OPINION & ORDER
I. INTRODUCTION
This opinion resolves four motions for summary judgment involving claim one of a method patent 1 owned by Liquidnet Holdings, Inc. (“Liquidnet”). In brief, Liquidnet has alleged that certain electronic methods for integrating buy-side firms’ order management systems with electronic securities marketplaces, developed and marketed by Investment Technology Group (“ITG”) 2 and Pulse Trading, Inc. (“Pulse”), literally infringe claim one of Patent '834, and that ITG willfully infringed the Patent. ITG and Pulse allege that Patent '834 is invalid, unenforceable, and not infringed by ITG’s and Pulse’s products.
On January 19, 2010,
For the following reasons, I grant ITG’s and Pulse’s motions for summary judgment of no literal infringement and deny Liquidnet’s motions on that claim. I also grant ITG’s motion for summary judgment on Liquidnet’s willful infringement claim and deny Liquidnet’s motion for partial summary judgment on ITG’s inequitable conduct claim.
II. BACKGROUND 4
On November 14, 2006, the Patent and Trademark Office (“PTO”) issued Patent '834 — entitled “Electronic Securities Marketplace Having Integration with Order Management Systems” — to Liquidnet. 5 In basic terms, the patented invention allows institutional investment management firms to connect with an electronic marketplace and trade securities (or other financial instruments) with one another. 6
A. Claim One of Patent'834
Claim one of the Patent — the only claim at issue in this case — describes a method for integrating an order management system (“OMS”) with an electronic marketplace (“ETM”) for the purpose of sending non-binding indications to that marketplace:
1. A computer-implemented method for generating non-binding indications for at least one security comprising:
i) accessing, by at least one computer, all records of open orders from a database of an order management system wherein the order management database is associated with a trading firm and wherein the order management system is coupled to at least one workstation utilized by the trading firm wherein the order management system database comprises at least the following fields.
(a) security name, symbol or identifier,
(b) transaction type,
(c) total order size,
(d) quantity of the security placed elsewhere, and
(e) quantity of the security executed;
ii) generating, by at least one computer, all non-binding indications from the accessed records of orders that are suitable for transmission to at least one electronic marketplace, each non-binding indication comprising security name, symbol or identifier, the transaction type, and an available quantity, such available quantity being determined by the accessed records;
iii) sending the suitable non-binding indications to the at least [sic] one electronic marketplace.
iv) periodically determining if at least one accessed record of order of the order management system database has changed, then subsequently generating, for the changed record of order, at leastone updated non-binding indication; and
v) if updated, subsequently sending the updated non-binding indication to the at least [sic ] one electronic marketplace. 7
B. Claim Construction
In an Opinion and Order dated January 19, 2010, I construed the disputed terms (italicized above) as follows:
“Accessing” means “gaining entry to.”
“All” means “each and every.”
“Open orders” means “instructions to buy or sell a quantity of a security not yet placed elsewhere (ie., where the total order size exceeds the quantity, if any, committed to another broker or other execution venue).”
“Generating” means “producing nonbinding indications in a format understood by the electronic marketplace.”
“Non-binding indications” means “non-binding purchase or sale offers that allow traders to enter into negotiation to trade securities, which cannot be executed without a further, affirmative action by a trader.”
“Suitable for transmission” means “appropriate for transmission.”
“Electronic marketplace” means “an electronic destination that (1) receives and processes non-binding indications, (2) allows for the matching of non-binding indications with their contra interests and for the negotiation and execution of trades, and (3) has the capacity to record trades if and when they are executed.”
“Sending” means “transmitting.”
“Periodically determining” means “determining from time to time.”
“Subsequently generating” means “subsequently producing.”
“Subsequently sending” means “subsequently transmitting.” 8
III. LEGAL STANDARD
Summary judgment is appropriate “if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” 9 “ ‘An issue of fact is genuine if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. A fact is material if it might affect the outcome of the suit under the governing law.’ ” 10 “[T]he burden of demonstrating that no material fact exists lies with the moving party ....” 11
In determining whether a genuine issue of material fact exists, the court must “constru[e] the evidence in the light most favorable to the non-moving party and draw all reasonable inferences” in that party’s favor.
12
However, “[wjhen the burden of proof at trial would fall on the nonmoving party, it ordinarily is sufficient for the movant to point to a lack of evidence to go to the trier of fact on an
IY. DISCUSSION
A. ITG and Pulse Are Entitled to Summary Judgment of Non-Infringement
ITG and Liquidnet, and Pulse and Liquidnet, now cross-move for summary judgment of literal infringement. ITG and Pulse argue they are entitled to summary judgment of no literal infringement, while Liquidnet argues that ITG and Pulse literally infringe Patent '834 as a matter of law. Upon a finding that either ITG or Pulse fails to perform even one of the claim’s five steps, it is entitled to summary judgment.
ITG’s and Pulse’s primary arguments for non-infringement are as follows: (1) ITG and Pulse do not perform step (i) because they do not “access” “all” records of open orders from a database of an OMS; (2) ITG and Pulse do not perform step (ii) because they do not generate “non-binding indications”; (3) ITG does not perform step (iii) because it does not send “nonbinding indications” to an “electronic marketplace”; and (4) ITG and Pulse do not enable traders to enter into negotiations to trade securities (relevant to steps (ii)-(v) in light of my construction j of “non-binding indications” and “electronic marketplace”). I agree with ITG and Pulse that, with the exception of one integration employed by ITG (“MacGregor XIP integrations”), ITG and Pulse do not “access” “all” records of open orders from databases of OMSs. I also agree with ITG that, because its accused products do not constitute an “electronic marketplace” as this Court has construed that term, it cannot perform steps (iii) and (v) of claim one, which require “sending” “non-binding indications” to at least one “electronic marketplace.” Accordingly, I deny Liquidnet’s motions for summary judgment of literal infringement and grant summary judgment to both ITG and Pulse with respect to literal infringement. I need not (and do not) address ITG’s and Pulse’s other arguments for non-infringement.
1. Facts Relating to Literal Infringement Claim
The accused products in this case— ITG’s “Channel” and “POSIT Alert” and Pulse’s “BlockCross” — are used by hedge funds and asset management firms to facilitate the electronic execution of U.S. equity (stock) trades. 14 These firms, which include mutual fund managers, pension funds, and private equity funds, are often referred to as “buy-side firms.” 15
Portfolio managers at buy-side firms direct the investment of the firms’ funds; they decide which securities will comprise the “portfolio” of assets in which then-funds are invested. 16 These investments can span U.S. and foreign stocks, bonds, options, futures, currencies, and derivatives. 17
When a portfolio manager decides to purchase or sell a particular security, she enters that instruction, or “order,” into an
Buy-side firms also employ traders who manage, or “work,” the actual buying and selling of assets for the firm — as opposed to deciding which assets to buy and sell (the portfolio managers’ job). 21 Traders are given permission to call up (or see) only certain orders in a firm’s portfolio. 22 They view those orders on their trader desktop computers, or “workstations,” using OMS graphical user interfaces (“GUIs”). 23 The GUIs include electronic “blotters” that display certain information from the records in the OMS database that the trader is responsible for working. 24
Traditionally, buy-side traders traded securities by picking up the phone and calling sell-side brokers to fill orders. 25 Since the mid-1990s, however, traders have been able to place orders electronically directly from their OMS blotters, or from other electronic trading platforms, such as execution management systems (EMSs). 26 Using an OMS or EMS, a trader can electronically place, change, cancel, and update his orders, and receive execution information electronically, without using the phone. 27
a. ITG’s Accused Products: Channel and POSIT Alert
Liquidnet accuses two ITG products, “ITG Channel”
28
(“Channel”) and “POSIT Alert,” of infringing the Patent. Channel is an EMS and “desktop trading tool” that ITG developed to help buy-side traders electronically route (or channel) firm orders “strictly to ITG trading destinations.”
29
Through some integration with buy-side firms’ OMS databases,
30
Channel obtains only those records of open orders
From her Channel blotter, a trader has two, non-mutually exclusive options. First, the trader can convert the unplaced share data into a “firm order” by sending it directly to one of ITG’s trading destinations for execution. 33 Second — or in addition 34 — she can expose the unplaced share data in POSIT Alert. 35
POSIT Alert is not a trading destination, but rather an alerting mechanism — it “alerts” traders when it finds matching (1) binding indications in POSIT and other ITG trading destinations or (2) non-binding indications in POSIT Alert. 36 When POSIT Alert finds a potential match, it notifies all the traders having relevant exposed unplaced shares in POSIT Alert that a potential match exists. 37 Upon such notification, each trader has a limited number of seconds to decide whether she wishes to act on that alert by sending a firm order to POSIT — ie., converting the non-binding indication into a binding indication for potential execution in POSIT. 38 POSIT Alert does not ideiitify the number of traders matched, the identity of those traders, the quantity of securities on either side of the trade, or the price at which any trader may wish to execute a trade 39 The trader only knows that (1) there are one or more traders on the opposite side of the desired trade (2) with unknown quantities of shares available, (3) with whom she might match in POSIT (4) if both sides send firm orders to POSIT and those firm orders have compatible terms. 40
b. Pulse’s Accused Product: BlockCross
Like Channel, BlockCross receives only U.S. equity order information from buy-side firms’ datacenters by integrating in some way with those firms’ OMS databases
41
and displaying only those orders for which individual traders are responsible on those traders’ BlockCross “blotters.”
42
As with Channel, a trader using Block-Cross can designate a trade in one of two modes — “Confirm” mode or “Auto-Ex”
c. Obtaining Order Information Located in OMS Databases
As noted above, Channel and Block-Cross obtain information about open orders for U.S. equities from their clients’ OMS databases by “interfacing” or setting up “integrations” with OMS vendors — integrations that vary depending on the vendor. 47
Pulse has integrations set up with ten different OMS vendors. 48 Of the ten, eight involve “stored procedure” integrations and two involve “web service” integrations. 49 In the stored procedure integrations, BlockCross issues a “call” to the OMS through an application programming interface (“API”) written by the OMS vendor or its client. 50 The call requests information about U.S. equity orders from the OMS by asking the API to execute a “stored procedure” in the OMS database. 51 After issuing the call to the API, Block-Cross has no further involvement with the OMS database until the API returns the U.S. equity order information to Block-Cross. 52 In the web server integrations, BlockCross retrieves U.S. equity order information from a web server, which is separate from the OMS. 53
Unlike Pulse, ITG owns an OMS — the MacGregor XIP — that integrates with Channel. 54 For ITG clients who use Channel with the MacGregor XIP, Channel prompts or “calls” a specific stored procedure in MacGregor XIP, 55 as in the Pulse “stored procedure” implementations described above. This stored procedure, written by MacGregor, 56 locates U.S. equity orders in the database, “reads in memory only those records, retrieves the read data, and sends it to Channel.” 57
For non-MacGregor OMS clients, the technology used by Channel to obtain unplaced share information varies depending
2. Applicable Law
Patent infringement refers to “the unauthorized making, using, selling, offering to sell, or importing into the United States of any patented invention during the term of the patent.” 65 Determination of infringement involves two steps: (1) a construction of the terms of the asserted claims (“Claim Construction”) and (2) a determination of whether the accused method infringes the claims as construed. 66 Claim construction is a question of law, the purpose of which is to determine what is covered by the claims of a patent. 67 In cases where “the parties do not dispute any relevant facts regarding the accused product but disagree over [claim interpretation], the question of literal infringement collapses to one of claim construction and is thus amenable to summary judgment.” 68
A plaintiff may establish infringement either by proving literal in
“[Wjhere the actions of multiple parties combine to perform every step of a claimed method, the claim is directly infringed only if one party exercises ‘control or direction’ over the entire process such that every step is attributable to the controlling party, i.e., the ‘mastermind.’ At the other end of this multi-party spectrum, mere ‘arms-length cooperation’ will not give rise to direct infringement by any party.” 73 “[T]he control or direction standard is satisfied in situations where the law would traditionally hold the accused direct infringer vicariously liable for the acts committed by another party that are required to complete performance of a claimed method.” 74 Although
the standard requiring control or direction for a finding of joint infringement may in some circumstances allow parties to enter into arms-length agreements to avoid infringement ... [t]he concerns over a party avoiding infringement by arms-length cooperation can usually be offset by proper claim drafting. A patentee can usually structure a claim to capture infringement by a single party----[A] court will not unilaterally restructure the claim or the standards for joint infringement to remedy [ ] ill-conceived claims. 75
3. Neither Pulse nor ITG (Other than MacGregor XIP Implementations) Literally Infringes Step (i) of Claim One of the '834 Patent
Pulse and ITG argue that their products do not, as a matter of law, “access [ ] ...
a. Claim Construction
Step (i) of claim one requires “accessing, by at least one computer, all records of open orders from a database of an order management system ....” 78 During Claim Construction, I defined “accessing” to mean “gaining entry to” and “all” to mean “each and every.” 79 Thus, to infringe claim one, Pulse’s and ITG’s products must (1) gain access to (2) each and every record of open orders from a database of an OMS.
In defining “accessing” as “gaining entry to,” I explained that “when the patent applicants used the term ‘accessing,’ they contemplated a process in which [an OMS interfacing module (“OIM”) ] 80 would be able to gain entry to the records and read them while they remained within the database.” 81 I pointed to language in the specification describing a process by which an “OMS database integration module [ODIM] in the OIM reads data records stored in the OMS database” 82 to support my conclusion that “accessing” refers to “a mode of ‘communication’ between the OIM and the OMS database wherein the OIM reads and monitors records within the OMS database.” 83 I found this definition supported by extrinsic evidence — a computer dictionary published by Microsoft in 2002 that defines “access” as “[t]o gain entry to memory in order to read or write data.” 84 Thus, records of open orders located in an OMS database are “accessed” when an OIM gains access to those records by reading them in OMS databases’ memory. And, according to the plain language of step (i), all records of open orders must be accessed in order for claim one to be infringed. In other words, Liquidnet must show that Pulse and ITG utilize OIMs that read data about — or gain entry to — “each and every” record of open orders contained within the OMS databases with which they are integrated.
As I explained in
Claim Construction,
the process of gaining entry to each and
Once a determination is made that a trader has logged on to the OMS the OIM retrieves data records about orders suitable for transmission to the ETM from the OMS database. In one embodiment of the present invention, all open orders are suitable for transmission to the ETM. In other embodiments of the present invention, the OIM, through the filtering module, makes the determination of suitable orders based on other criteria, such as the security type (e.g., stock or bond), security name (e.g., IBM or T), order type (e.g., market or limit order), order quantity, and/or price. 86
In other words, after an OIM reads in the OMS database’s memory data about each and every record of open orders in the OMS database, it determines which of the “accessed records” are suitable for transmission to the ETM. If only some records are suitable for transmission to the ETM, an OIM will filter the accessed records and then retrieve only those suitable for transmission to the ETM. 87 As I made clear in Claim Construction, these retrieving and filtering steps are not part of the “accessing” that takes place in step (i); they are unclaimed steps that take place before an OIM “generatfes] ... from” the “accessed records” “non-binding indications” in step (ii). 88 But the disclosure of these “filtering,” “retrieving,” and “generating” steps — claimed or unclaimed — only reinforces that the patented method requires all records of open orders to be read from the OMS database’s memory. 89
Notwithstanding my claim construction, Liquidnet argues that “the act of ‘accessing’ is the act of communicating with an OMS database that contains all records of open orders ....” 90 But the syntax of step (i) makes clear that it is the “records of open orders” that the patented method must access, not the database. Liquidnet’s proposed construction of step (i) essentially reads out of the claim the words “all records of open orders from.” That the records — rather than the database — are the object of the verb “accessing” is only confirmed by the language of steps (ii) and (iv), which require the performance of additional steps on the “accessed records of orders” — such as “generating ... nonbinding indications from” 91 them and “determining if at least one” of them “has changed.” 92
b. ITG and Pulse Do Not “Access [ ] ... All Records of Open Orders From” Databases of Non-MacGregor OMSs
Liquidnet has adduced no evidence — and does not argue — that ITG and Pulse employ OMS integration modules that read in memory all records of open orders from the OMS databases with which they interface. Rather, it argues that mere “communicat[ion] with an OMS database that contains all records of open orders” suffices to constitute infringement of step (i). 95 But the undisputed facts make clear that in all “stored procedure” integrations, the OMSs with which Pulse and ITG integrate filter the records of open orders for U.S. equity orders before they are obtained — let alone “read in memory” or accessed — by any sort of OIM. Thus, only records of open U.S. equity orders — a subset of “all” records of open orders- — could possibly be accessed by Pulse and ITG in non-MacGregor XIP 96 stored procedure integrations. For non-stored procedure integrations, Liquid-net has not even adduced evidence sufficient to support its argument that ITG and Pulse “communicate with” OMS databases, let alone access all records of open orders within those databases. Therefore, ITG and Pulse are entitled to summary judgment of non-infringement for all nonMacGregor OMS integrations.
First,
Liquidnet does not even articulate a theory of infringement for ITG’s and Pulse’s non-stored procedure integrations. In addition to stored procedures, Channel utilizes “socket connections, web services, COM API’s and flat files (i.e., ‘file drops’);”
97
two of BloekCross’s ten integration types involve “web server” im
Second,
it is undisputed that in stored procedure integrations, Channel and BlockCross issue “calls” to OMS databases, or to APIs
in
the OMS databases— written by OMS vendors or their respective clients — instructing the OMS databases to execute stored procedures.
103
The
This description is the only undisputed evidence that Channel and BlockCross perform any sort of OIM-like functionality. This is because, despite the fact that “ITG [for example] produced to Liquidnet over 86,000 pages of documents, as well as the actual software code for Channel, and despite the fact that Liquidnet deposed ten fact witnesses of Channel, Liquidnet does not rely on any of this testimony, or on the functional specification documents for Channel, or on the software code” 109 to make its argument. Instead, Liquidnet’s briefing consists almost entirely of statements from Pulse and ITG documents describing Pulse integration software (“BCX”) and “BCGetOrders” stored procedures and an ITG interfacing module (“TIM”), 110 the accuracy and implementation of which ITG and Pulse dispute. 111
However, even if these documents fully, accurately, and undisputedly described Pulse’s and ITG’s OIM functionality, they would support the undisputed fact that any records of open orders accessed by Pulse and ITG — or read in the OMS databases’ memory — have already been filtered to exclude non-U.S. equity orders. For example, the “TIM” document explains that “the OMS Vendor will need to supply the following interface: stored procedure to access open orders from the OMS database.” 112 And the BCX document explains that the software will periodically query the OMS database to execute a stored procedure, which will request the OMS database to “return all active U.S. equity orders whose available quantity meets a specified minimum number of shares.” 113
Liquidnet admits that it is the stored procedures — located in the OMS database and written by OMS vendors
(not
ITG or Pulse)
114
— that “look for the requested U.S. equity orders” and return only those orders to BlockCross or Channel.
115
Therefore, only U.S. equity orders could possibly be accessed by any Pulse or ITG interfacing module.
116
Nowhere does Li
Perhaps this is because Patent '834 simply does not encompass integrations with OMSs in which stored procedures filter out non-suitable orders before the records are obtained (or accessed) by an OIM. The claim’s “accessing” step is necessary because all records of open orders in the OMS databases memory must be read in order for the OIM to perform the remaining functions outlined in the specification— including filtering the data to determine which orders are suitable for transmission to the ETM. But Liquidnet has adduced no evidence that an ITG or Pulse OIM “reads in memory” any records of open orders located in any non-MacGregor OMS database as required by Patent '834.
In its reply briefs, Liquidnet makes (for the first time) a conclusory “in the alternative” argument for joint infringement, asserting that “[ejven if Claim [one] were somehow construed to require the actions of an entity other than ITG, there is still direct . infringement, because [ITG and Pulse] control [] the actions of the OMS database in performing the [Channel and BlockCross] method[s].”
117
According to Liquidnet, this control derives from (1) Channel’s and BlockCross’s “calls” to the stored procedures
118
and (2) the fact that ITG and Pulse provide OMS vendors with “functional specifications” describing how to interface with Channel and Block-Cross.
119
First,
even if ITG and Pulse did “control” the actions of the OMS vendors, Liquidnet has adduced no evidence of how
Although Liquidnet makes no legal distinction between the MacGregor XIP and other OMS databases, I cannot ignore the undisputed fact that ITG owns the MacGregor Group, which manufactures the MacGregor XIP — an OMS with which ITG integrates by calling stored procedures written
by
the MacGregor Group.
4. ITG Does Not Literally Infringe Steps (iii) and (v) of Claim One of the '834 Patent
Even if the MacGregor XIP’s stored procedures “access [ ] ... all records of open orders” in its database, ITG’s products do not infringe as a matter of law because Channel is not an ETM as this Court has construed that term. Therefore, ITG cannot be found to perform steps (iii) or (v) of claim one, which require “sending” “non-binding indications to the at least one [sic ] electronic marketplace.” 127
Liquidnet argues that all of claim one is completed when order data is “swept into Channel from the OMS database.” 128 But steps (iii) and (v) of claim one both require “sending” non-binding indications to at least one ETM, which this Court has defined as “an electronic destination that (1) receives and processes nonbinding indications, (2) allows for the matching of nonbinding indications with their contra interests and for the negotiation and execution of trades, and (3) has the capacity to record trades if and when they are executed.” 129 Channel allows for neither the execution nor the negotiation of trades. Therefore, it cannot be considered an “ETM” to which non-binding indications are sent.
As I explained during Claim Construction, “the term ‘electronic marketplace’ suggests an electronic destination where trades are executed.”
130
But it is undisputed that neither Channel nor POSIT Alert — the two products Liquidnet accuses of infringing Patent’ 834 — allow for the execution of trades.
131
Thus, those venues — considered together or separately— cannot be “ETMs” to which nonbinding indications are sent. Liquidnet’s assertion that “the combination of Channel ITG, POSIT Alert, and ITG execution venues satisfy the Court’s definition of ‘electronic
ITG speculates that “Liquidnet is intent on arguing that all of the steps of claim one are performed by the time unplaced share information arrives in Channel because the revenues associated with the use of POSIT Alert are only about one-third of the total revenues associated with the use of Channel.” 134 Thus, ITG suggests that Liquidnet might have had a stronger infringement argument if POSIT Alert were the “ETM” to which Liquidnet argued the non-binding indications were sent. Leaving aside for the moment that trades cannot be executed in POSIT Alert, either, 135 even this argument would fail because POSIT Alert does not “allow for” the negotiation of trades — a “necessary feature” of an ETM as this Court has construed that term. 136 Although “negotiation need not be an in-depth process” and “can be as basic as each party assenting to the terms of the other party’s non-binding indications,” 137 POSIT Alert does not allow for even this functionality because the steps taken by traders in response to a “match” in POSIT Alert — a match that reveals neither trader’s proposed price or quantity— do not constitute assent to the terms of the contra-indication. 138
It bears noting that traders using POSIT Alert merely “expose” nonbinding indications to traders at other institutions. If POSIT Alert identifies a matching contra
indication
— ie., an indication from a trader on the opposite side of the trade in the same security — each party is “alerted.” Each is then given the opportunity to enter a firm order — an opportunity she holds at all times, incidentally, regardless of whether her non-binding indication is matched in POSIT Alert. There is no
Even if Trader One’s decision to enter a firm order, upon the realization that Trader Two might have a matching trade, could somehow constitute “assent” to a trade with Trader Two-despite the fact that the ultimate execution could easily occur with an entirely different counterparty — there is no conceivable way that such a decision constitutes Trader One’s assent to the terms of Trader Two’s contra-indication. This is because the only information conveyed to a trader “alerted” to a match in POSIT Alert is that one or more traders want to buy the security she wants to sell, or sell the security she wants to buy. Neither trader knows how much of her nonbinding indication will be executed even if she converts it to a firm order simultaneous with the trader/s on the other side. And ITG’s products do not afford traders the ability even to expose a non-binding price indication to a counterparty through POSIT Alert, 139 let alone negotiate that price term.
The fact that “the trader has the ability to change the quantity before converting it to a firm order and sending it out for matching” 140 or “put a specific price range on it before requesting execution” 141 does not transform the process into a negotiation; in fact, traders’ ability to change their orders’ price and quantity terms after they are alerted to a match only underscores that neither trader could possibly be assenting to the other’s “terms.” Nor does it matter that traders know their trades will execute above a “minimum order size set for the system.” 142
Furthermore, traders using POSIT Alert are notified when their non-binding indication is matched by either (1) a nonbinding indication or (2) a firm order already entered in POSIT Now. Surely a trader’s decision to convert a nonbinding indication to a firm order in the latter situation cannot constitute negotiation. First, given my description of the minimum requirement for negotiation — “each party assenting to the terms of the other party’s non-binding indications” 143 — there can be no negotiation if only one of the party’s “indications” is non-binding. Second, it would make no sense to say that two traders were “negotiating” simply because Trader One decided to enter a firm order that ultimately influenced Trader Two’s decision to trade, totally unbeknownst to Trader One.
In conclusion, Channel/POSIT Alert may transmit “non-binding indications” among traders, but they do not “ ‘provide information to allow traders to enter into
negotiations
to ultimately trade the securities.’ ”
144
A trader does not “negotiate” a
5. Conclusion
For the aforementioned reasons, both ITG and Pulse are entitled to summary judgment of non-infringement with respect to claim one of the '834 Patent.
B. ITG Is Entitled to Summary Judgment of No Willful Infringement
Liquidnet is suing ITG not only for literal infringement, but also for willful infringement — a cause of action that carries the possibility of enhanced damages. ITG now moves for summary judgment that, as a matter of law, it did not willfully infringe the '834 Patent. Liquidnet argues that “at a minimum, there exist genuine issues of material fact for trial that preclude summary judgment on the issue of ITG’s willful infringement.” 145 In particular, Liquidnet asserts that “ITG copied the Liquidnet System embodiment of the '834 Patent invention” and that, after the '834 Patent was
brought to its attention by Liquidnet, ITG failed to articulate even one non-infringement defense, relying instead on a bogus inequitable conduct defense based on a patent application for the failed ‘Harborside’ system, while choosing to expand, rather than abate, its infringing activity. ITG also continued its willful conduct throughout this litigation by asserting baseless claims and defenses that contravene this Court’s claim construction rulings, ITG’s own production documents, and the deposition admission of ITG’s own expert witnesses. 146
Meanwhile, ITG moves for summary judgment on the grounds that, because all of the conduct on which Liquidnet bases its willful infringement claim occurred (1) after ITG learned of Patent '834 and (2) after Liquidnet filed suit against it for willful infringement (“post-filing”), Liquid-net’s failure to move for a preliminary injunction precludes it from accruing enhanced damages based solely on ITG’s post-filing conduct.
1. Factual Background Relating to Willful Infringement Claim
Liquidnet’s patent issued on November 14, 2006.
147
Six days later, on November 20, 2006, ITG learned of the patent.
148
The next day, Liquidnet filed a complaint in Delaware charging ITG with willful infringement.
149
Because Liquidnet sued under the wrong name, however, subject matter jurisdiction in Delaware was improper.
150
ITG alerted Liquidnet to this jurisdictional defect on January 24, 2007 — two months after Liquidnet sued
2. Applicable Law
“To willfully infringe a patent, the patent must exist and [the accused infringer] must have knowledge of it.” 155 Then, “a patentee must show by clear and convincing evidence [1] that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent” and “[2] that this objectively-defined risk (determined by the record developed in the infringement proceeding) was either known or so obvious that it should have been known to the accused infringer.” 156 However,
a willfulness claim asserted in the original complaint must necessarily be grounded exclusively in the accused infringer’s pre-filing conduct. By contrast, when an accused infringer’s post-filing conduct is reckless, a patentee can move for a preliminary injunction, which generally provides an adequate remedy for combating post-filing willful infringement. A patentee who does not attempt to stop an accused infringer’s activities in this manner should not be allowed to accrue enhanced damages based solely on the infringer’s post-filing conduct. 157
3. ITG Is Entitled to. Summary Judgment of No Willful Infringement
ITG argues that it is entitled to summary judgment on Liquidnet’s claim that it willfully infringed Patent '834 because (1) ITG had only a single day of prelitigation (“pre-filing”) knowledge of Patent '834 and (2) Liquidnet has never sought a preliminary injunction against ITG, thereby precluding its recovery for “post-filing” willful infringement under Seagate,
158
It is undisputed that Liquid-net’s patent issued on November 14, 2006;
159
six days later, on November 20, 2006, ITG learned of the patent;
160
and the next day, Liquidnet filed a complaint against ITG for willful infringement in Delaware.
161
Aside from November 20,
Liquidnet acknowledges that “the issue of whether the patentee has moved, or should have moved, for a preliminary injunction only arises under Seagate where the patentee is relying solely upon post-complaint conduct of the accused infringer to prove willfulness.” 163 However, it argues that the “operative complaint for purposes of determining ITG’s willful infringement of Patent '834 is ITG’s declaratory judgment complaint filed in this Court [on January 23, 2007], not Liquid-net’s dismissed Delaware complaint.” 164 Therefore, it argues, because “Liquidnet is relying upon both pre-complaint and post-complaint conduct of ITG to establish willfulness ..., it is irrelevant ... whether Liquidnet ever moved for a preliminary injunction in this action, or in the Delaware action.” 165
I reject this argument. Liquidnet offers no logical reason why ITG’s complaint, as opposed to its dismissed Delaware complaint, should trigger the start of the post-filing period. Liquidnet filed suit against ITG in Delaware one day after ITG learned of its patent. It alleged willful infringement in both its initial and its first amended complaint.
166
Because it named the wrong plaintiff in the Delaware complaint, however, subject matter jurisdiction was improper.
167
Thus, three days after ITG filed suit in this Court seeking declaratory relief for non-infringement,
168
Liquidnet voluntarily dismissed the Delaware action in favor of this action.
169
Knowledgeable of the Patent and of Liquidnet’s grounds for alleging infringement, ITG was “force[d] to choose between [1] resting on theories of invalidity and non infringement it believe[d] to be objectively reasonable and [2] engaging in costly and potentially unnecessary redesign of its accused products.”
170
Had Liquidnet sought a preliminary injunction, those theories would have been tested at the time ITG was relying on them.
171
The policy ratio
Liquidnet also argues that the
Seagate
“rule precluding a patentee from pursuing a claim of willful infringement where the patentee did not first move for a preliminary injunction” is not absolute.
173
This is true.
174
However, there are limited circumstances under which a patentee may sustain a claim of post-filing willful infringement despite the patentee’s failure to first seek a preliminary injunction.
175
Such post-filing circumstances might include, e.g., (1) a patent’s surviving reexamination proceedings without narrowed claims
176
or (2) a patentee’s neither practicing its invention nor directly competing with the accused infringer (rendering its failure to seek a preliminary injunction reasonable).
177
However, Liquidnet makes
Finally, Liquidnet argues that the Sea-gate rule announced on August 20, 2007 is procedural in nature, and therefore cannot be applied retroactively “to Liquidnet’s [November 21, 2006] Delaware action.” 178 I note at the outset that the Federal Circuit has held that Seagate’s new “objective recklessness” standard applies retroactively. 179 However, it has not specifically addressed the retroactivity of the preliminary injunction “requirement.”
First, it is not so clear that Seagate’s preliminary injunction requirement is procedural. If “failure to seek a preliminary injunction is not dispositive” 180 — as suggested by the cases on which Liquidnet relies' — then it is better-viewed as a factor to be weighed in a totality-of-the-circumstances approach to determining whether there is an objectively high likelihood of infringement of a valid patent — a rule more substantive than procedural in nature. In other words, failure to obtain a preliminary injunction serves as evidence that the accused infringer’s defenses are “substantial, reasonable, and far from the sort of easily-dismissed claims that an objectively reckless infringer would be forced to rely upon.” 181
Second,
at least three federal district courts have applied Seagate’s preliminary injunction “requirement” retroactively — albeit without discussion of whether the rule is substantive or procedural in nature— under circumstances virtually identical to those presented here.
182
For example, a
[the patentee] did not even attempt to stop any alleged infringing activity, electing instead to allow any enhanced damages to accrue. The court does not impose a categorical rule that lack of a motion for preliminary injunction automatically bars post-suit willful infringement, but rather finds that in these particular circumstances, [the patentee’s] post-suit conduct coupled with the lack of any evidence of pre-suit notice of the [] patent establishes that there is no willful infringement by [the accused infringers]. 185
One court in this district has reasoned (in dicta) that “it is unlikely that Seagate’s discussion of the necessity of a preliminary injunction applies retroactively,” 186 reasoning that “[i]t is one thing to apply Seagate’s objective recklessness standard retroactively and quite another to bar [a patentee’s] willful infringement claim as a matter of law because [a patentee] did not seek a preliminary injunction that it had no reason to believe was required.” 187 However, that reasoning did not form the basis for the court’s decision; instead, it found that because the patentee’s claims for willful infringement were not based solely on the infringer’s post-filing conduct, “Seagate’s requirement of a preliminary injunction does not apply.” 188
Thus, for the aforementioned reasons, ITG’s motion for summary judgment on Liquidnet’s claim that it willfully infringed Patent '834 is granted.
C. Liquidnet’s Motion for Partial Summary Judgment on ITG’s Inequitable Conduct Claim Is Denied
In its amended complaint, ITG alleges that Liquidnet’s CEO, Seth Merrin, and the other named inventors of Patent '834 did not invent what is claimed in Patent '834 but rather copied a system called “@Harborside” developed by Richard Holway at a firm called Jefferies & Co. from 1997-1999.
189
ITG contends that Liquid-net’s failure to disclose the @Harborside system to the PTO during prosecution constitutes inequitable conduct, rendering Patent '834 unenforceable.
190
In particular, it has alleged three bases for a finding of inequitable conduct: (1) Liquidnet’s failure to disclose a patent application filed by Harborside, (2) Liquidnet’s failure to disclose the “@Harborside” system itself, and (3) a statement Liquidnet made during prosecution that it “know[s] of no prior art system or method, manual or automated, for reading OMS records reflecting orders, deriving non-binding indications and pro
1. Factual Background Relating to ITG’s Inequitable Conduct Claim
ITG has produced evidence that, prior to the formation of Liquidnet, Holway and Jefferies & Co. hired VIE Systems to write, under Holwa/s direction, the software code to integrate a system called @Harborside with OMSs used by Jefferies’ clients. 193 According to ITG, Merrin (Liquidnet’s CEO and a named inventor on Patent '834) owned VIE, and two VIE employees — Kevin Lupowitz (another named inventor on Patent '834) and Eric LeGoff (a founder of Liquidnet) — worked on the @Harborside integration. 194 Merrin, Lupowitz, and LeGoff left VIE and started Liquidnet, a direct competitor to @Harborside. 195
ITG presents evidence (1) that Holway told both Lupowitz and Merrin in 2001 that he believed Liquidnet had stolen his invention, and (2) that John Halloran (a third named inventor on Patent '834) knew about this accusation. 196 ITG also presents evidence suggesting that these persons, and others at Liquidnet, did not disclose @Harborside to the PTO during the prosecution of Patent '834, instead disclosing to the PTO only a later version of @Harborside called “Harborside + ” and telling the PTO that the later version was a copy of Liquidnet’s invention. 197
Regarding the third basis for its inequitable conduct defense, ITG presents evidence that Liquidnet did not disclose to the PTO a patent application that Holway and his colleagues at Jefferies had filed for the @Harborside system — an application that was publicly available as of January 2, 2003. 198 As evidence that. Liquidnet knew about this patent application, ITG points to (1) testimony by Holway that he told Merrin, Lupowitz, and LeGoff about his patent application; 199 (2) an email dated April 7, 2005, showing that LeGoff and Merrin had been told about the Harborside patent application; 200 and (3) testimony by Merrin and LeGoff that they were aware during the prosecution of the Liquidnet patent application that there was a Harborside patent application. 201 As evidence that Liquidnet did not know about this patent application, Liquidnet points to Holway’s deposition testimony that he never gave a copy of the Harborside patent application to anyone at Liquidnet and could not identify anyone who provided the application to anyone at Liquidnet. 202
2. Applicable Law
“To hold a patent unenforceable due to inequitable conduct, there must be
3. Whether Liquidnet Made a “Deliberate Decision to Withhold a Known Material Reference’’ Raises a Genuine Issue of Material Fact
Drawing all reasonable inferences in ITG’s favor, I conclude that there is a genuine issue of material fact whether, in failing to disclose the Harborside patent application, Liquidnet “made a deliberate decision to withhold a known material reference” 206 — specifically, the Harborside patent application.
Liquidnet argues that, because there is no evidence that Liquidnet received a copy of the Harborside patent application, there is insufficient evidence for a trier of fact to find that Liquidnet knew of its contents, 207 I disagree. Based on the undisputed fact that Merrin, Lupowitz, and LeGoff knew the Harborside patent application existed — on an invention they were accused of stealing — a reasonable trier of fact could infer that Liquidnet knew of its contents, even if there is no hard evidence that it received or had in its possession a physical copy of the application. Liquidnet is patently wrong that there is “no evidence showing, what, if anything, Liquidnet personnel knew about the Harborside patent application.” 208 However, it is for a trier of fact to determine whether the named inventors and others involved in the prosecution of Patent '834 had knowledge of the Harborside Patent application (and its contents) and deliberately withheld it from the PTO. 209 Therefore, Liquidnet’s motion for summary judgment is denied.
V. CONCLUSION
For the aforementioned reasons, ITG’s and Pulse’s motions for summary judg
SO ORDERED.
Notes
. 11/14/06 U.S. Patent 7,136,834 ("Patent '834"), Ex. 1 to Affidavit of Jenny Workman, counsel to ITG.
. "ITG” refers collectively to Investment Technology Group, Inc., ITG Inc., ITG Solutions Network, Inc., and The MacGregor Group, Inc.
.
See Investment Tech. Group, Inc. v. Liquidnet Holdings, Inc.,
Nos. 07 Civ. 510, 07 Civ. 6886,
. For ease of understanding, I outline the factual background and applicable law relevant to each of the three claims on which summary judgment in this case is sought— literal infringement, willful infringement, and inequitable conduct — in the separate sections of this opinion in which I discuss each set of briefs relating to those claims.
. Patent '834.
. I incorporate here by reference my discussion 0f "The Invention,” as stated in
Claim Construction,
. Patent '834 col.12 1.50-col. 13 1.15 (emphasis added to terms disputed during Claim Construction).
.
Claim Construction,
. Fed.R.Civ.P. 56(c).
.
SCR Joint Venture L.P. v. Warshawsky,
.
Miner v. Clinton County, N.Y.,
.
Sledge v. Kooi,
.
Jaramillo v. Weyerhaeuser Co.,
. See ITG’s Statement of Undisputed Facts Pursuant to Local Rule 56.1 ("ITG 56.1”) ¶¶ 1-2; Liquidnet’s Statement of Undisputed Facts Pursuant to Local Rule 56.1 in Support of Motion for Partial Summary Judgment Against Pulse ("Liquidnet v. Pulse 56.1") ¶ 3; Pulse’s Memorandum of Law in Support of Motion for Summary Judgment ("Pulse Mem.”) at 2.
. ITG 56.1111.
. See id. ¶¶ 13-14.
. See id. ¶ 13.
. See id. ¶ 14.
. See id. ¶ 12.
. Id. ¶ 15. For example, according to Patent '834's specification, “each OMS database holds data representative of open, contemplated, or completed orders to buy and/or sell securities ....” Col.5 11.42-44.
. ITG 56.1 ¶ 16.
. See id. ¶ 17.
. Id. ¶ 18.
. See id. ¶ 19. Traders call this GUI the “blotter” because traders once managed the same order information by hand on paper “blotters.” See id. 1120. A trader blotter typically displays, for each order: (1) an identification of the asset to be bought or sold; (2) the total number of shares to buy or sell (i.e., the total order size); (3) details regarding shares the trader already bought or sold (i.e., executed or completed orders); (4) details regarding any "firm” buy/sell orders that the trader already placed, but that have not been executed (i.e., "firm orders” or “placed orders”); and (5) the number of shares the trader has not yet placed anywhere ("unplaced” or "open orders”). Id. ¶ 22. "Firm” orders are orders that, once submitted to an electronic marketplace, are "binding” on traders; in other words, once they are “matched” with a "contra-indication,” they are automatically executed, with no further, affirmative action required by the trader. See id. ¶¶ 65, 69-70, 74-75.
. See id. ¶ 24.
. See id. ¶ 25.
. See id. ¶ 27.
. The MacGregor XIP, an order management system manufactured by The MacGregor Group, Inc. (owned by ITG), integrates with Channel. See id. ¶ 1.
. Id. ¶¶ 32-33.
. A more detailed description of the manner in which the accused products integrate with client-side OMS databases is included in Section IV.A. 1 .c below.
. See ITG 56.1 ¶¶ 42, 45.
. See id. 1Í1Í 33-34, 36, 38, 58.
. See id. ¶ 67. ITG’s “trading destinations” include (1) “POSIT,” (2) ITG’s suite of trading algorithms (“ITG Algorithms”), and (3) the ITG trading desk. Id. ¶¶ 65-76. POSIT is an electronic "crossing” system that matches firm orders received from traders across ITG’s entire client base and executes them at the midpoint of the National Best Bid and Offer (NBBO) price. Id. ¶¶ 65, 68.
. See id. ¶¶ 78, 82-83.
. See id. ¶ 78.
. Id. ¶ 79. Accord Liquidnet's Statement of Undisputed Facts Pursuant to Local Rule 56.1 in Support of Motion for Partial Summary Judgment Against ITG ("Liquidnet v. ITG 56.1”) n 58-59.
. See ITG 56.1 ¶ 84; Liquidnet v. ITG 56.1 ¶ 63. The parties refer to the binding or nonbinding indication with which the trader's exposed unplaced share information is matched as a "contra-indication.”
. See ITG 56.1 ¶ 88; Liquidnet v. ITG 56.1 ¶¶ 64-65.
. See ITG 56.1 ¶¶ 86-87. All a trader knows with respect to the other side’s quantity in POSIT Alert is that it is more than the minimum order size set for the system. See id. ¶ 87.
. See id. ¶ 87.
. See Pulse's Statement of Undisputed Facts Pursuant to Local Rule 56.1 ("Pulse 56.1”) ¶¶ 15-16.
. See id. ¶¶ 28-29.
. Liquidnet v. Pulse 56.1 ¶ 55.
. See id. ¶ 57.
. See Pulse 56.1 ¶ 31. When designating an order for Auto-Ex mode, a trader may also select a “Follow-on” option that enables her to complete additional trading (after her initial order has been executed in BlockCross), but only if the contra-trader with whom her initial order was executed also pre-set her order to "Follow-on.” See id. ¶¶ 37-38. If both parties have pre-set their orders to Follow-on, and an AutoEx trade is executed, the parties will have an opportunity to do another trade in Confirm mode. See id. ¶ 39.
. Liquidnet v. Pulse 56.1 ¶ 56.
. See Pulse 56.1 ¶¶ 7, 9; ITG 56.1 ¶¶ 40, 48-49; Liquidnet v. ITG 56.1 ¶¶ 40-41.
. See Pulse 56.1 ¶ 7.
. Id.
. Id. ¶ 14.
. See id. ¶¶ 15-16.
. See id. ¶ 18.
. See id. ¶ 10. Pulse asserts that in web services integrations, BlockCross software ("BCX”) communicates with a web services server and does not integrate with an OMS. See Pulse’s Response to Liquidnet’s Statement of Undisputed Facts Pursuant to Local Rule 56.1 ("Pulse Response to Liquidnet 56.1”) 135.
. See ITG 56.1 ¶¶ 1, 41-42.
. Id. ¶ 41.
. See id. ¶ 42.
. Id. ¶ 45.
. See id, ¶ 48.
. See Liquidnet v. ITG 56.1 ¶¶ 40-41.
. See ITG's Response to Liquidnet's Statement of Undisputed Facts Pursuant to Local Rule 56.1 ("ITG Response to Liquidnet 56.1") ¶¶ 41, 43 (disputed by ITG only to the extent the "call" is not a communication with the database, but rather "some sort of prompt to that program to send information”).
. See ITG 56.1 11 45.
. Liquidnet 56. ¶ 40.
. ITG 56.1 ¶ 49. Accord ITG Response to Liquidnet 56.1 V 40.
. See ITG 56.1 ¶ 54.
. 35 U.S.C. § 271(a).
.
See Metabolite Labs., Inc. v. Laboratory Corp. of Am. Holdings,
.
See, e.g., Boss Control, Inc. v. Bombardier Inc.,
.
Athletic Alternatives, Inc. v. Prince Mfg., Inc.,
.
See Windbrella Products v. Taylor Made Golf Co.,
.
See, e.g., PC Connector Solutions LLC v. SmartDisk Corp.,
.
BMC Res., Inc. v. Paymentech, L.P.,
.
Gart v. Logitech, Inc.,
.
Muniauction, Inc. v. Thomson Corp.,
. Id. at 1330 (alleged infringer that merely "controls access to its system and instructs bidders on its use is not sufficient to incur liability for direct infringement”). Id. at 1331.
.
BMC Res.,
. Patent'834 col. 12 11.52-54.
.
Athletic Alternatives,
. Patent'834 col. 12 11.52-54.
.
Claim Construction,
. Under the terms of the specification, a ''module” is “machine-executable code and/or data, but may also include associated circuitry, such as processing circuitry, as well as data storage areas, and/or other software or hardware.” Patent '834 col.5 11.42-46.
.
Claim Construction,
. Patent '834 col.3 11.44-46.
.
Claim Construction,
. Id.
. Id. at *7.
. Patent'834 col.ll 11.17-27.
. The fact that only some orders are suitable for transmission in some embodiments of Patent '834 does not change the fact that a necessary step of the patented method is accessing each and every one of those records.
. Patent '834 col.12 1.65-col. 13 1.1.
. Pulse argues that “this is not a trivial distinction. As explained by Liquidnet's founder and inventor of the '834 patent, the order information on an OMS database '... is the most sensitive information on Wall Street.’ For Liquidnet, convincing their customers to allow this 'blotter sweeping’ was '[t]he biggest obstacle that [Liquidnet] had to overcome.’ And it has had real-life impact; Liquidnet averages nearly four times more shares executed on a daily basis than Pulse.” Pulse Mem. at 4.
. Liquidnet’s Memorandum in Opposition to Pulse's Motion for Summary Judgment (''Liquidnet Opp. Mem. to Pulse Mem.”) at 5.
. Patent '834 col.12 11.65-66.
.
Id.
col.13 11.7-9. I also note that, if Liquid-net's construction of step (i) were correct, much of claim one, and the vast majority of the patent's specification, would be superflu
. Patent '834 col.3 11.43-44.
. Id. col. 12 11.52-54.
. Liquidnet Opp. Mem. to Pulse Mem. at 5 (emphasis added).
. I address MacGregor XIP integrations at the end of this discussion.
. Liquidnet 56.1 ¶ 40.
. Pulse 56.1 ¶ 9.
. Nor does Liquidnet explain how these integrations involve "communication with” an OMS database — despite the fact that its entire argument is based on the theory that "the act of 'accessing’ is the act of communicating with the OMS database.” Liquidnet's Memorandum in Opposition to ITG's Motion for Summary Judgment ("Liquidnet Opp. Mem. to ITG Mem.”) at 12. What is more, evidence presented by ITG suggests that "for some interfaces, such as a file drop, no call is required,” ITG Response to Liquidnet 56.1 ¶ 41, and that the "technology used to copy unplaced share information to Channel” can involve "storing the order data in an agreed upon network location, such as in a flat file or a port,” ITG 56.1 ¶¶ 48-49 — an integration method that would not appear to involve any communication with the OMS database. See also ITG Response to Liquidnet 56.1 ¶ 41 (disputing that “[w]ith each Channel interface, a customer-provided program ... provides order information in response to a ‘call’ sent by Channel”); id. ¶ 50 ("Channel does not always ‘request’ [information from the OMS]; in some workflows, the information is just sent to the client.”).
. See Liquidnet’s Memorandum of Law in Support of Motion for Partial Summary Judgment Against Pulse ("Liquidnet v. Pulse Mem.") at 8 ("In a ‘typical deployment ... BCX ... uses [Open Data Base Connectivity] to connect to the database and to call the stored procedures ...”') (emphasis added); Liquidnet's Response to ITG’s Statement of Undisputed Facts Pursuant to Local Rule 56.1 ("Liquidnet Response to ITG 56.1”) ¶ 50 (“Channel, ITG-developed software, gains entry to all of the orders in the OMS database through its 'prompts’ or 'calls' to the stored procedure”); Liquidnet Opp. Mem. to ITG Mem. at 15 ("without those calls, no order information can be swept into Channel”); id. at 14 ("Channel ITG’s ‘call’ to the OMS database, is the equivalent of the visitor either physically entering the library or the user accessing the database search functionality of the library’s website.”).
. Liquidnet Opp. Mem. to ITG Mem. at 12. See, e.g., id. (asserting that Channel makes " 'queries’ to the [OMS databases] via various communications protocols (e.g., stored procedures, API, webservice, and sockets), and a ‘TIM’ interface running on at least one Channel ITG server”); Liquidnet Opp. Mem. to Pulse Mem. at 5 (asserting that "BlockCross gains entry to the OMS databases ... by making 'queries' to the database via a communications protocol and a ‘BCX’ interface running on at least one BlockCross server computer.").
. Liquidnet Opp. Mem. to ITG Mem. at 12 ("Channel performs the 'accessing' step by 'open[ing] up a socket’ to receive information from the OMS database.”).
.
See
Pulse 56.1 ¶¶ 14-15 ("In the stored procedure integrations, BlockCross issues a call to the OMS through an application program interface ('API')” that "requests order information from the OMS by asking the API to execute a stored procedure in the OMS database.”); ITG 56.1 ¶ 41 ("For ITG clients who want to use Channel with the MacGregor XIP OMS, Channel prompts or 'calls’ a specif
Throughout its briefs, Liquidnet describes "Channel” and “BlockCross” both as the destinations for retrieved order data and as the entities responsible for "accessing” the OMS databases and the records of open orders therein. Conveniently, this glosses over Patent '834’s clear portrayal of (1) an OIM that accesses all records of open orders, which are then transmitted (2) to an ETM. When Liquid-net employs such language, it essentially reads out of the claim the necessary step wherein all records of open orders are read in OMS databases’ memories — the essential first step of claim one.
. See Pulse 56.1 ¶ 16.
. See id. ¶ 26; ITG 56.1 ¶¶ 41-43, 45. Liquidnet disputes that U.S. equity orders are merely a subset of open orders located in OMS databases, asserting that "[t]here is no way for ... anyone ... to know whether or not an OMS database at a buy-side institution exists whose records comprise only U.S. equity orders.” Liquidnet’s Response to Pulse’s Statement of Undisputed Facts Pursuant to Local Rule 56.1 ("Liquidnet Response to Pulse 56.1”) ¶ 6. However, it is Liquidnet’s burden to prove infringement by clear and convincing evidence. And the Patent specification discloses that the “securities” that "[e]ach OMS database holds data representative of” can include stocks, bonds, “or any other financial instrument, contract, or transaction, such as a forward, futures, option, put, call, collar, swap, or currency contract.” Patent '834 col.5 11.21-45. It also discloses that the patented method "makes the determination of suitable orders based on other criteria ... such as the security type (e.g., stock or bond).” Id. col. 11 11.26-27 (emphasis added). Moreover, it is undisputed that buy-side firms’ investment funds "contain a variety of U.S. and foreign stocks, bonds, options, futures, currency, derivatives, etc.” ITG 56.1 ¶ 13. Therefore, in light of the undisputed evidence that ITG and Pulse only obtain information about U.S. equity orders, Liquidnet's response amounts to an admission that its evidence is insufficient as a matter of law. See also ITG 56.1 ¶ 55 (citing the deposition of Liquidnet’s infringement expert, Joshua Galper, who testified that, during the two-and-a-half to three years that he has been working on this case, he has never communicated with any OMS vendor or underlying customer to ascertain whether they, in fact, give Channel access to all records of open orders and that he was merely speculating when he testified that he thought ITG might be getting all orders) (disputed by Liquidnet only as an "incomplete” characterization of the testimony). Liquidnet Response to ITG 56.1 ¶ 55.
. Liquidnet Opp. Mem. to Pulse Mem. at 8-9.
. See ITG 56.1 ¶ 49 ("in every case, the client decides what orders it wants to be able to trade at ITG through Channel and it works directly with its OMS vendor to gather the pertinent information. Some form of vendor-written computer program obtains order data by methods known only to the vendor-author, and provides the data to Channel ... by transmitting the order data to Channel ....”); id. ¶ 54; Pulse 56.1 ¶ 18.
. See Pulse 56.1 ¶ 26; ITG 56.1 ¶¶ 41-43.
. ITG's Reply to Liquidnet's Memorandum in Opposition to ITG’s Motion for Summary Judgment ("ITG Reply Mem.") at 1-2.
. See, e.g., Liquidnet v. Pulse Mem. at 2-5, 8, 9, 14, 15; Liquidnet’s Memorandum of Law in Support of Motion for Partial Summary Judgment Against ITG ("Liquidnet v. ITG Mem.") at 5-8, 15, 22, 23.
. For example, ITG disputes that the TIM was ever built or implemented, describing the ITG document on which Liquidnet relies as "conceptual.” ITG's Memorandum in Opposition to Liquidnet’s Motion for Summary Judgment (“ITG Opp. Mem.”) at 2. Accord ITG Response to Liquidnet 56.1 ¶ 35 ("TIM was never deployed and plays no role in the Channel interface. TIM was merely a concept that was never built.”). Similarly, Pulse asserts that "there is no evidence that any OMS vendor or BlockCross customer has a ‘BCGetOrders’ stored procedure.... Stored procedures on an OMS database are written, maintained and owned by the OMS vendor and BlockCross customer.” Pulse Response to Liquidnet 56.1 V 45.
. ITG Reply Mem. at 2 n. 1 (quotation marks omitted).
. Liquidnet v. Pulse 56.1 ¶ 45 (quotation marks omitted).
. Liquidnet Opp. Mem. to ITG Mem. at 8 ("OMS vendors obviously own the right and title to the source code for the OMS software product that they market.”).
. Liquidnet Opp. Mem. to Pulse Mem. at 8-9.
. Liquidnet's legal theory for step (i) also has implications for step (iv), which requires "periodically determining if at least one ac
. Liquidnet's Reply to ITG's Memorandum in Opposition to Liquidnet's Motion for Summary ("Liquidnet Reply Mem. to ITG Opp. Mem.”) at 8; Liquidnet’s Reply to Pulse's Memorandum in Opposition to Liquidnet's Motion for Summary Judgment ("Liquidnet Reply Mem. to Pulse Opp. Mem.”) at 8.
. See Liquidnet Reply Mem. to Pulse Opp. Mem. at 8 (“Pulse’s BlockCross system dictates the performance of each of the claimed steps, not the OMS vendor.”); Liquidnet Reply Mem. to ITG Opp. Mem. at 8 (asserting the same for Channel); Liquidnet Response to ITG 56.1 ¶ 55 (asserting — in response to ITG's statement that it "does not direct or control the accessing and retrieving steps” — that "[a]bsent the call to the stored procedure or other means of integration, no information would be returned to ITG. Channel's TIM interface is used to make those calls.”).
. See, e.g., Liquidnet Reply Mem. to Pulse Opp. Mem. at 8 ("Pulse’s own functional specifications provide that the BlockCross system 'periodically queries the OMS database to determine orders and quantities available on a trader's blotter’ .... Any intermediate ... steps that may be performed by an OMS vendor and/or the OMS database itself are irrelevant to the infringement analysis ....”).
. The only evidence in this case of how relational databases and stored procedures work (in general) is from Pulse's expert, Jim Rnocke. See Liquidnet Response to Pulse 56.1 ¶ 8. But Liquidnet does not even use this evidence to make an "in the alternative” argument that stored procedures "gain entry to” all records of open orders in OMS databases, instead asserting that it "is of no moment" that "the stored procedures actually initiate the retrieval of the requested data records, and may be 'written' and 'owned' by the OMS vendors ....” Liquidnet Opp. Mem. to Pulse Mem. at 8 (citations omitted).
. Liquidnet has adduced no evidence that any of the OMS vendors actually follow the "functional specifications” described in Pulse's "Stored Procedure Guide” (for integration with BlockCross) or in ITG’s "Channel Functional Specifications”' — a document which, according to ITG, "does not contain the functional specifications for Channel.” ITG Reply Mem. at 2. Accord Pulse Response to Liquidnet 56.1 ¶¶ 44-47.
.
Muniauction,
.
Muniauction,
. Id. at 1329. See ITG 56.1 ¶¶ 49, 54; Pulse 56.1 ¶ 18.
.
Muniauction,
.
Global Patent Holdings,
. Patent '834 col.13 11.5-6, 13-15.
. Liquidnet v. ITG Mem. at 23.
.
Claim Construction,
. Id. When quoting this Court’s construction of the term “electronic marketplace” in its motion for summary judgment, Liquidnet has — literally—deleted the requirement that the electronic marketplace allow for the execution of trades. See Liquidnet v. ITG Mem. at 16.
. See ITG 56.1 ¶ 39 ("No trades are matched and/or executed in Channel.”); id. ¶ 79 ("POSIT Alert is not a trading destination, but rather is an alerting mechanism
. Liquidnet v. ITG Mem. at 22.
. ITG Opp. Mem. to Liquidnet Mem. at 22.
. Id. at 23.
. See ITG 56.1 ¶ 79.
.
Claim Construction,
. Id. at *11.
. See ITG’s Memorandum of Law in Support of Motion for Summary Judgment ("ITG Mem.”) at 20 ("Because quantity (the number of shares) is an essential term of any stock trade, one cannot negotiate a stock trade— much less "assent [ ] to the terms of the other party’s non-binding indications” — if one does not know what the quantity is.”); id. ("The sending of a firm order cannot constitute negotiation of the proposed terms of another party’s trade, because an essential term on which the party may agree to trade — i.e., the quantity — is never known, let alone discussed.”).
. See ITG 56.1 ¶ 86.
. Liquidnet Opp. to ITG Mem. at 5.
. Liquidnet v. ITG 56.1 ¶ 66 (quotation marks omitted).
. Liquidnet Opp. to ITG Mem. at 18 (quotation marks omitted).
.
Claim Construction,
. Id. at *10 (quoting an exchange between the patent applicant and a PTO examiner during the prosecution of the patent). See Pulse Mem. at 5 ("Since [negotiation] functionality was a business advantage that Liquidnet touted from the start, it is no surprise that Liquidnet included this aspect of its product in the '834 patent.”).
. Liquidnet Opp. Mem. to ITG Mem. at 1.
. Id.
. See Liquidnet 56.1 ¶ 1.
. See ITG 56. ¶ 94.
. See id. Liquidnet maintained its willful infringement claim against ITG in its first amended complaint, filed on January 8, 2007. Id. ¶ 99.
. See id. ¶¶ 101-102. The Delaware complaint named Liquidnet, Inc., instead of Liquidnet Holdings, Inc. — the owner of the '834 patent. See id.
. See id. ITG also indicated in the letter its intention to file a motion to dismiss the Delaware action. See id. ¶ 102.
. See id. ¶ 103.
. See id. ¶ 104.
. See id. ¶ 105. On January 24, 2009, ITG raised Liquidnet's failure to seek a preliminary injunction as a basis for dismissing its willful infringement claim in a letter to Judge Lynch. See id. To date, Liquidnet has still not sought preliminary injunctive relief.
.
State Indus., Inc. v. A.O. Smith Corp.,
.
In re Seagate Tech., LLC,
. Id. at 1374 (citations omitted) (emphasis added).
. See ITG Mem. at 23.
. See Liquidnet 56.1 ¶ 1.
. See ITG 56.1 ¶ 94.
. See id.
.
Seagate,
. Liquidnet Opp. Mem. to ITG Mem. at 23. Thus, Liquidnet essentially concedes that— had subject matter jurisdiction in Delaware been proper, and had the case proceeded there — the issue of whether it moved or should have moved for a preliminary injunction would be relevant to my resolution of this motion.
. Id.
. Id. at 23-24.
. See ITG 56.1 ¶ 99.
. See id. ¶¶ 101-102.
. See id. ¶ 100.
. See id. ¶ 103.
.
Webmap Tech., LLC v. Google, Inc.,
No. 2:09-CV-343-DF-CE,
.
See Seagate,
. Liquidnet might have a stronger argument if, upon discovering that Liquidnet had named the wrong plaintiff in its Delaware complaint, ITG had remained silent. But ITG should not be punished for essentially correcting Liquidnet's filing error and seeking declaratory relief that the defenses it asserted in the Delaware action — and that would have been tested had subject matter jurisdiction been appropriate — were valid.
Even if the two-month period during which Liquidnet’s complaint was improperly filed in Delaware could somehow be considered "prefiling,” Liquidnet would still be precluded from seeking enhanced damages after January 23, 2007, when ITG filed suit in this Court.
See Baxter Healthcare Corp. v. Fresenius Med. Care Holdings, Inc.,
No. C 07-1359,
. Liquidnet Opp. Mem. to ITG Mem. at 23.
.
See Seagate,
.
See Webmap Tech.,
.
See St. Clair Intellectual Prop. Consultants, Inc. v. Palm, Inc.,
No. 06-404-JJF-LPS,
.
See Krippelz,
. Liquidnet Opp. Mem. to ITG Mem. at 23 (citing
Schriro v. Summerlin,
.
See Voda
v.
Cordis Corp.,
.
Netscape Commc’ns,
.
ResQNet.com, Inc. v. Lansa, Inc.,
.
See Anascape, Ltd.
v.
Microsoft Corp.,
No. 9:06-CV-158,
. See Anascape, 2008 WL 7182476, at *3.
.
Id.
(citing
Seagate,
. Id.
.
Astrazeneca AB v. Apotex Corp.,
Nos. 01 Civ. 9351, M-21-81,
. Id.
. Id.
. See 2/15/08 ITG Amended Complaint Against Liquidnet (“ITG Amended Complaint”) ¶¶ 18-86; ITG Opp. Mem. at 24 n. 16.
. See id.
. ITG Response to Liquidnet 56.1 ¶ 83.
. Liquidnet Reply Mem. to ITG Opp. Mem. at 9.
. See ITG Response to Liquidnet 56.1 ¶ 80.
. See id.
. See id.
. See id. ¶ 81.
. See id.
. See id.
. See id. ¶¶ 80-82.
. See id. ¶¶ 80-81.
. See id.
. See Liquidnet v. ITG Mem. at 25.
.
Cargill, Inc. v. Canbra Foods, Ltd.,
.
Star Scientific, Inc. v. R.J. Reynolds Tobacco Co.,
.
Kingsdown Med. Consultants, Ltd. v. Hollister Inc.,
.
Star Scientific,
. See Liquidnet v. ITG Mem. at 24-25. I note that Liquidnet does not argue the application was not a “material reference,” only that there is insufficient evidence that Liquid-net knew of its contents. See id. at 23-25.
. Id. at 24.
.
See McClellan v. Smith,