`
`
`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.
`___________
`
`Case CBM2016-00086 (Patent No. 7,818,247 B2)
`Case CBM2016-00087 (Patent No. 7,412,416 B2)
`Case CBM2016-00090 (Patent No. 7,725,382 B2)
`___________
`
`Record of Oral Hearing
`Held: August 10, 2017
`___________
`
`
`
`
`
`Before SALLY C. MEDLEY, MEREDITH C. PETRAVICK, and
`JEREMY M. PLENZLER, Administrative Patent Judges.
`
`
`
`
`
`
`
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`
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`Case CBM2016-00086 (Patent No. 7,818,247 B2)
`Case CBM2016-00087 (Patent No. 7,412,416 B2)
`Case CBM2016-00090 (Patent No. 7,725,382 B2)
`
`APPEARANCES:
`
`ON BEHALF OF THE PETITIONER:
`
`
`Richard Bemben, Esquire
` Sterne Kessler Goldstein & Fox
` 1100 New York Avenue, Northwest
` Washington, DC 20005
` Adam Kessel, Esquire
` Fish & Richardson
` One Marine Park Drive
` Boston, Massachusetts 02210
`
`
`ON BEHALF OF PATENT OWNER:
`
`
`Leif R. Sigmond, Jr.
` McDonnell Boehnen Hulbert & Berghoff
` 300 South Wacker Drive
` Chicago, Illinois 60606.
`
`Jay Knoblock, Esquire
`
` Trading Technologies International
` Director of IP
`
`
` The above-entitled matter came on for hearing on
`Monday, August 10, 2017, commencing at 1:01 p.m., at the U.S. Patent
`and Trademark Office, 600 Dulany Street, Alexandria, Virginia.
`
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`Case CBM2016-00087 (Patent No. 7,412,416 B2)
`Case CBM2016-00090 (Patent No. 7,725,382 B2)
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`
`
`P R O C E E D I N G S
`JUDGE PETRAVICK: We're here today for CBM
` 2016-00086, CBM2016-00087, CBM2016-00090. I'm Judge
` Petravick. With me on the bench is Judge Medley and
` joining us from Detroit is Judge Plenzler. So could
` we know who's here for the petitioner.
` MR. BEMBEN: Good afternoon, Your Honors.
` My name is Richard Bemben. I'm an attorney at
` Sterne Kessler Goldstein & Fox. I'm here on behalf
` of the petitioners, and I will be arguing in the 87
` and 90 CBMs.
` With me is Adam Kessel.
` MR. KESSEL: Good afternoon, Your Honors.
` I'm Adam Kessel from Fish & Richardson. I'm counsel
` just for the trade station parties. I'm here for
` the CBM2016-86 on the '247 patent and my colleague
` John Phillips is on the phone.
` JUDGE PETRAVICK: And for patent owner.
` MR. KNOBLOCH: My name is Jay Knobloch.
` I'm in-house patent counsel at Trading Technologies,
` and I will be taking the 101 section for all three
` of the proceedings.
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` MR. SIGMOND: Your Honor, Leif Sigmond
` from McDonnell Boehnen Hulbert & Berghoff, and I'll
` be talking about the 090, 103 issues. We also have
` Monica Dudak also from Trading Technologies in
` house.
` JUDGE PETRAVICK: I understand that some
` of the demonstratives were marked confidential.
` MR. SIGMOND: I think it was just one, one
` slide, and I will not be using that.
` JUDGE PETRAVICK: You will not be using
` it. Okay. All right. Thank you. All right.
` Also, there is a motion to exclude.
` Does patent owner intend to argue its motion to
` exclude.
` MR. SIGMOND: Your Honor, we are resting
` on our papers.
` JUDGE PETRAVICK: So each side has 45
` minutes today. Petitioner, would you like to
` reserve some of your time for rebuttal?
` MR. BEMBEN: We would, Your Honor. We'd
` like to reserve ten minutes.
` JUDGE PETRAVICK: So I'm going to set the
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` timer lights here for 45 minutes. And if you go over,
` we'll just subtract that.
` Also, please remember that Judge
` Plenzler will not be able to see any slides that
` are on the screen. So you need to refer to your
` slide by slide numbers so that he can follow
` along. And also, please when you make your
` remarks, step to the podium and use the microphone
` at the podium or Judge Plenzler will not be able
` to hear you.
` You can begin when you are ready, Mr.
` Bemben.
` MR. BEMBEN: Good afternoon, Your Honors.
` I'd like to start with the '416 patent.
` The claims of the '416 patent are
` ineligible under Alice. The federal circuit's
` non-precedential decision in Trading Technologies
` versus CQG does not control the fate of the '416
` patent nor should it be instructed here.
` The '416 patent was not an issue in CQG
` as patent owner admits on page 8 of his response,
` quote: The claimed invention in the '416 patent
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` is different from the inventions of the '132 and
` '304 patents. As a non-precedential opinion, CQG
` did not add significantly to the body of law, nor
` did it hold that all GUIs used for trading are
` patent eligible.
` Therefore, the board should follow the
` federal circuit's precedential 101 decisions --
` such as Electric Power Group, Ameranth, Affinity
` Labs -- and should find the claims of the '416
` patent ineligible.
` Unless there are any questions about
` CQG, I would like to discuss the claims and the
` breadth of the claims.
` So the '416 claims are quite broad, they
` are required displaying only a small amount of
` data points. Claim 1, for example, it does not
` require collecting, displaying, or updating real
` time market data. Rather, it requires displaying
` only two indicators of historical trading data.
` It recites vertical and horizontal axes.
` But these axes need not necessarily be displayed.
` It also recites a plurality of locations
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` for placing an order icon. But again, these
` locations don't necessarily need to be displayed.
` Mr. Thomas, patent owner's expert, testified that
` they can see through the screen locations.
` Finally, claim 1 requires generating an
` order and sending the order to an electronic
` exchange, but it doesn't recite how the order is
` generated or how it's sent by computer.
` With this in mind, I'd like to address
` Alice step one. Now, this first stage of inquiry
` looks to the focus of the claims, where their
` character is (unintelligible). The focus of the
` '416 claims is graphing or displaying trading data
` to assist in traders placing AN order. This is a
` fundamental economic practice.
` Petitioner's proffered abstract data
` closely tracks the language of the claims. Claim
` 1 is representative, and if we look at the
` preamble, it paraphrases the abstract idea. It
` recites a method for facilitating trading and
` displaying information regarding the buying and
` selling of a good.
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`Case CBM2016-00087 (Patent No. 7,412,416 B2)
`Case CBM2016-00090 (Patent No. 7,725,382 B2)
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` Now, if we turn to the body of claim 1,
` the first two steps are directed to displaying a
` chart that has historical trading data. In other
` words, this is directed to graphing or displaying
` the trading data.
` The next four steps are directed to a
` trade order -- generating a trade order by moving
` an icon to a chart and then sending the trader off
` to the exchange. In other words, these are
` directed to assisting the trader in placing an
` order. In short, the claims display market data
` and facilitate order entry. Nothing more.
` Now, patent owner makes the same
` structure, makeup, and functionality argument in
` this case that it has for all its patents in the
` CBMs. We've heard the same argument with respect to
` the '055 patent, '056, '132, '134, '304 and so on.
` And my guess is that we're going to hear it again
` today applied to the '247, '382, and '416.
` To patent owner it doesn't matter what the
` claims actually say, it's argument remains the
` same -- structure, make-up, functionality. But by
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`Case CBM2016-00087 (Patent No. 7,412,416 B2)
`Case CBM2016-00090 (Patent No. 7,725,382 B2)
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` using the same argument to describe different
` patents and different claims, patent owner has
` watered this argument down to the point that it's
` meaningless.
` In essence, you could apply this
` structure, make-up, and functionality argument to
` any graphical user interface, but that doesn't
` answer the question in Alice, whether these claims
` are eligible.
` We know from cases like Electric Power
` Group, Ameranth, Affinity Labs, there's no rule on
` the patent eligibility of graphical user interfaces,
` rather meaning to apply the Alice test on a
` case-by-case, claim-by-claim basis. And that's what
` petitioners have done here. And the irony is that
` patent owner accuses petitioners of overgeneralizing
` the claims. But the direct opposite is true. Our
` abstract idea closely tracks the claim numbers.
` Patent owner's structure, makeup, and functionality
` argument simply does not.
` Patent owner argues that the claims of the
` '416 patent recite how to construct a GUI, but
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`Case CBM2016-00087 (Patent No. 7,412,416 B2)
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` that's not true. These claims, at a very high level
` generality describe a result or an idea of
` displaying a chart and dragging and dropping an icon
` to place an order. They don't recite how the
` computer achieves these functions.
` And this is different from DDR, which
` claimed it changed the conventional functionality of
` a hyperlink. It's also different from Enfish, which
` claimed changes to a database which resulted in
` faster search times and smaller memory requirements.
` It's also very different from McRO, which claimed a
` detailed algorhythm to emanate lip sync.
` Patent owners attempt to analogize its
` claims to those at issue in DDR, Enfish, and McRO
` simply falls flat. And to be sure, these claims
` don't affect an improvement to a computer which was
` the cornerstone in cases like DDR, Enfish, and
` Baskin.
` Now, patent owner alleges that in at least
` some instances the '416 claims increase the speed of
` order entry. Patent owner doesn't identify what
` those instances are. And even it's that's true,
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`Case CBM2016-00087 (Patent No. 7,412,416 B2)
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` which petitioners don't concede, the alleged
` improvement is not to the computer.
` If limiting drag and drop, as opposed to
` other well known GUI functionality, it doesn't speed
` up the computer. It's just one of many well known
` GUI operations that can be chosen from.
` Patent owner also argues that the claimed
` invention provides a benefit of displaying trading
` data concurrently and in an intuitive manner. But
` we know from Electric Power Group that displaying
` information concurrently or in a quote/unquote
` humanly comprehensible manner does not save the
` claims from being abstract.
` In short, these claims amount to nothing
` more than implementing the abstract data using
` conventional GUI functionality and fail under Alice
` step one.
` Alice step two. The '416 claims do not
` recite an invented consequence, whether considered
` individually or as an ordered combination.
` Displaying the chart with historical trading data
` that has a vertical axis of price and a horizontal
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` axis of time was simply well known by the time of
` the '416 patent. Arms, which is Exhibit 1033,
` instructor is a treatise from 1971 that explains
` that vertical line charts, which are charts that
` display prices on the vertical axis and time on the
` horizontal axis were, quote, the oldest and most
` widely used method of chart. That's Exhibit 1033,
` pages 12 through 14.
` Similarly, dragging and dropping an icon
` form or function was well known in convention.
` Cooper's comprehensive treatise on GUI is Exhibit 1029.
`Cooper teaches that dragging
` the icon to, quote, a gizmo that represents a
` function, is arguably the most famous expression of
` direct manipulation. That's Cooper at 262.
` Merely applying this famous GUI function
` in the field of electronic trading, where, in this
` case, the gizmo is a chart and the function is order
` placement, that's not invented.
` The still to the core of the '416 claims
` merely recite to supplying trading data and
` conventional GUI functionality. But they do not
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` recite how to constructively nor are they required
` in the event of programming, nor do they require a
` nonconventional computer, network, display, or input
` device.
` As this panel correctly found in the
` institution decision, the specification does not
` disclose a particular way for data gathering, drag
` and drop, sending orders, or arranging data and
` locations to place a trade on display. Nor does the
` specification provide or disclose any particular
` algorithms or rules for performing or reciting
` functions.
` Patent owner has done nothing to refute
` these findings. In sum, the '416 claims recite
` basic well known display of GUI functionality
` without limiting to any technical needs. Similar to
` the claims of Electric Power Group, the '416 claims
` define a desirable information-based result and are
` not limited to inventive means of achieving that
` result. Thus, they fail under section 101.
` Unless there are questions about the '416
` patent, I'd like to move on to the '382 patent.
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` Here petitioners have challenged the '382
` claims as both ineligible under 101 and as obvious
` under 103. I'd like to begin with the obviousness
` challenge. And that necessarily requires a brief
` discussion of TSE.
` Petitioners have proven that TSE is prior
` art. We established that TSE was disseminated and
` otherwise made available to the public in August of
` 1998. The law requires nothing more to show that
` TSE is a prior art printed publication. This panel
` should come to the same conclusion that it did
` CBM2105-181 and 182 that TSE is not prior art.
` Briefly, Mr. Kawashima, as we know, is the
` person who prepared the TSE document. He testified
` that about 200 participants of the Tokyo stock
` exchange, which includes companies like Morgan
` Stanley, Goldman Sachs, Merrill Lynch. They
` received copies in August of 1998.
` His testimony is unrebutted and patent
` owner has had two opportunities to cross examine
` him on this point.
` However, the facts remain the same.
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` Patent owner cannot point to anything that
` contradicts his testimony or that shows that he's
` biased.
` Unless there's any questions about TSE,
` I'll move on.
` Claims of the '382 patent are quite broad.
` Independent claim 1 -- the independent claims. They
` both require displaying only three pieces of data.
` It's a first indicator associated with the best bid,
` a second indicator associated with the best offer,
` and an enter-order indicator associated with an
` order entered at the exchange.
` In other words, the independent claims
` require displaying the inside market and one
` additional order. And contrary to patent owner's
` arguments in their briefs, the claims do not require
` that this display data be in a single window. All
` of the patent owner's arguments about condensing
` multiple windows into one simply isn't commensurate
` with the scope of the claims.
` Now, with this in mind, the breadth of the
` claims in mind, I'll move to the obviousness
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` combination, and that is TSE and Belden. TSE
` teaches or suggests every limitation of the
` independent claims, except for, quote, receiving a
` single action that selects the location associated
` with the enter order indicator that's supposed to
` cancel the order at the exchange.
` But Belden teaches a single-action
` cancellation, and the petition provided a number of
` reasons that a skilled artisan would combine the TSE
` and Belden as proposed. And these reasons are
` supported by the petitioner's expert, Mr. Román, and
` by the evidence in the record, such as teachings
` through Belden; Buist, which is Exhibit 1009; Weiss,
` Exhibit 1010; Deel, 1011; and Shneiderman, 1013.
` Now, in his response patent owner repeats
` or recasts a number of flawed arguments that it's
` asserted in related CBMs. The panel is already
` familiar with many of those arguments or some
` variation of those arguments. And then addressed
` them and rejected them in CBM 2015-181 and 182.
` I'll still briefly touch on them today.
` JUDGE PETRAVICK: Mr. Bemben, if I could
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` interrupt you, I'd like to ask a couple questions to
` clarify exactly what the combination in your
` petition is with regards to TSE and Belden and what
` is the entered order indicator.
` So I'm really talking about pages --
` pages 54 through 61 of the petition. So when you
` are talking about displaying an entered order
` indicator you gave two alternatives. You say,
` first, TSE teaches an entered order indicator
` because there are indicators next to price
` column 11. And in the second you talk about TSE
` teaching the notice display area, a window with a
` notice display area having entered order
` indicators. So there's two things like that.
` When you get to talking about the next
` limitation, the receiving a single action coming
` in, it seems like in that part of the
` petition you really only talk about combining
` Belden with the indicator in the notice display
` area as opposed to combining Belden with the
` indicator as next to the column 11 on the board
` screen; is that correct?
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` MR. BEMBEN: So, Your Honor, I would say
` that you are right about page 54 regarding
` displaying the entered order indicator. We've
` identified two ways on the board screen, columns 11
` and 12, and in the notice display area. And we
` submit that it would be both or the cancellation of
` both are applicable. Cancellation can occur from
` both by applying both.
` JUDGE PETRAVICK: So you gave me two
` alternatives. You want to combine Belden with the
` order indicator next to the column and Belden
` canceling the order indicator – the entered order
` indicator in the notice display area, which you then
` also have to move up to the lineup with the static
` price axis.
` Can you tell me where in the petition
` exactly you give a motivation for combining Belden
` with the order indicator along the price column?
` Because I'm looking at the part of the petition
` where you are talking about the single action
` command limitation at page 57 through 60 and it
` moves over to 61, and you seem to be talking more
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` about the notice display area than the indicator.
` MR. BEMBEN: So I will say this. While it
` may seem that it's -- it may seem that we're talking
` mostly about the notice display area, and I'd have
` to -- I can check this while --
` JUDGE PETRAVICK: You can tell me later.
` That's fine.
` MR. BEMBEN: But I will say this right now
` that -- to answer your question -- we explained that
` both the entered order indicators in the notice to
` display and in the board screen, both of those
` qualify as entered order indicators. And we
` provided the motivation on page 60 and 61 that a
` POSITA, they would be motivated to make the
` combination with Belden's single-action techniques
` in order to reduce time and/or in order to reduce
` the opportunity for input errors from the user. And
` that applies to both those locations that we are
` talking about.
` JUDGE PETRAVICK: Right. Can you point to
` anything more specific that talks about combining
` Belden's single-action order with indicators along
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`Case CBM2016-00086 (Patent No. 7,818,247 B2)
`Case CBM2016-00087 (Patent No. 7,412,416 B2)
`Case CBM2016-00090 (Patent No. 7,725,382 B2)
`
` the column? That statementssort of general. And
` when you read that in context with the other
` paragraphs, you are only talking about
` the notice display area.
` That's what I'm looking for. You can
` look at it -- you can tell me after. That's fine.
` MR. BEMBEN: I will do that. Thank you
` very much.
` As I was saying, the first argument that
` patent owner brings up is that a combination of
` TSE and Belden doesn't teach an order entry
` region. Here this is an argument that we've heard
` before. Here patent owner attacks TSE and Belden
` individually, but it fails to consider their
` combination, which we know from viewing Mercury
` code is the proper analysis.
` Patent owner makes another argument that
` it's made in the past. And that is that TSE's
` display doesn't update in scroll mode and that
` orders cannot be placed in a scroll mode. This is
` just pure conjecture. Page 91 of TSE states that
` the board information on its board screens
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`Case CBM2016-00086 (Patent No. 7,818,247 B2)
`Case CBM2016-00087 (Patent No. 7,412,416 B2)
`Case CBM2016-00090 (Patent No. 7,725,382 B2)
`
` automatically updated even if it has been scrolled
` vertically. And also there's actually nothing in
` TSE that suggests that the order entry region --
` that order entry is disabled in scroll. There's
` nothing to suggest that.
` This is similar to what you're asking
` about, motivation to combine. Patent owners argue
` that petitioners didn't provide a motivation to
` combine Belden and TSA, but that's not true. In
` addition to the motivation set forth in Belden,
` petitioner also relies on Mr. Román's testimony,
` which is supported by Shneiderman. That's
` petition 483 and 60. Weiss, petitioner 57; and
` Deel, 61.
` If there's no questions about those.
` I'd like to move on to what we view as the main
` dispute here. And that deals with the entry order
` indicator as you pointed out. And here the
` parties dispute the construction of this term.
` Petitioners assert that the term is defined in
` claim one. And claim one says being associated
` with an order entered at the electronic exchange.
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`Case CBM2016-00086 (Patent No. 7,818,247 B2)
`Case CBM2016-00087 (Patent No. 7,412,416 B2)
`Case CBM2016-00090 (Patent No. 7,725,382 B2)
`
` Our position is that that's a definition of what
` that term means.
` Patent owner, on the other hand, asserts
` that the entered order indicator must indicate to
` the user that the user has an order at the
` particular price line.
` Now, we believe that patent owner's
` construction is incorrect because it includes
` unreasonable limitations from the specification into
` the claims. However, we want to make it clear
` that under either interpretation we believe that
` petition demonstrates that the prior art renders the
` limitations obvious. And while we just kind of
` briefly touched on it about TSE and how TSE showed
` the entry order indicator in two ways, as I
` mentioned, columns 12 and 13 of TSE's board
` screen, which you're familiar with on page 107,
` that has entered order indicators in the sense
` that each of those numbers in column 12 is
` associated with at least one order that's entered
` at the exchange.
` And I also mentioned that there are
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`Case CBM2016-00086 (Patent No. 7,818,247 B2)
`Case CBM2016-00087 (Patent No. 7,412,416 B2)
`Case CBM2016-00090 (Patent No. 7,725,382 B2)
`
` several instances on that screen where there's
` only single orders displayed. So the trader that
` placed that order, to him or her, it would
` indicate that they have an order at that
` particular price level, which means patent owners'
` narrow interpretation.
` And as we explain again, the notice
` display area, which is directly below the board
` screen, that displays the user's own entered
` orders. And as explained in the petition at pages
` 55 through 57, it's just a simple design choice
` where you want to display those, whether you want
` to display them below or to the side of the board
` screen.
` Now, patent owner disagrees and argues
` that there's no evidence whatsoever that it would
` have been obvious to display on the notice of
` display area as we suggested on the price axis.
` But that's not true either.
` Mr. Román explained that it wouldn't
` have been obvious so that a trader could track his
` or her orders along the axis. And this testimony
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`Case CBM2016-00086 (Patent No. 7,818,247 B2)
`Case CBM2016-00087 (Patent No. 7,412,416 B2)
`Case CBM2016-00090 (Patent No. 7,725,382 B2)
`
` is also supported by the Buist patent. So Buist
` is a patent that qualifies as 102 E and was filed
` before the earliest priority date of the '382
` patent, and it demonstrates the state of the art
` that persons of ordinary skill in the art would
` have known at the time of the motion put forward.
` Now, Buist shows a graphical user
` interface has displays, that has a "your-orders"
` column. And it shows the user picks up her own
` orders.
` Mr. Román's testimony also supported by
` the Weiss, which shows the trader's name next to
` his or her order along the price axis. So again,
` we have an identification of the trader along the
` price axis.
` And as I mentioned, displaying
` information on the side of the board as opposed to
` underneath, that doesn't take up any more or any
` less screen real estate, which is one of patent
` owners' arguments. They make this argument about
` screen real estate and you move it around, but
` notice to display area is already displayed on the
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`Case CBM2016-00086 (Patent No. 7,818,247 B2)
`Case CBM2016-00087 (Patent No. 7,412,416 B2)
`Case CBM2016-00090 (Patent No. 7,725,382 B2)
`
` screen. It's already taking up some real estate.
` So moving to a different location wouldn't seem to
` matter.
` Now, claim 1 also requires single action
` order cancellation. And here petitioners propose
` monitoring TSE's multistep order (unintelligible)
` based on Belden's teaching of single-action order
` (unintelligible).
` This combination is very similar to the
` combination of TSE and Belden's place, buy, or
` sell orders which this panel is familiar with.
` And so the same motivation is applied, as I
` mentioned, increasing the speed and raising the
` input error.
` Unless there's any questions, I'd like
` to briefly touch on secondary considerations.
` Here petitioner should prevail for four
` reasons, and the first is that petition presents a
` very strong prima facie obviousness showing. The
` secondary consideration evidence, while it must be
` considered, it simply doesn't overcome the strong
` showing.
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`Case CBM2016-00086 (Patent No. 7,818,247 B2)
`Case CBM2016-00087 (Patent No. 7,412,416 B2)
`Case CBM2016-00090 (Patent No. 7,725,382 B2)
`
` The second reason is that patent owner
` has failed to establish the requisite nexus
` between the 382 claims and the secondary
` consideration evidence. Patent owner is not
` entitled to a presumption of nexus because it
` hasn't shown that the MD Trader product embodies
` the claimed invention. And I'll point you to
` paper 36. This panel has found patent owner
` improperly presented its arguments in that respect.
` And I also say that the evidence
` demonstrates that patent owner's alleged secondary
` considerations result from unclaimed and known
` features. So that's another reason that cuts
` against the finding of nexus.
` Patent owner's failure to establish
` nexus is fatal for the secondary consideration
` arguments.
` The third reason is that, as we
` explained in the motion to exclude, the vast
` majority of patent owner's evidence is
` inadmissible hearsay, and another point is that
` most of this evidence predates the '382 patent
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`Case CBM2016-00086 (Patent No. 7,818,247 B2)
`Case CBM2016-00087 (Patent No. 7,412,416 B2)
`Case CBM2016-00090 (Patent No. 7,725,382 B2)
`
` issuance.
` Fou
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