CQG, Inc. and CQGT, Llc.v.Trading Technologies International, Inc.

Patent Trial and Appeal Board

Jul 10, 2015

09894637 (P.T.A.B. Jul. 10, 2015)

Trials@uspto.gov Paper 13
Tel: 571-272-7822 Entered: July 10, 2015

UNITED STATES PATENT AND TRADEMARK OFFICE
_______________
BEFORE THE PATENT TRIAL AND APPEAL BOARD
_______________
CQG, INC. and CQGT, LLC,
Petitioner,

v.

TRADING TECHNOLOGIES INTERNATIONAL, INC.,
Patent Owner.
____________

Case CBM2015-00057 (Patent 6,766,304 B2)
Case CBM2015-00058 (Patent 6,772,132 B2)
_______________

Before SALLY C. MEDLEY, MEREDITH C. PETRAVICK, and
PHILIP J. HOFFMANN, Administrative Patent Judges.

MEDLEY, Administrative Patent Judge.

DECISION
Denying Institution of Covered Business Method Patent Review
37 C.F.R. § 42.208

CBM2015-00057 (Patent 6,766,304 B2)
CBM2015-00058 (Patent 6,772,132 B2)

2

I. INTRODUCTION
CQG, Inc. and CQGT, LLC (collectively, “Petitioner”) filed a Petition
requesting a covered business method patent review (CBM2015-00057) of
claims 1–40 of U.S. Patent No. 6,766,304 B2 (“the ’304 patent”) and a
Petition requesting a covered business method patent review (CBM2015-
00058) of claims 1–56 of U.S. Patent No. 6,772,132 B2 ( “the ’132 patent”).
Paper 3 (“Pet.”).
1
In response, Trading Technologies International, Inc.
(“Patent Owner”) filed a Patent Owner Preliminary Response in each
proceeding. Paper 11 (“Prelim. Resp.”).
An issue raised by the parties in both proceedings, is whether
35 U.S.C. § 325(a)(1) applies to covered business method (CBM) patent
reviews, and, if it does apply, whether Petitioner is barred in accordance
with that section. For the reasons set forth below, 35 U.S.C. § 325(a)(1)
does apply to covered business method patent reviews, Petitioner is barred in
accordance with that section, and, therefore, the Petitions are denied.
II. ANALYSIS
A. Background and Findings of Fact
On August 17, 2005, Petitioner filed a complaint in the U.S. District
Court for the District of Colorado for declaratory judgment (“Colorado DJ
Action”) against Patent Owner challenging the validity of all claims in each
of the ’304 and the ’132 patents under “Title 35 of the United States Code,
including without limitation, Sections 101, 102, 103 and/or 112.” Ex. 1003,
4. On August 19, 2005, Patent Owner sued Petitioner in the Northern

1
Unless otherwise indicated, citations are to CBM2015-00057.
CBM2015-00057 (Patent 6,766,304 B2)
CBM2015-00058 (Patent 6,772,132 B2)

3

District of Illinois for infringement (“Illinois Infringement Action”) of the
’304 and ’132 patents. Ex. 1004. Petitioner moved to have the Illinois
Infringement Action transferred to Colorado (Ex. 2006), and Patent Owner
moved to have the Colorado DJ Action transferred to Illinois (Ex. 1005).
Ultimately, on September 26, 2006, the Colorado DJ Action was transferred
to Illinois. Ex. 1006.
On November 2, 2006, Patent Owner filed a Motion to Reassign and
Consolidate seeking reassignment of the transferred Colorado DJ Action to
the same judge presiding over the Illinois Infringement Action and
consolidation of the cases. Ex. 1010, 4. Shortly thereafter, on November 9,
2006, Petitioner sent a Proposed Minute Order to the judge presiding over
the Illinois Infringement Action, Judge Moran. Ex. 1012. The Proposed
Minute Order includes granting Patent Owner’s Motion to Reassign and
Consolidate, along with several specific forms of relief, such as reassigning
the Colorado case to Judge Moran; dismissing without prejudice the
Colorado DJ Action based on agreement of the parties; Patent Owner
withdrawing its opposition in the Illinois Infringement Action to Petitioner’s
motion to file an amended answer, affirmative defenses, and counterclaims;
and granting Petitioner leave to file an amended answer, affirmative
defenses, and counterclaims in the Illinois Infringement Action. Id. A copy
of the Proposed Minute Order was apparently e-mailed from Petitioner to
Patent Owner. Id. at 1. Based on the record before us, we find that the
Proposed Minute Order, and all of the stipulations therein, were jointly
agreed upon by Petitioner and Patent Owner. Id.
CBM2015-00057 (Patent 6,766,304 B2)
CBM2015-00058 (Patent 6,772,132 B2)

4

Instead of deciding the Motion to Reassign and Consolidate, or
outright executing the Proposed Minute Order, three separate orders were
entered. The first order issued on November 14, 2006, reassigning the
transferred Colorado DJ Action to Judge Moran. Ex. 1007. The second
order dated December 1, 2006,
2
dismissed the Colorado DJ Action without
prejudice, specifically stating that “[p]ursuant to agreement of the parties,
this case is dismissed without prejudice.” Ex. 1008 (emphasis added). The
third order, dated December 4, 2006, granted Petitioner leave to file an
amended answer, affirmative defenses, and counterclaims in the Illinois
Infringement Action. Ex. 1013.
In essence, the Illinois Court granted several of the requests made per
the Proposed Minute Order. Petitioner is silent with respect to what was the
“agreement of the parties.” Based on the totality of the facts before us, we
agree with Patent Owner (Prelim. Resp. 6) that the “agreement of the
parties” is reflected in the Proposed Minute Order.
The Illinois Action is still pending and has not been stayed. Paper 6.
B. Principles of Law
Section 18(a)(1) of the Leahy-Smith America Invents Act (“AIA”)
establishes the transitional program for covered business method patents as
follows:
SEC. 18. TRANSITIONAL PROGRAM FOR COVERED
BUSINESS METHOD PATENTS.
(a) TRANSITIONAL PROGRAM.

2
The presiding Judge made a docket entry in lieu of an “Order.”
CBM2015-00057 (Patent 6,766,304 B2)
CBM2015-00058 (Patent 6,772,132 B2)

5

(1) ESTABLISHMENT.— . . . the Director shall issue
regulations establishing and implementing a transitional post-
grant review proceeding for review of the validity of covered
business method patents. The transitional proceeding
implemented pursuant to this subsection shall be regarded as,
and shall employ the standards and procedures of, a post-grant
review under chapter 32 of title 35, United States Code, subject
to the following:
(A) Section 321(c) of title 35, United States Code,
and subsections (b), (e)(2), and (f) of section 325 of such
title shall not apply to a transitional proceeding.
AIA, Pub. L. No 112-29, § 18(a)(1), 25 Stat. 329 (2011). The AIA, thus,
provides that a covered business method patent review proceeding shall
employ the standards and procedures of a post-grant review under Chapter
32 of title 35 of the United States Code (i.e., 35 U.S.C. §§ 321 et seq.)
except for those expressly carved out exceptions (i.e., 35 U.S.C. §§ 321(c)
and 325(b), (e)(2), and (f)). Therefore, covered business method patent
reviews are governed by the requirements of 35 U.S.C. § 325(a)(1), which
states:
(a) INFRINGER’S CIVIL ACTION.—
(1) POST–GRANT REVIEW BARRED BY CIVIL ACTION.—A
post-grant review may not be instituted under this chapter if,
before the date on which the petition for such a review is filed,
the petitioner or real party in interest filed a civil action
challenging the validity of a claim of the patent.
35 U.S.C. § 325(a)(1).
C. 35 U.S.C. § 325(a)(1) applies to CBM Patent Reviews
Petitioner argues that 35 U.S.C. § 325(a)(1) only applies to post grant
reviews and not to covered business method patent reviews. Pet. 15. The
CBM2015-00057 (Patent 6,766,304 B2)
CBM2015-00058 (Patent 6,772,132 B2)

6

language of Section 18(a)(1) of the AIA clearly establishes that the
transitional program for covered business method patents “shall be regarded
as, and shall employ the standards and procedures of, a post-grant review
under chapter 32 of title 35, United States Code,” with certain exceptions.
Those exceptions do not include 35 U.S.C. § 325(a)(1). See supra. Thus,
35 U.S.C. § 325(a)(1) applies to covered business method patent reviews.
Petitioner further argues that rule 37 C.F.R. § 42.300(a) exempts
covered business method patent reviews from being barred by an earlier
filing of a declaratory judgment action. Pet. 16. There is no such
exemption. See SecureBuy, LLC v. CardinalCommerce Corp., Case
CBM2014-00035, Paper 12 (PTAB April 25, 2014). Moreover, an addition
to our rules clarifying that the 35 U.S.C. § 325(a)(1) prohibition applies to
covered business method patent reviews, in the form of final rule 37 C.F.R.
§ 42.302(c), became effective May 19, 2015. Amendments to the Rules of
Practice for Trials Before the Patent Trial and Appeal Board, Fed. Reg.
28,561, 28,566 (May 19, 2015).
For all of the above reasons, 35 U.S.C. § 325(a)(1) applies to covered
business method patent reviews.
D. Petitioner Is Barred Under 35 U.S.C. § 325(a)(1)
Petitioner argues that, because the Colorado DJ Action was dismissed
without prejudice, it is as if the Colorado DJ Action never existed, citing
several Board and Federal Circuit decisions. Pet. 5–6. Patent Owner
counters and argues that the dismissal without prejudice should not be
treated as if the Colorado DJ Action never existed, because the claims raised
in the Colorado DJ Action effectively continued in the Illinois Infringement
CBM2015-00057 (Patent 6,766,304 B2)
CBM2015-00058 (Patent 6,772,132 B2)

7

Action, citing Apple v. Rensselaer Polytechnics Institute, Case IPR2014-
00319, Paper 12 (PTAB June 12, 2014). Prelim. Resp. 7–8. Petitioner,
however, argues that the Apple case is distinguishable, because, in that case,
an earlier filed first infringement action was consolidated with a second
infringement action prior to dismissal (without prejudice) of the first
infringement action. In contrast, Petitioner argues that the Colorado DJ
Action was not consolidated with the Illinois Infringement Action, but was
dismissed without prejudice. Pet. 8–10.
Patent Owner argues that Petitioner’s arguments put form over
substance and that all of the orders from the Illinois Court effectively gave
the parties what Petitioner wanted—continuation of the Colorado DJ Action
claims raised by Petitioner into the Illinois Infringement Action. Prelim.
Resp. 6–10. Based on the facts of these proceedings before us, Patent
Owner’s arguments are persuasive.
The Board panel in the Apple case made clear on rehearing that it was
the immediate continuation of the first action into the second action,
including the legal positions taken by the parties, that was the dispositive
factor for determining that the dismissal without prejudice of the first case
did not have the effect as if the first case never existed. Apple, Case
IPR2014-00319, slip op. at 3–4 (PTAB July 31, 2014) (Paper 14). In
rendering the original decision, the panel relied on Brennan v. Kulick, 407
F.3d 603 (3d Cir. 2005). Apple, Paper 12, slip op. at 6. In Brennan, the
court explained that prior cases are treated as if they never existed after
dismissal because “[a]n order merely dismissing a complaint without
prejudice could result in a significant period of delay prior to the bringing of
CBM2015-00057 (Patent 6,766,304 B2)
CBM2015-00058 (Patent 6,772,132 B2)

8

a new action.” Brennan, 407 F.3d at 607. The court further explained that
with a conditional dismissal, a prior case would be treated as if it existed
because “[t]he conditions specified in the order prevent a plaintiff from
indefinitely extending the limitations period.” Id. Treating a case dismissed
without prejudice as if it never existed, therefore, depends on the
circumstances surrounding the dismissal.
Shortly after the Proposed Minute Order was sent to the Illinois Court,
three separate orders were entered within days of one another. The first
order reassigned the transferred Colorado DJ Action to Judge Moran. Ex.
1007. The second order dismissed the Colorado DJ Action without
prejudice, “[p]ursuant to agreement of the parties.” Ex. 1008 (emphasis
added). The third order granted Petitioner leave to file an amended answer,
affirmative defenses, and counterclaims in the Illinois Infringement Action.
Ex. 1013.
In accordance with the third order, Petitioner amended its answer,
affirmative defenses, and counterclaims. Ex. 1014. The counterclaims are
identical to those claims raised in the Colorado DJ Action. Compare Ex.
1003, 4 with Ex. 1014, 5, 7.
The actions of the Illinois Court, by way of the three orders and the
content of those orders, allowed continuation of the claims made in the
Colorado DJ Action by “agreement of the parties.” In essence, the Illinois
Court authorized Petitioner leave to amend its answer to include claims
made in the Colorado DJ Action into the Illinois Infringement Action. Ex.
1013. Thus, we agree with Patent Owner that it was as if the claims from the
Colorado DJ Action continued into the Illinois Infringement Action. Prelim.
CBM2015-00057 (Patent 6,766,304 B2)
CBM2015-00058 (Patent 6,772,132 B2)

9

Resp. 8. The actions of the Illinois Court were not made as if the Colorado
DJ Action never existed. But for the Colorado DJ Action, there would have
been no occasion for the Illinois Court to authorize Petitioner to amend its
answer in the Illinois Infringement Action to add the claims made in the
Colorado DJ Action.
Here, the legal positions of Petitioner in the Colorado DJ Action
effectively continued in the Illinois Infringement Action. For these reasons,
we are not persuaded by Petitioner’s argument that the dismissal without
prejudice of the Colorado DJ Action should be treated as if it never existed.
III. CONCLUSION
Section 325(a)(1) precludes us from instituting a covered business
method patent review when the petitioner filed a civil action challenging the
validity of a claim of the patent. 35 U.S.C. § 325(a)(1). For the reasons
provided, Petitioner’s filing of the Colorado DJ Action before filing its
Petitions bars us from instituting a covered business method patent review of
either of the ’304 or ’132 patents. We, therefore, deny the Petitions. We
express no opinion regarding the likelihood that Petitioner would prevail in
establishing that any of the challenged claims of the ’304 or ’132 patents are
unpatentable for the reasons set forth in the Petitions.
IV. ORDER
It is:
ORDERED that the Petitions are denied.

CBM2015-00057 (Patent 6,766,304 B2)
CBM2015-00058 (Patent 6,772,132 B2)

10

PETITIONER:

Adam G. Kelly
William J. Kramer
William J. Voller, III
LOEB & LOEB LLP
akelly@loeb.com
wkramer@loeb.com
wvoller@loeb.com

PATENT OWNER:

Erika H. Arner
Joshua L. Goldberg
FINNEGAN, HENDERSON, FARABOW, GARRETT & DUNNER, LLP
erika.arner@finnegan.com
joshua.goldberg@finnegan.com

Steven F. Borsand
TRADING TECHNOLOGIES INTERNATIONAL, INC.
Steve.Borsand@tradingtechnologies.com