., 1] 4)
`
`0 MD Trader is “invaluable.” (Jahno Decl., 1] 5)
`
`o
`
`o
`
`0
`
`0
`
`0
`
`“substantially increases the speed in which traders can react to opportunities and enter
`
`orders.” (Mendelson Decl., 1] 6)
`
`“revolutionary.” (Moricz Decl., 1] 4)
`
`“radically different .
`
`.
`
`. far superior.” (Monieson Decl., 1] 7)
`
`“a world ofdifference for the trader.” (Melgarejo Decl., 1] 4)
`
`“provided dramatic benefits to traders.” (Ryan Decl., 1] 5)
`
`33.
`
`In addition, by keeping the price levels static and having the inside market move
`13
`
`Page 13 of 61
`
`Page 13 of 61
`
`
`
`relative to the static price axis, the patents-in-suit unexpectedly better represented the market and
`
`changes in the market than prior art style screens. E. g., Brumfield Trial Tr., at 705-706. For
`
`example, allowing the market to move up and down on the screen provided the ability of the
`
`trader to enter orders more quickly and accurately at desired prices relative to the market. This
`
`required less mental processing demands on the trader, and also more precisely identified the
`
`current market. E.g., Anthony, Decl., 1] 5, Cahnman Decl., 1]1] 8-9, Glickman, Decl., 1] 5; Grisafi,
`
`Decl., 1]1] 4-5, McElveen, Dec., 1]1] 4-5, Feltes, Decl., 1]1] 4-5, Northway, Decl., 1] 4, Zellinger,
`
`Decl., 1] 5. Thus, order entry at desired prices was improved. E. g., Brumfield Trial Tr., at 703-
`
`706; Anthony, Decl., 1] 5, Glickman, Decl., 1]1] 4-5, Grisafi, Decl., 1]1] 4-5, Clark Decl., 1] 5;
`
`Cahnman Decl., 1] 8, Feltes, Dec., 1]1] 4-5, McElveen, Dec., 1]1] 4-5, Northway, Decl., 1] 4. The
`
`combination of this unexpected benefit with the fast/accurate order entry made this invention
`
`very valuable to many traders.
`
`34.
`
`I have reviewed testimony from traders describing the benefits of the invention
`
`over the prior art. For example, one of the inventors, Harris Brumfield, changed from using the
`
`prior art style interface to the invention claimed in the patents-in—suit and as a result quickly
`
`experienced an exponential increase in his gains. Brumfield Trial Tr., at 707-713; PTX 396.
`
`One early adopter, David Martin, changed from using a prior art style Globex terminal to the
`
`invention claimed in the patents-in-suit and soon thereafter had approximately 90 consecutively
`
`profitable trading days using the invention. Martin Decl., 1] 8; Martin Dep. Tr., at 118-120.
`
`According to Mr. Martin, the invention “was far superior to preexisting systems” and his success
`
`was “directly attributable” to TT’s patented invention.
`
`Ia’. Yet another user ofthe invention,
`
`Charles McElveen lll, founder and owner of Kingstree Trading, L.L.C., licensed and used the
`
`invention soon after it launched and quickly saw the “significant advance over the trading
`
`14
`
`Page 14 of 61
`
`Page 14 of 61
`
`
`
`screens existing at the time.” McElveen Decl., 114. Using the invention, Mr. McElveen
`
`commented that the invention “allows for traders to react much more quickly to fast-changing
`
`market conditions than the preexisting systems.” Id. at 1] 5. Mr. McElveen also testified that the
`
`patented invention was so important that his company may not have even been able to survive
`
`without it. McElveen Dep., Tr., at 107-109. Many electronic futures traders recognized the
`
`benefits of the invention and started using it. Id. at 1] 6. The patented invention has also received
`
`accolades and been widely copied. E. g., Steidlmayer on Markets, pp. 205-207.
`
`VI.
`
`THE IMPORTANCE AND VALUE OF TT’S PATENTED INVENTIONS TO THE
`
`INDUSTRY
`
`35.
`
`To better appreciate the revolutionary nature of the invention, an understanding of
`
`the nature of the industry in which it was developed is helpful. The incentives for success are
`
`pure — there is a lot of money at stake. The industry consists of traders (who can be brokers,
`
`speculators and/or hedgers), exchanges, FCMs and software vendors. Traders use technology,
`
`such as software and hardware products, to help make quick decisions and seize opportunities.
`
`This technology can be obtained from independent software vendors (like TT), more diversified
`
`software vendors as explained above, from FCMs or from the exchanges. At the time of the
`
`invention, and still today, there was/is a strong interest in technology that provides even the
`
`slightest edge or advantage over others in the industry. As a result, there are millions of dollars
`
`spent each year on research and development to create technology that can provide a participant
`
`in the industry any edge.
`
`36.
`
`Speed and accuracy are often critical factors for success. Because opportunities
`
`may exist for only fleeting moments, the ability to spot them and seize those opportunities can
`
`often be the difference between the success and failure ofa trader. Thus, even the smallest
`
`appreciation or suspicion that some new technology has a chance to provide even a slight
`
`l5
`
`Page 15 of 61
`
`Page 15 of 61
`
`
`
`advantage is quickly tried by the industry. Unlike the case in some other industries, there are no
`
`market factors or other reasons why participants in the industry would not try any technology
`
`that has the slightest possibility of providing an edge. Similarly, the exchanges and FCMs make
`
`more money when more volume that is traded, and they are always looking to develop
`
`technology that will increase the volume traded by end users. As a result, new technology that
`
`provides a competitive edge spreads like wildfire.
`
`37.
`
`Prior to and at the time of the invention, many well-capitalized industry
`
`participants had the motivation to create better trading screens. For example, many exchanges
`
`throughout the world provided electronic trading systems at the time of the invention. The
`
`systems provided order-matching, maintained order books and positions (or market depth), price
`
`information, and managed and updated electronic trading databases. Traders used software that
`
`created high-speed interactive screens that enabled them to enter orders, obtain data from the
`
`exchange and monitor their positions. As volume through electronic trading increased,
`
`electronic trading quickly became a large portion of the business for exchanges. The exchanges,
`
`therefore, had great interest in promoting electronic trading. Eurex invested in promoting
`
`electronic trading and trading screens in particular. The Chicago Board of Trade (“CBOT”)
`
`developed its own screen. The Chicago Mercantile Exchange (“CME”) provided Globex and
`
`Globex 11, both of which included trading screens. All of these exchanges had an incentive to
`
`create an improved trading screen that caused people to trade more and that improved trader
`
`performance, so the exchanges would make more money through increased volume.
`
`38.
`
`Similarly, prior to and at the time ofthe invention, other software vendors, such
`
`as Patsystems, eSpeed, Orc Software, Trinitech (Nyfix), Ecco, GL Trade, RTS Realtime
`
`Systems, EasyScreen, Front Capital Systems, and many others also were investing resources to
`
`[6
`
`Page 16 of 61
`
`Page 16 of 61
`
`
`
`develop better trading screens. Futures Commission Merchants (“F CM”)/brokers and
`
`proprietary traders also invested in their own front end technology. Similarly, many trading
`
`firms invested resources in developing their own front end technology. All of these entities had
`
`many highly skilled persons in the field working to create improved trading interfaces. Even
`
`though all had tried to create an improved trading screen, none created the inventive trading
`
`screen covered by the patents-in-suit.
`
`VII.
`
`LEVEL OF ORDINARY SKILL IN THE ART
`
`39.
`
`In my opinion, one of ordinary skill in the art for purposes of this case is a person
`
`having (1) a bachelor's degree or equivalent experience and (2) two years of experience
`
`designing and/or programming graphical user interfaces, including experience designing and/or
`
`programming graphical user interfaces for electronic trading based on input from a person with
`
`knowledge of the needs of an electronic trader.
`
`I have a greater level of skill, but I can speak
`
`about what one of ordinary skill in the art would understand because of my background and
`
`experience.
`
`VIII.
`
`INFRINGEMENT ANALYSIS
`
`40.
`
`I understand that infringement involves a two-step process.