NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
TRADING TECHNOLOGIES INTERNATIONAL,
INC.,
Plaintiff-Appellee
v.
CQG, INC., CQG, LLC, FKA CQGT, LLC,
Defendants-Appellants
______________________
2016-1616
______________________
Appeal from the United States District Court for the
Northern District of Illinois in No. 1:05-cv-04811, Judge
Sharon Johnson Coleman.
______________________
Decided: January 18, 2017
______________________
ERIKA ARNER, Finnegan, Henderson, Farabow, Gar-
rett & Dunner, LLP, Reston, VA, argued for plaintiff-
appellee. Also represented by CORY C. BELL, Finnegan,
Henderson, Farabow, Garrett & Dunner, LLP, Boston,
MA; LEIF R. SIGMOND, JR., MICHAEL DAVID GANNON,
JENNIFER KURCZ, COLE BRADLEY RICHTER, McDonnell,
Boehnen, Hulbert & Berghoff, LLP, Chicago, IL; STEVEN
BORSAND, Trading Technologies International, Inc.,
Chicago, IL.
2 TRADING TECHS. INT’L, INC. v. CQG, INC.
JOHN C. O'QUINN, Kirkland & Ellis LLP, Washington,
DC, argued for defendants-appellants. Also represented
by KENNETH R. ADAMO, EUGENE GORYUNOV, MEREDITH
ZINANNI, Kirkland & Ellis LLP, Chicago, IL; JOHN A.
COTIGUALA, ADAM GLENN KELLY, WILLIAM JOSHUA VOLLER
III, Loeb & Loeb LLP, Chicago, IL.
ANDREW BALUCH, Strain PLLC, Washington, DC, for
amici curiae Gregory Dolin, Richard A. Epstein, Christo-
pher Frerking, Irina D. Manta, Adam Mossoff, Kristen J.
Osenga, Michael Risch, Mark F. Schultz, Ted M. Sichel-
man, David O. Taylor. Also represented by STEPHEN G.
NAGY, Strain PLLC, Washington, DC.
______________________
Before NEWMAN, O’MALLEY, and WALLACH, Circuit
Judges.
NEWMAN, Circuit Judge.
The CQG companies appeal the decision of the United
States District Court for the Northern District of Illinois,
holding that the asserted claims of U.S. Patents No.
6,772,132 (“the ’132 patent”) and No. 6,766,304 (“the ’304
patent”) recite patent-eligible subject matter in terms of
35 U.S.C. § 101. This appeal relates only to eligibility
under Section 101. We affirm the district court’s decision.
DISCUSSION
Patent owner Trading Technologies International,
Inc. (“TTI”) charged CQG with infringement of the ’132
patent and the ’304 patent. CGQ moved for judgment as
a matter of law, asserting that the claims of these patents
are directed to patent-ineligible subject matter. The
district court denied CGQ’s motion, holding that the
claims are not directed to an abstract idea and also that
they recite an inventive concept, such that the subject
matter is patent-eligible under § 101. Trading Techs.
TRADING TECHS. INT’L, INC. v. CQG, INC. 3
Int’l, Inc. v. CQG, Inc., No. 05-cv-4811, 2015 WL 774655
(N.D. Ill. Feb. 24, 2015) (“Dist. Ct. op.”). CGQ appeals
this holding.
The ’132 and ’304 patents describe and claim a meth-
od and system for the electronic trading of stocks, bonds,
futures, options and similar products. The patents ex-
plain problems that arise when a trader attempts to enter
an order at a particular price, but misses the price be-
cause the market moved before the order was entered and
executed. It also sometimes occurred that trades were
executed at different prices than intended, due to rapid
market movement. This is the problem to which these
patents are directed.
The patents are for “[a] method and system for reduc-
ing the time it takes for a trader to place a trade when
electronically trading on an exchange, thus increasing the
likelihood that the trader will have orders filled at desira-
ble prices and quantities.” ’132 patent, Abstract; ’304
patent, Abstract. The patents describe a trading system
in which a graphical user interface “display[s] the market
depth of a commodity traded in a market,[1] including a
dynamic display for a plurality of bids and for a plurality
of asks in the market for the commodity and a static
display of prices corresponding to the plurality of bids and
asks.” ’132 patent col. 3, ll. 11–16; ’304 patent col. 3, ll.
15–20. In the patented system bid and asked prices are
displayed dynamically along the static display, and the
system pairs orders with the static display of prices and
prevents order entry at a changed price.
Both the ’132 and the ’304 patents have the same
specification, and the district court treated claim 1 in each
1 “A commodity’s market depth is the current bid
and ask prices and quantities in the market.” ’132 patent
col. 3, ll. 69–61; ’304 patent col. 3, ll. 63–65.
4 TRADING TECHS. INT’L, INC. v. CQG, INC.
patent as representative, as agreed by the parties. We
illustrate the analysis of § 101 with respect to method
Claim 1 of the ’304 patent:
1. A method for displaying market information re-
lating to and facilitating trading of a commodity
being traded in an electronic exchange having an
inside market with a highest bid price and a low-
est ask price on a graphical user interface, the
method comprising;
dynamically displaying a first indicator in one of a
plurality of locations in a bid display region, each
location in the bid display region corresponding to
a price level along a common static price axis, the
first indicator representing quantity associated
with at least one order to buy the commodity at
the highest bid price currently available in the
market;
dynamically displaying a second indicator in one
of a plurality of locations in an ask display region,
each location in the ask display region correspond-
ing to a price level along the common static price
axis, the second indicator representing quantity
associated with at least one order to sell the com-
modity at the lowest ask price currently available
in the market;
displaying the bid and ask display regions in rela-
tion to fixed price levels positioned along the
common static price axis such that when the in-
side market changes, the price levels along the
common static price axis do not move and at least
one of the first and second indicators moves in the
bid or ask display regions relative to the common
static price axis;
displaying an order entry region comprising a plu-
rality of locations for receiving commands to send
TRADING TECHS. INT’L, INC. v. CQG, INC. 5
trade orders, each location corresponding to a
price level along the common static price axis; and
in response to a selection of a particular location
of the order entry region by a single action of a
user input device, setting a plurality of parame-
ters for a trade order relating to the commodity
and sending the trade order to the electronic ex-
change.
’304 patent col. 12, l. 36–col. 13, l. 3. The ’132 claims are
directed to similar subject matter covering a method and
system.
The Court’s opinion in Alice Corporation Pty. Ltd. v.
CLS Bank International, 134 S.Ct. 2347 (2014), provides
the framework for patent-eligibility of business methods.
The Court explained that a patent’s
claim falls outside § 101 where (1) it is “directed
to” a patent-ineligible concept, i.e., a law of na-
ture, natural phenomenon, or abstract idea, and
(2), if so, the particular elements of the claim, con-
sidered “both individually and ‘as an ordered com-
bination,’” do not add enough to “‘transform the
nature of the claim’ into a patent-eligible applica-
tion.”
Id. at 2355 (citations omitted). Patent eligibility under
§ 101 is an issue of law, and receives de novo determina-
tion on appeal. 2
2 The parties dispute whether the district court
erred in requiring proof of ineligibility under § 101 by
clear and convincing evidence. Because our review is de
novo, and because under either standard the legal re-
quirements for patentability are satisfied, we need not
address this dispute.
6 TRADING TECHS. INT’L, INC. v. CQG, INC.
The district court first applied Step 1 of this two-step
framework. The court held that, rather than reciting “a
mathematical algorithm,” “a fundamental economic or
longstanding commercial practice,” or “a challenge in
business,” the challenged patents “solve problems of prior
graphical user interface devices . . . in the context of
computerized trading[] relating to speed, accuracy and
usability.” Dist. Ct. op. at *4 (citations omitted). The
court found that these patents are directed to improve-
ments in existing graphical user interface devices that
have no “pre-electronic trading analog,” and recite more
than “‘setting, displaying, and selecting’ data or infor-
mation that is visible on the [graphical user interface]
device.” Id.
The district court explained that the challenged pa-
tents do not simply claim displaying information on a
graphical user interface. The claims require a specific,
structured graphical user interface paired with a pre-
scribed functionality directly related to the graphical user
interface’s structure that is addressed to and resolves a
specifically identified problem in the prior state of the art.
The district court concluded that the patented subject
matter meets the eligibility standards of Alice Step 1. We
agree with this conclusion, for all of the reasons articulat-
ed by the district court, including that the graphical user
interface system of these two patents is not an idea that
has long existed, the threshold criterion of an abstract
idea and ineligible concept, as the court explained in
Mayo Collaborative Services v. Prometheus Laboratories,
Inc., 566 U.S. 66, 73 (2012) (the patent must “amount to
significantly more in practice than a patent upon the
[ineligible concept itself]”).
The district court alternatively continued the analysis
under Alice Step 2, and determined that the challenged
claims recite an “inventive concept.” The court observed
that Step 2 “requires something different than pre-AIA §§
102 and 103.” Dist. Ct. op. at 8. The court identified the
TRADING TECHS. INT’L, INC. v. CQG, INC. 7
static price index as an inventive concept that allows
traders to more efficiently and accurately place trades
using this electronic trading system. The court distin-
guished this system from the routine or conventional use
of computers or the Internet, and concluded that the
specific structure and concordant functionality of the
graphical user interface are removed from abstract ideas,
as compared to conventional computer implementations of
known procedures. Thus the court held that the criteria
of Alice Step 2 were also met.
The district court’s rulings are in accord with prece-
dent. Precedent has recognized that specific technologic
modifications to solve a problem or improve the function-
ing of a known system generally produce patent-eligible
subject matter. In DDR Holdings, LLC v. Hotels.com,
L.P., 773 F.3d 1245 (Fed. Cir. 2014), the court upheld the
patent eligibility of claims “necessarily rooted in computer
technology” that “overcome a problem specifically arising
in the realm of computer networks.” Id. at 1257. Similar-
ly, “claimed process[es] us[ing] a combined order of specif-
ic rules” that improved on existing technological processes
were deemed patent-eligible in McRO, Inc. v. Bandai
Namco Games America Inc., 837 F.3d 1299, 1315 (Fed.
Cir. 2016). Claims that were “directed to a specific im-
provement to the way computers operate, embodied in [a]
self-referential table,” were deemed eligible in Enfish,
LLC v. Microsoft Corp., 822 F.3d 1327, 1334 (Fed. Cir.
2016).
Illustrating the operation of this principle to facts that
negated patent eligibility, claims “drawn to the idea itself”
of “out-of-region broadcasting on a cellular telephone,”
without implementing programmatic structure, were
deemed ineligible in Affinity Labs of Tex. v. DIRECTV,
LLC, 838 F.3d 1253, 1258 (Fed. Cir. 2016). Similarly,
claims directed to the “idea of generating a second menu
from a first menu and sending the second menu to anoth-
er location” were held patent-ineligible in Apple, Inc. v.
8 TRADING TECHS. INT’L, INC. v. CQG, INC.
Ameranth, Inc., 842 F.3d 1229 (Fed. Cir. 2016). Claims
directed to the “process of gathering and analyzing infor-
mation of a specified content, then displaying the results,”
without “any particular assertedly inventive technology
for performing those functions,” were held ineligible in
Electric Power Grp., LLC v. Alstom S.A., 830 F.3d 1350,
1354 (Fed. Cir. 2016). As these cases illustrate, ineligible
claims generally lack steps or limitations specific to
solution of a problem, or improvement in the functioning
of technology.
For some computer-implemented methods, software
may be essential to conduct the contemplated improve-
ments. Enfish, 822 F.3d at 1339 (“Much of the advance-
ment made in computer technology consists of
improvements to software that, by their very nature, may
not be defined by particular physical features but rather
by logical structures and processes.”). Abstraction is
avoided or overcome when a proposed new application or
computer-implemented function is not simply the general-
ized use of a computer as a tool to conduct a known or
obvious process, but instead is an improvement to the
capability of the system as a whole. Id. at 1336.
We reiterate the Court’s recognition that “at some
level, all inventions . . . embody, use, reflect, rest upon, or
apply laws of nature, natural phenomena, or abstract
ideas.” Alice, 134 S. Ct. at 2354, quoting Mayo 566 U.S.
at 71. This threshold level of eligibility is often usefully
explored by way of the substantive statutory criteria of
patentability, for an invention that is new, useful and
unobvious is more readily distinguished from the general-
ized knowledge that characterizes ineligible subject
matter. This analysis is facilitated by the Court’s guid-
ance whereby the claims are viewed in accordance with
“the general rule that patent claims ‘must be considered
as a whole’.” Alice, 134 S. Ct. at 2355 n.3, quoting Dia-
mond v. Diehr, 450 U.S. 175, 188 (1981).
TRADING TECHS. INT’L, INC. v. CQG, INC. 9
As demonstrated in recent jurisprudence directed to
eligibility, and as illustrated in the cases cited ante, the
claim elements are considered in combination for evalua-
tion under Alice Step 1, and then individually when Alice
Step 2 is reached. See BASCOM Global Internet Services
v. AT&T Mobility LLC, 827 F.3d 1341 (Fed. Cir. 2016).
Applying an overview of this evolving jurisprudence, the
public interest in innovative advance is best served when
close questions of eligibility are considered along with the
understanding flowing from review of the patentability
criteria of novelty, unobviousness, and enablement, for
when these classical criteria are evaluated, the issue of
subject matter eligibility is placed in the context of the
patent-based incentive to technologic progress.
CONCLUSION
It is not disputed that the TTI System improves the
accuracy of trader transactions, utilizing a software-
implemented programmatic met. For Section 101 purpos-
es, precedent does not consider the substantive criteria of
patentability. For Section 101 purposes, the claimed
subject matter is “directed to a specific improvement to
the way computers operate,” id., for the claimed graphical
user interface method imparts a specific functionality to a
trading system “directed to a specific implementation of a
solution to a problem in the software arts.” Id. at 1339.
The district court’s analysis and conclusions conform
to precedent. The decision that the subject matter
claimed in the ’132 and ’304 patents is patent-eligible in
terms of Section 101 is affirmed. No other statutory
criteria of patentability are before us on this appeal, and
we state no opinion thereon.
AFFIRMED