TRADING TECHNOLOGIES INTERNATIONAL, INC. v. IBG LLC, INTERACTIVE BROKERS, LLC, FEDERAL CIRCUIT 2019 (SOFTWARE PATENTS)

HomeHistory of Software PatentsTRADING TECHNOLOGIES INTERNATIONAL, INC. v. IBG LLC, INTERACTIVE BROKERS, LLC, FEDERAL CIRCUIT 2019 (SOFTWARE PATENTS)

This decision involves Trading Technologies U.S. Patent Nos. 7,533,056; 7,212,999; and 7,904,374 covering graphical user interfaces for electronic trading.

U.S. Patent Nos. 7,533,056 and 7,212,999 disclose a user interface for an electronic trading system that allows a re-mote trader to view trends in the orders for an item, and provides the trading information in an easy to see and interpret graphical format.  U.S. Patent No. 7,904,374 discloses a display and trading method to ensure fast and accurate execution of trades by displaying market depth on a vertical or horizontal plane, which fluctuates logically up or down, left or right across the plane as the market prices fluctuate.

Claim 1 of U.S. Patent No. 7,212,999 is representative and recites:

A computer based method for facilitating the placement of an order for an item and for displaying transactional information to a user regarding the buying and selling of items in a system where orders comprise a bid type or an offer type, and an order is generated for a quantity of the item at a specific value, the method comprising:

  • displaying a plurality of bid indicators, each corresponding to at least one bid for a quantity of the item, each bid indicator at a location along a first scaled axis of prices corresponding to a price associated with the at least one bid;
  • displaying a plurality of offer indicators, each corresponding to at least one offer for a quantity of the item, each offer indicator at a location along the first scaled axis of prices corresponding to a price associated with the at least one offer;
  • receiving market information representing a new order to buy a quantity of the item for a specified price, and in response to the received market information, generating a bid indicator that corresponds to the quantity of the item bid for and placing the bid indicator along the first scaled axis of prices corresponding to the specified price of the bid;
  • receiving market information representing a new order to sell a quantity of the item for a specified price, and in response to the received market information, generating an offer indicator that corresponds to the Quantity of the item for which the offer is made and placing the offer indicator along the first scaled axis of prices corresponding to the specified price of the offer;
  • displaying an order icon associated with an order by the user for a particular quantity of the item;
  • selecting the order icon and moving the order icon with a pointer of a user input device to a location associated with a price along the first scaled axis of prices;
  • and sending an order associated with the order icon to an electronic trading exchange, wherein the order is of a bid type or an offer type and the order has a plurality of order parameters comprising the particular quantity of the item and the price corresponding to the location at which the order icon was moved.

Claim 1 of U.S. Patent No. 7,533,056 is similar and recites:

A method of operation used by a computer for displaying transactional information and facilitating trading in a system where orders comprise a bid type or an offer type, the method comprising:

  • receiving bid and offer information for a product from an electronic exchange, the bid and offer information indicating a plurality of bid orders and a plurality of offer orders for the product;
  • displaying a plurality of bid indicators representing quantity associated with the plurality of bid orders, the plurality of bid indicators being displayed at locations cor-responding to prices of the plurality of bid orders along a price axis;
  • displaying a plurality of offer indicators representing quantity associated with the plurality of offer orders, the plurality of of-fer indicators being displayed at locations corresponding to prices of the plurality of-fer orders along the price axis;
  • receiving a user input indicating a default quantity to be used to determine a quantity for each of a plurality of orders to be placed by the user at one or more price levels;
  • receiving a user input indicating a desired price for an order to be placed by the user, the desired price being specified by selection of one of a plurality of locations corresponding to price levels along the price axis; and
  • sending the order for the default quantity at the desired price to the electronic exchange.

Claim 1 of U.S. Patent No. 7,904,374 recites:

A method for facilitating trade order entry, the method comprising:

  • receiving, by a computing device, market data for a commodity, the market data com-prising a current highest bid price and a current lowest ask price available for the commodity;
  • identifying, by the computing device, a plurality of sequential price levels for the commodity based on the market data, where the plurality of sequential price levels includes the current highest bid price and the current lowest ask price;
  • displaying, by the computing device, a plurality of graphical locations aligned along an axis, where each graphical location is configured to be selected by a single action of a user input device to send a trade order to the electronic exchange, where a price of the trade order is based on the selected graphical location;
  • mapping, by the computing device, the plurality of sequential price levels to the plurality of graphical locations, where each graphical location corresponds to one of the plurality of sequential price levels, where each price level corresponds to at least one of the plurality of graphical locations, and where mapping of the plurality of sequential price levels does not change at a time when at least one of the current highest bid price and the current lowest ask price changes; and
  • setting a price and sending the trade order to the electronic exchange in response to receiving by the computing device commands based on user actions consisting of: (1) placing a cursor associated with the user input device over a desired graphical location of the plurality of graphical locations and (2) selecting the desired graphical location through a single action of the user input device

The Federal Circuit agreed with the U.S. Patent and Trademark Office’s Appeals Board that these claims are directed to a covered business method and thus CBM review was appropriate.  The Federal Circuit found that they were all eligible for covered business method (CBM) review. In a CBM review, a patent can be attacked under 35 U.S.C. 101 for being non-patent eligible after an analysis in accordance with Alice v CLS Bank.  Having found that the claims were eligible for a CBM review, the Federal Circuit then performed an Alice analysis to determine if the software patents for graphical user interfaces were patent-eligible.

For U.S. Patent No. 7,212,999, the Federal Circuit first noted that at Alice step one, they must “determine whether the claims at issue are directed to a patent-ineligible concept.” Under this inquiry, they evaluate “the focus of the claimed advance over the prior art” to determine if the character of the claim as a whole, considered in light of the specification, is directed to excluded subject matter.

The Appeals Board at the U.S. Patent and Trademark Office determined claim 1 is directed to “the abstract idea of graphing (or displaying) bids and offers to assist a trader to make an order.” The Federal Circuit agreed. The claim’s preamble states that it is a “computer based method for facilitating the placement of an order for an item and for displaying transactional information to a user regarding the buying and selling of items.” The method steps require “displaying” a plurality of bid and of-fer indicators along a “scaled axis of prices,” “receiving market information,” displaying that information along the axis, and “displaying” information pertaining to a user’s order. This essentially describes receiving information, which the specification admits was already available to “market makers,” and displaying that information. The Federal Circuit noted that they have treated collecting information, including when limited to particular content (which does not change its character as information), as within the realm of abstract ideas, citing to Electric Power Grp., LLC v. Alstom S.A.

Claim 1 also recites sending an order by “selecting” and “moving” an order icon to a location along the price axis.  According to the Federal Circuit, this does not change our determination that the claims are directed to an abstract idea. As the Board determined, placing an order based on displayed market information is a fundamental economic practice. The fact that the claims add a degree of particularity as to how an order is placed in this case does not impact the analysis at Alice step one.

The fact that this is a “computer-based method” does not render the claims non-abstract. The specification indicates the claimed GUI is displayed on any computing device. As a general rule, “the collection, organization, and display of two sets of information on a generic display device is abstract.” Relying principally on Core Wireless Licensing S.A.R.L. v. LG Electronics, Inc.,  Trading Tech argued the claimed invention provides an improvement in the way a computer operates. The Federal Circuit did not agree. The claims of the ’999 patent do not improve the functioning of the computer, make it operate more efficiently, or solve any technological problem. Instead, they recite a purportedly new arrangement of generic information that assists traders in processing information more quickly. The Federal Circuit concluded that the claims are directed to the abstract idea of graphing bids and offers to assist a trader to make an order.

At step 2 of the Alice analysis, the Federal Circuit is to consider the elements of each claim both individually and ‘as an ordered combination’ to determine whether the additional elements ‘transform the nature of the claim’ into a patent eligible application.”   The Board held that the claims do not contain an inventive concept. It determined that receiving market in-formation is simply routine data gathering, and displaying information as indicators along a scaled price axis is well-understood, routine, conventional activity that does not add something significantly more to the abstract idea. It likewise determined that selecting and moving an icon is well-understood, routine, conventional activity.  It considered the elements both individually and as an ordered combination and concluded they did not transform the claim into a patent eligible application of the abstract idea. The Federal Circuit agreed.

With regard to U.S. Patent No. 7,533,056, like the ’999 patent, the Board at step one determined claim 1 is directed to “the abstract idea of graphing (or displaying) bids and offers to assist a trader to make an order.” The Federal Circuit agreed.

At step two, the Board held the elements, both individually and as an ordered combination, do not recite an inventive concept. Trading Technologies argued the claims improve computer functionality by improving on the intuitiveness and efficiency of prior GUI tools. The specification makes clear that this invention helps the trader process information more quickly. This is not an improvement to computer functionality.  The Federal Circuit saw no merit to Trading Tech’s argument.

Regarding U.S. Patent No. 7,904,374, at step one, the Appeals Board held that claim 1 of the patent is directed to the abstract idea of receiving user input to send a trade order. It explained that claim 1 only minimally requires collecting and analyzing information and includes no requirement that any of that information is displayed. This is because the claims require “displaying . . . graphical locations along an axis” but do not require the graphical locations to display the price levels that are mapped to them. Based on the Board’s understanding, the graphical locations need not provide any information to the user.

At step two, the Board held the elements of claim 1, individually or as an ordered combination, do not add an inventive concept. It noted that the specification discloses that the invention can be implemented “on any existing or future terminal or device” and describes the programming as insignificant. It also noted that Trading Technologies acknowledged that conventional GUIs for electronic trading permitted a trader to send an order electronically. Trading Tech repeats its argument that claim 1 improves computer functionality by solving technological problems with prior art electronic trading interfaces. But as previously explained, claim 1 does not solve any purported technological problem. The Federal Circuit agreed with the Board.

This case is unfortunate because a previous, non-precedential, Trading Technologies decision found a patent covering a stock trading graphical user interface to be patent-eligible.  That decision gave hope to patent practitioners that software could be patentable if graphical user interfaces were described and claimed.  Some commentators argued that many or even all graphical user interfaces should be patentable for reasons similar to those described in that case.  Unfortunately, the different judges of the Federal Circuit have different understandings of Alice, leading to the case law being inconsistent.  This decision makes clear that the only safe harbor is if there is unique hardware or if the software somehow improves operation of the computer.  These claims were fairly narrow but the software limitations were not enough to carry the day.

Trading Technologies argued that because non-precedential decisions of this court held that other Trading Technologies patents were for technological inventions or claimed eligible subject matter, this court should have too. The Federal Circuit declined, stating that they are not bound by non-precedential decisions at all, much less ones to different patents, different specifications, or different claims. Each panel must evaluate the claims presented to it.  It is unfortunate that the previous Trading Technologies decision was not precedential but this one was.