Trading Technologies (TT) claimed infringement damages
totaling $4.6m as it concluded its side of the case second week
of the patent case against E-Speed.
TT claims that E-Speed and Ecco infringed on TTs MD
Trader patents over a four month period August to
December 2004. Ray Sims, TTs expert witness on
intellectual property and vice president with CRA
International, told the court that he pieced together a
hypothetical licensing agreement since no formal agreement
between TT and E-Speed was ever created. In doing so, Sims
estimated that E-Speed and Ecco executed an estimated 23m
trades on their software during that period. He also estimated
a 20 cent per side rate licensing fee which therefore totaled
A plaintiff can receive up to triple that amount if it could
prove that E-Speed knowingly and egregiously
infringed on the patent. However, legal experts familiar with
the case do not believe that an extreme level of infringement
can be applied here if E-Speed is foGund by the jury to
E-Speed tried to poke holes in the damage claim, arguing that
the estimates were based on incomplete volume data and faulty
projections. E-Speed attorneys also said 90% of the volume
during that four month period came from Ecco, which was
acquired by E-Speed in October 2004 for $14m. Of that,
TTs estimated volume came from just two firms that used
Ecco software Rho Trading and Harrison Trading, but did
not include volume data from two other Ecco customers
Rosenthal Collins Group, another TT patent defendant and
Transmarket Group, which settled its patent suit with TT.
E-Speed attorneys also argued that it and Ecco were each trying
to re-design their software so as not to infringe on TTs
patents during that time. They also pointed out that
Patsystems, which settled with TT and agreed to design new
non-infringing software, was given a grace period of several
months in which to comply with the settlement. E-Speed was
E-Speed also countered that other licensees have paid far less
to TT, such as Goldenberg Hehmeyer which paid 10 cents per
contract and a total of about $1.3m so far in licensing fees to
TT. However, TT attorneys argued that E-Speeds
hypothetical rate was higher because it was not a favoured
customer like Goldenberg Hehmeyer, and it also has a cash bond
exchange. The 20 cent figure is considered a median price for
TT also outlined the origins of the MD Trader patent, created
by Brumfield. The importance of this could prove pivotal as
there is some debate as to how Brumfield built MD Trader using
TT for software expertise and patented the invention. Brumfield
said he first approached TTs founder Gary Kemp in late
1997 or early 1998 with an idea for a customised order entry
system he called the Iceberg Solution. After TT developed the
system for $85,000, Brumfield determined that the concept
didnt work and scrapped it as a failure.
it was getting better day by day. I thought the software had a
lot of potential once we got the significant kinks worked out.
I was excited. I said, Wow, this could be
Brumfield testified he then went back to the drawing board and
sketched the MD Trader in September 1998. Again he hired TT to
help provide the software expertise to develop the system,
which included the static price or ladder display with bids and
offers on either side. In March 1999, Brumfield said he began
testing a first version of the MD Trader solution.
It was a mess and had very significant problems with
it, Brumfield said on the stand.
But it was getting better day by day. I thought the
software had a lot of potential once we got the significant
kinks worked out. I was excited. I said, Wow, this could
The March date is crucial as patent law requires that an
inventor file for a patent within a year from the date an
invention is created. Brumfield filed for the first patent for
MD Trader on 2 March 2000.
An attorney for E-Speed said in the opening statement that the
invention is not new and asked Brumfield if he knew of any
other trading screens that looked just like his MD Trader with
static prices down the middle prior to his invention.
In 1998, when you were thinking and coming up with your
idea you hadnt seen the screen the Tokyo Stock Exchange
used, is that right? asked E-Speeds lead attorney
No sir, replied Brumfield.
And you didnt know that the Tokyo Stock Exchange
kept those prices static did you? asked Lombardi.
No sir, Brumfield answered.
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