Trading Technologies (TT) struck back in the rebuttal phase of
its patent case against E-Speed with expert testimony, which it
said proved its patented MD Trader software is valid.
The trial, which stretched into its fourth week, was expected
to conclude on 4 October with closing arguments and a possible
verdict from the nine person jury the following day.
TT brought in several expert witnesses in the rebuttal phase,
all of which testified that MD Trader patents could not be
invalidated by the examples of prior art introduced by E-Speed.
E-Speed introduced several pieces of prior art that allegedly
preceded the critical 2 March, 1999 date when MD Trader was
created including GLs TradePad, Japanese ISV Midas
Kapitis Market Trader and order entry software from Tokyo
Stock Exchange (TSE) and Tokyo International Financial Futures
TTs attorneys attacked the credibility of GL TradePad
evidence, allegedly created by the Paris-based ISV in late 1998
and included in its overall software package called GL Win
4.31. Those versions were presented to Chicago Mercantile
Exchange (CME) in December 1998 and sold to Cargill Investor
Services in February 1999, E-Speed said.
But David Klausner, a software forensic expert for TT, told the
court that among the evidence produced by E-Speed there was
no version of TradePad prior to 2 March,
Klausner said he analysed 11 CME hard drives and the 36 CDs
that GLs former trading application manager Jean-Cedric
Jollant said he kept as back-up files on TradePad and a GL
demonstration computer. Klausner said he found no evidence of
TradePad in GL Win 4.31 or 4.50.
E-Speed attempted to deflect such a findings by pointing out
practical evidence such as the January 1999 letter from CME
which specifically criticized TradePad as useless to our
local traders proved that TradePad existed prior to MD
E-Speed also presented several manuals from GL which showed
that TradePad existed in version 4.31. However, those manuals
did not illustrate all of the functionality of TradePad, a
point which diminishes the value of such evidence.
TT further pressed its case by outlining just how exact
TradePad and other prior art evidence must be to invalidate
TTs patents with its expert witness, Craig Pirrong, a
professor with the University of Houston. In legal terminology,
it is called anticipation or art that was there
before an invention.
Neither TradePad nor Midas Kapiti anticipate claims in
the TT patent, Pirrong said. No single piece of
prior art contains every element of the asserted claims. It has
to be every element. Proving anticipation is like bowling, you
have to roll a strike. You essentially have to prove that every
element was there in the prior art. If you leave only one pin
standing, there is no anticipation.
Pirrong said MD Trader allows users to preset the quantity of
contracts and then allows them to set a price and a buy or sell
with one single click of the mouse, also known in this case as
single action. MD Trader also provides users with
market depth and a list of working orders all on one window. GL
Win 4.3 included market depth, but in a separate window.
TradePad required users to use a right click to set trade
parameters and then a left click of the mouse to send the
order. In Pirrongs view, that constituted two separate
actions. In testimony and cross-examination that plunged the
discussion into mind-numbing detail over the difference between
one-click, two-click and right- and left-click order entry
Pirrong and another TT expert witness, Christopher
Thomas, held firmly that the TradePad method was not a single
E-Speeds technology expert Richard Ferraro testified in a
deposition just weeks earlier that the right- and left-click
methodology was two separate actions. But in court, he changed
his opinion and said it was a single action.
Another key part of patent law and this case is
obviousness which simply means that the elements in
a patent are just that, obvious to anyone with expertise in
that field. While much has been made in and outside of court
about just how ubiquitous MD Traders static display of
prices was before the invention, TTs experts claimed that
MD Trader was revolutionary because it combined a set of common
characteristics in the industry and provided a simple way in
which to view and trade.
Thomas said combining a static ladder, which is found in GL,
Midas Kapiti and the Tokyo exchanges software, with
single action order entry, MD Trader was a
revolution and pioneering invention.
If it was obvious, GL knew about static [price ladders]
and single action order entry, they would have done it, but
Thomas, an equity trader, said it was akin to the Post-it note
invention. Everyone knew about paper and glue, but no one had
put the two together before Post-its inventor did.
For its part, E-Speed held that TradePads left- and
right-click methodology is no different than a single- or
E-Speed also brought in its own expert to estimate the amount
of infringement damages that are at issue here. Daniel Slottje,
senior managing director at FTI Consulting, told the court that
TTs estimates of around $4.6m, revealed in the previous
weeks hearing (see FO Wee 28/09/07) were way off because
they take estimate trading volumes on incomplete data from
users of eSpeed and Ecco software. He estimated the amount for
both E-Speed and Ecco to be $455,831 to $595,079.
The case will be decided by a nine person jury, as one juror
had to drop out. Whatever the outcome, it is expected that the
losing party will appeal the case.