Chicago Mercantile Exch. Inc. v. Tech. Research Group Llc

789 F.Supp.2d 986

2011 Markman 2222316

CHICAGO MERCANTILE EXCHANGE, INC. and Board of Trade of the City of Chicago, Inc., Plaintiffs/Counterclaim Defendants,

v.TECHNOLOGY RESEARCH GROUP, LLC, Defendant/Counterclaim Plaintiff,

v.CME Group, Inc., Counterclaim Defendant.

No. 09 C 3895.

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

June 6, 2011.

Jerrold E. Salzman, Albert Lee Hogan, III, Gretchen Maria Wolf, Skadden Arps Slate Meagher & Flom, LLP CH, Chicago, IL, Daniel A. Devito, Skadden Arps Slate Meagher & Flom, LLP, New York, NY, James J. Elacqua, Jonathan D. Baker, Skadden, Arps, Slate, Meagher and Flom, Palo Alto, CA, for Plaintiffs/Counterclaim Defendants.Daniel Aaron Kotchen, Alicia Rosa Gutierrez, Daniel L. Low, Kitchen & Low LLP, Washington, DC, Daryl M. Schumacher, Kopecky, Schumacher & Bleakley, P.C., Chicago, IL, James Daniel Petruzzi, Mason & Petruzzi, Houston, TX, for Defendant/Counterclaim Plaintiff.

MEMORANDUM OPINION AND ORDER

RUBEN CASTILLO, District Judge.

Chicago Mercantile Exchange, Inc. (“CMEI”) and the Board of Trade of the City of Chicago (“CBOT”) (collectively, “Plaintiffs”) filed this patent action against Technology Research Group, LLC (“TRG”), seeking declaratory judgment pursuant to the Declaratory Judgment Act, 28 U.S.C. § 2201 et seq. (R. 121, Second Am. Compl.) Specifically, Plaintiffs seek a declaration that United States Patent No. 5,963,923 (“'923 patent”) is invalid and unenforceable. ( Id. ¶¶ 37–88.) Additionally, Plaintiffs seek a declaration that they have not directly or indirectly infringed the '923 patent. ( Id. ¶¶ 27–39.) TRG has also filed a patent infringement counterclaim against Plaintiffs and CME Group, Inc. (“CMEG”) (collectively, “CME”). (R. 47, TRG's Am. Countercl.) Presently before the Court is CME's motion for summary judgment of noninfringement of all asserted claims of the '923 patent. (R. 161, CME's Mot.) For the reasons stated below, the motion is denied.

BACKGROUND ¹

I. '923 patent

The '923 patent issued on October 5, 1999 and is titled “System And Method for Trading Having a Principal Market Maker.” (R. 196, TRG's Resp. to CME's N.D. Ill. L.R. 56.1 Statement ¶ 7.) In the present litigation, TRG is only asserting claims 9–11 of the '923 patent. Claims 9–11 of the '923 patent claim:

9. A principal market maker system for trading commodities, comprising:

a principal market maker futures computer operative to receive and automatically execute primary commodity purchase and sale trades and orders and maintain a commodity futures bid and offer market;

a principal market maker options computer operative to receive and automatically execute secondary commodity purchase and sale trades and orders and maintain a commodity options bid and offer market; and

a bi-directional communications link coupled between the futures and options computers, the bi-directional communications link to facilitate intermarket trading to manage risk taken in a position resulting from a trade in either market.

10. An electronic market for trading commodities, comprising:

a communications interface operative to transmit commodity bids and offers from at least one financial institution;

a principal market maker computer coupled to the communications interface, the principal market maker computer operative to receive the commodity bids and offers and execute trades to maintain a market for commodity trades; and

a principal market maker options computer.

11. The electronic market defined in claim 10, further comprising a bi-directional communications link coupled between the options computer and the principal market maker computer.

'923 patent, col. 11, ll. 11–41.

On June 28, 2010, the Court issued a Memorandum Opinion and Order construing various claims of the '923 patent. Chi. Mercantile Exch., Inc. v. Tech. Research Grp., LLC, 721 F.Supp.2d 785, 788–92 (N.D.Ill.2010). Notably, the Court construed the claim term “principal market maker” as follows:

an entity required to provide the following functions: (1) continuously maintain a two-sided bid/offer market of specified size and spread for its designated product(s); (2) maintain a public order book with respect to these assigned products; and (3) give priority to customer order execution over personal trading. As compensation for the fulfillment of these responsibilities, this entity is to receive priority volume benefits.

Id. at 794.

Additionally, the Court provided the following constructions: (1) “computer” as a programmable electronic device that can store, retrieve, and process data.”; (2) “execute” as “to carry out fully and completely”; (3) “order” as “instruction to a broker or dealer to buy or sell securities or commodities”; (4) “link” as “a unit in a communication system”; and (5) “coupled” to mean “to join for combined effect.” Id. at 795–803.

II. Infringement allegations

TRG contends that CME infringes independent claims 9 and 10 and dependent claim 11 of the '923 patent under 35 U.S.C. § 271(a) by making and using the patented system for electronic trading including principal market maker functionality that is claimed in the '923 patent. (R. 196, TRG's Resp. to CME's N.D. Ill. L.R. 56.1 Statement ¶ 19.) TRG argues that the following systems infringe, or have infringed, the asserted claims: (1) CME's Globex/iLink system, which is the current version of Globex; (2) CME's Globex/HipHop system, which is a prior version of Globex; and (3) e-CBOT, which is a system that was operated by CBOT before its merger into the CME. ( Id. ¶ 23.)

According to TRG, these systems infringed claims 9 and 10 of the '923 patent by, inter alia, (1) continuously maintaining a two-sided bid/offer market of specified size and spread for a designated product; and (2) giving priority to customer order execution over personal trading. ( Id. ¶¶ 24–25, 28–29, 32–33.) Additionally, TRG argues that these systems infringed claim 9 by, inter alia, containing a bi-directional communications link coupled between the futures and options computer. ( Id. ¶¶ 26, 30, 34.) Finally, TRG maintains that these systems infringe claim 11 by, inter alia, containing a bi-directional communications link coupled between the options computer and principal market maker computer. ( Id. ¶¶ 27, 31, 35.)

TRG contends that Globex became an infringing system in or around February 2002, when CME recruited certain entities known as “Lead Market Makers” and programmed Globex to award priority volume benefits to those market makers. (R. 164, CME's Summ. J. R., Ex. B at 2.) Globex, TRG asserts, has continued to infringe claims 9–11 of the '923 patent without interruption since that time. ( Id.) Similarly, TRG argues that e-CBOT became an infringing system in or around May 2004, when CBOT recruited entities known as “Electronic Market Makers” and programmed e-CBOT to award priority volume benefits to those market makers. ( Id.) The e-CBOT system, TRG maintains, continued to infringe claims 9–11 of the '923 patent without interruption until it was decommissioned. ( Id.)

PROCEDURAL HISTORY

On November 10, 2010, Plaintiffs filed a second amended complaint in which they request: (1) declaratory judgment of noninfringement of the '923 patent by CMEI; (2) declaratory judgment of noninfringement of the '923 patent by CBOT; (3) declaratory judgment of invalidity of the '923 patent by CME; and (4) declaratory judgment of unenforceability of the '923 patent by CME. (R. 121, Second Am. Compl. ¶¶ 27–88.)

In March 2011, CME filed a motion for summary judgment of noninfringement of all asserted claims of the '923 patent. (R. 152, CME's Mot.) Summary judgment, CME asserts in its supporting memorandum, is appropriate for three reasons. First, CME argues that the accused systems do not infringe the ' 923 patent because they “do not ‘continuously’ maintain a two-sided bid/offer market.” (R. 162, CME's Mem. at 6–9.) Second, it contends that the accused systems are not required to “give priority to customer order execution over personal trading, they cannot infringe any of the asserted claims of the ' 923 patent.” ( Id. at 9–12.) Third, CME maintains that since “TRG has cited no evidence that the accused systems include or use a bi-directional link that allows two-way communications between the futures computer and the options computer, TRG cannot prove that the overall accused systems (including both CME's systems and the market makers' systems) literally infringe claims 9 or 11 of the '923 patent as construed by the Court.” ( Id. at 15.)

LEGAL STANDARD

“Summary judgment is as available in patent cases as in other areas of litigation.” Tokai Corp. v. Easton Enters., Inc., 632 F.3d 1358, 1366 (Fed.Cir.2011) (citation omitted). It is well-established that summary judgment is appropriate when the record, viewed in the light most favorable to the nonmoving party, reveals that there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). In determining whether there is a genuine issue of material fact, courts must view the evidence in the light most favorable to the party opposing the motion, with doubts resolved in favor of the nonmovant. Leggett & Platt, Inc. v. VUTEk, Inc., 537 F.3d 1349, 1352 (Fed.Cir.2008).

A party seeking summary judgment bears the initial responsibility of informing a court of the basis for its motion and identifying those portions of the record which it believes demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The moving party may discharge its initial responsibility by simply “ ‘showing’—that is, pointing out to the district court—that there is an absence of evidence to support the nonmoving party's case.” Id. at 325, 106 S.Ct. 2548. When the nonmoving party has the burden of proof at trial, the moving party is not required to support its motion with affidavits or other similar materials...