759 F. Supp. 2d 387
S.D.N.Y.2010Background
- Patent '834 issued Nov 14, 2006 to Liquidnet; claim 1 covers method to integrate OMS with an ETM to generate non-binding indications.
- Litigation centers on four motions seeking summary judgment on claim 1 (literal infringement), Liquidnet's willful infringement claim, and ITG's inequitable-conduct defense.
- Court previously construed key claim terms (e.g., accessing, open orders, electronic marketplace) in a Jan 19, 2010 order.
- Accused ITG and Pulse products Channel, POSIT Alert, and BlockCross interface with OMSs by various integrations, most not reading all records of open orders; MacGregor XIP is a key MacGregor-based integration.
- Court holds: non-infringement for all non-MacGregor OMS integrations; willful infringement claim against ITG is granted (no pre-filing willfulness); inequitable-conduct claim by Liquidnet denied.
- ITG and Pulse rely on stored procedures and non-stored-procedure integrations; Channel not an ETM under court’s construction; reading of all records of open orders not shown in non-MacGregor integrations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Literal infringement of claim 1 | Liquidnet says ITG/Pulse read all open-order records and send non-binding indications to an ETM. | ITG/Pulse do not access all records of open orders in non-MacGregor OMSs; Channel/BlockCross do not constitute ETMs; MacGregor XIP with TIM may read all records. | No literal infringement by ITG/Pulse for non-MacGregor OMS integrations; MacGregor XIP may infringe only if read all records, but not necessary for conclusion. |
| Willful infringement by ITG | ITG knowingly copied Liquidnet’s system; post-filing conduct shows willfulness. | Only pre-filing knowledge matters; Seagate rule precludes post-filing willfulness; no preliminary injunction sought. | ITG granted summary judgment of no willful infringement. |
| Inequitable conduct by Liquidnet in prosecuting Patent '834 | Liquidnet withheld Harborside/Harborside+ references; misrepresented prior art. | No deliberate withholding proven; evidence shows knowledge of Harborside patent application exists; intent issue for trial. | Liquidnet's motion for partial summary judgment on inequitable conduct denied. |
| Joint infringement/actor liability | ITG/Pulse control OMS vendors, establishing joint infringement. | Arms-length cooperation with OMS vendors does not show control/direction; cannot attribute all steps to ITG/Pulse. | Not separately addressed as a discrete theory beyond the above holdings. |
| MacGregor XIP liability relevance | MacGregor XIP stored procedures read all open orders, enabling infringement. | Held that Channel is not an ETM; MacGregor XIP issue unresolved but not controlling for non-MacGregor cases. | Not establishing infringement for non-MacGregor implementations; conclusions focus on claimed steps. |
Key Cases Cited
- Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (Fed. Cir. 2008) (direction or control requires more than mere contractual relationship; vicarious liability analysis for direct infringement)
- Seagate Tech., LLC v. West Digital Sys., LLC, 497 F.3d 1360 (Fed. Cir. 2007) (willfulness standard; pre-filing conduct emphasized; Seagate retroactivity discussion)
- BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed. Cir. 2007) (direct infringement requires all elements; control/direction considerations in multi-party infringement)
- Kingsdown Medical Consultants, Ltd. v. Hollister Inc., 863 F.2d 867 (Fed. Cir. 1988) (inequitable conduct standards; intent to deceive needed)
- Cargill, Inc. v. Canbra Foods, Ltd., 476 F.3d 1359 (Fed. Cir. 2007) (clear and convincing evidence; material misrepresentation and intent to deceive)
- Star Scientific, Inc. v. R.J. Reynolds Tobacco Co., 537 F.3d 1357 (Fed. Cir. 2008) (inequitable conduct standards; materiality and intent)