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Trading Technologies International, Inc. v. Cqg, Inc.

United States District Court, N.D. Illinois, Eastern Division

January 13, 2015

TRADING TECHNOLOGIES INTERNATIONAL, INC., Plaintiff,
v.
CQG, INC., and CQGT, LLC, Defendants.

MEMORANDUM OPINION AND ORDER

SHARON JOHNSON COREMAN, District Judge.

On December 12, 2014, CQG filed a Motion to Stay the case pending Covered Business Method Review by the U.S. Patent and Trademark Office [845]. The Court allowed Trading Technologies until December 29, 2014, to respond. No reply was allowed, but one was filed.[1] For the reasons stated below, the motion is denied.

Background

The instant motion stems from a petition filed by TD Ameritrade Holding Corp. et al. on May 19, 2014, with the USPTO requesting review under the transitional program for covered business method patents of U.S. Patent No. 6, 772, 132 B1 (one of the patents-in-suit in our case - the 132 patent).[2] TD Ameritrade challenged the patentability of claims 1-56 of the 132 patent under 35 U.S.C. § 101 (among other things). On December 4, 2014, the USPTO determined that the petition demonstrates that it is more likely than not that the challenged claims are unpatentable under 35 U.S.C. § 101, and therefore instituted a covered business method patent review of claims 1-56 of the 132 patent. (Dkt. 845-6, Ex. 5). CQG represented in their motion its intention to file a petition with the USPTO challenging the patentability of the 304 patent (the other patent-in-suit in this case) under 35 U.S.C. § 101. CQG filed a petition with the USPTO for a covered business method patent review for each of the patents-in-suit on January 9, 2015, after this motion was briefed and taken under advisement by the Court.

Legal Standard

The America Invents Act ("AIA") was signed into law on September 16, 2011, and the transitional program for covered business method patents came into effect one year later in September 2012. "The AIA permits covered business method review only for covered business method patents, ' which it defines as patent[s] that claim[ ] a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions." Market-Alerts Pty. Ltd. v. Bloomberg Finance LP et al., 922 F.Supp.2d 486, 491 (D. Del. Feb. 3, 2013)(citing America Invents Act (AIA), Pub. L. No. 112-29, § 18(d)(1), 125 Stat. 331 (2011)). The covered business review process lasts no more than 18 months, issuing a final written decision within twelve months of its beginning its review. See 77 Fed. Reg. 48757 (2012).

The AIA identifies four factors that a district court should consider when deciding whether to grant a stay: (1) whether a stay, or the denial thereof, will simplify the issues in question and streamline the trial; (2) whether discovery is complete and whether a trial date has been set; (3) whether a stay, or the denial thereof, would unduly prejudice the nonmoving party or present a clear tactical advantage for the moving party; and (4) whether a stay, or the denial thereof, will reduce the burden of litigation on the parties and on the court. Versata Software, Inc. v. Callidus Software, Inc., 771 F.3d 1368, 2014 U.S.App. LEXIS 21962, *4 (Fed. Cir. Nov. 20, 2014)(citing § 18(b)(1) of the AIA).

Discussion

CQG moves for a stay of the case in its entirety, arguing that section 101 subject matter patentability is a threshold question that should be resolved before the court considers subordinate issues such as infringement and validity. CQG refers to Judge Mayer concurring opinion in Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 2014 U.S.App. LEXIS 21633, *20 (Fed. Cir. Nov. 14, 2014), for the proposition that this Court must stay the litigation to allow the USPTO to determine patentability in the first instance. In his concurrence, Judge Mayer likens section 101 determination to a jurisdictional inquiry, stating "if claimed subject matter does not fall within the ambit of section 101, any determination on validity or infringement constitutes an impermissible advisory opinion." Id. Judge Mayer goes on to recite with approval some of the benefits of addressing section 101 at the outset of litigation.

I. Four Factors for a Stay

With respect to the four factors, CQG first argues that the USPTO review may eliminate the 132 patent entirely from this case. CQG also asserts that extensive and costly expert discovery remains to be completed as well as ruling on the three motions for summary judgment and pretrial preparation. Further, CQG argues that a stay will neither prejudice TT nor give CQG an unfair advantage. Lastly, CQG maintains that staying the case will reduce the burden on the Court and the parties. This Court weighs each factor in turn.

1. Simplify the Issues and Streamline the Trial

"[T]his simplification factor weighs more strongly in favor of a stay when all of the litigation claims are undergoing CBM review." Versata Software, Inc., 2014 U.S.App. LEXIS 21962, at *7. Here, only one of the patents-in-suit is subject to covered business method review. Although review of the 132 patent could decide the issue of § 101 validity, there are other issues relating to the 132 patent that the Court would still have to resolve. Moreover, the 304 patent is not implicated in any covered business method review and thus this Court would have to resolve all issues relating to that patent. In Virtualagility, Inc. v. Salesforce.com, Inc. et al., 759 F.3d 1307, 1314 (Fed. Cir. 2014), cited by CQG, the court found it significant that CBM review included all asserted claims on the ...


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