Trading Technologies International, Inc. v. BGC Partners, Inc.
MEMORANDUM Opinion and Order Signed by the Honorable Virginia M. Kendall on 7/26/2011.(tsa, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
BCG PARTNERS, INC.
Case No. 10 C 715
10 C 716, 10 C 718,
10 C 720, 10 C 721,
10 C 726, 10 C 882,
10 C 883, 10 C 884
10 C 885, 10 C 929,
10 C 931)
Judge Virginia M. Kendall
MEMORANDUM OPINION AND ORDER
In 2010, plaintiff Trading Technologies International, Inc. (“TT”) filed a dozen cases alleging
infringement of its electronic trading patents in this District. In two of those cases, TT alleges GL
Trade Americas, Inc, SunGard Data Systems, Inc., SunGard Investment Ventures LLC and
FuturePath Trading, LLC (collectively “the SunGard Defendants”) infringed four of its patents
(“2010 Actions”). TT and the SunGard Defendants are not strangers: TT filed two actions in 2005
against the SunGard Defendants for infringement of two other patents. Those 2005 cases are
consolidated and remain pending in this District (“2005 Actions”). The SunGard Defendants moved
for summary judgment, urging the Court to dismiss the 2010 Actions because TT has impermissibly
“split” claims into the 2010 Actions that should have been brought in the 2005 Actions. For the
below reasons, the SunGard Defendants’ motion (Doc. 136, Case. No. 10 C 716) is denied.
MATERIAL UNDISPUTED FACTS
The SunGard Defendants develop and sell electronic trading software for the financial
industry. (Doc. 139, TT 56.1 Resp. ¶ 9.) In July and September 2005, TT filed suit against the
SunGard Defendants, among others, alleging that they had infringed, and continued to infringe, TT’s
‘304 and ‘132 patents (the “2005 Patents”). (Id. ¶¶ 11-12, 18; see Case Nos. 05 C 4120 and 05 C
5164.) After being stayed pending the trial and appeal in a related litigation between TT and eSpeed,
Inc., those 2005 Actions have been consolidated and remain pending in this District before Judge
Chang. (Id. ¶ 13; Doc. 139, TT Add’l Facts ¶ 9.1) After TT filed the 2005 Actions, the Patent Office
issued a series of additional patents to TT. (Id. ¶¶ 3-6, 8.) Those new patents included the ‘999
patent that issued May 1, 2007, the ‘056 patent that issued May 12, 2009, the ‘416 patent that issued
August 12, 2008 and the ‘411 patent that issued March 9, 2010. (Id.)
In February 2010, TT sued the SunGard Defendants again, this time alleging that they had
infringed, and continue to infringe, the ‘999, ‘056, ‘416, and ‘411 patents (“the 2010 Patents”).2 (TT
56.1 Resp. ¶¶ 14, 19; see Case Nos. 10 C 716, 10 C 720.) One of the patents asserted in the 2010
Actions is related to the earlier patents asserted in the 2010 Actions. Specifically, the ‘411 patent
(2010) is a continuation of the ‘132 patent (2005), and they share a common patent disclosure and
provisional application. (TT 56.1 Resp. ¶¶ 21-22.) The ‘999, ‘056 and ‘416 patents (all 2010), on
the other hand, are not part of the same patent “family” as the ‘132, ‘304 (both 2005) and ‘411
patents (2010). (TT Add’l Facts ¶ 7.) In both the 2005 and 2010 Actions, TT alleges that the
As part of its response to the SunGard Defendants’ Local Rule 56.1 statement of material undisputed facts, TT
provided a set of additional facts supporting denial of the SunGard Defendants’ motion for summary judgment, as
permitted by Local Rule 56.1(b)(3)(C). (See Doc. 139 at 13-16.) The SunGard Defendants did not file a statement
responding to these additional facts, and they are deemed admitted under Local Rule 56.1. See L.R. 56.1(a) (“If
additional material facts are submitted by the opposing party pursuant to section (b), the moving party may submit a
concise reply in the form prescribed in that section for a response. All material facts set forth in the statement filed
pursuant to section (b)(3)(C) will be deemed admitted unless controverted by the statement of the moving party.”)
(emphasis added); Cracco v. Vitran Express, Inc., 559 F.3d 625, 632 (7th Cir. 2009) (finding “[b]ecause of the important
function local rules like Rule 56.1 serve in organizing the evidence and identifying disputed facts, we have consistently
upheld the district court’s discretion to require strict compliance with those rules.”).
TT amended its complaint on March 9, 2010 to include the ‘416 patent as to one of the SunGard Defendants
and added the ‘411 patent as to all of the SunGard Defendants. (TT Add’l Facts ¶ 16.)
SunGard Defendants have infringed its patents via their GL Win/Quick Trade and PhotonTrader
trading software systems. (TT 56.1 Resp. ¶¶ 10, 15.)
Before the Court consolidated all the cases TT filed in 2010 into a single proceeding, the
SunGard Defendants filed this same claim-splitting motion in case number 10 C 716 when it was
pending before Judge Pallmeyer. (TT Add’l Facts ¶ 20.) Judge Pallmeyer orally denied the motion
on January 21, 2011, while TT’s consolidation motion was pending. (Id.) During that hearing,
Judge Pallmeyer stated:
I have reviewed the briefs. I am familiar with this problem from this
case and at least one other, and it seems to me that the two cases that
[the SunGard Defendants] believe should really be one do, in fact,
raise substantially similar issues. They are not completely
overlapping, but they are substantially overlapping. I think the
correct result is that these cases belong together.
I don’t think that what [TT] has done can fairly be characterized as
claim-splitting so much as an effort to expand on the original claim,
on the one, hand and potentially get a fresh start on the other;
potentially, this is – I really don’t fully understand the whole picture
here, but potentially get another judge and start over.
But I don’t think its appropriate for me to grant summary
judgment in this case because I think that’s an end-run around
a decision by another judge not to take the cases together.
Whether or not I believe that’s the right thing to do, I can’t force the
(TT 56.1 Resp. ¶ 24; TT Add’l Facts ¶¶ 20-21; emphasis added.)
As an initial matter, the parties dispute whether this motion is properly considered to be a
motion to reconsider Judge Pallmeyer’s decision or a Rule 56 motion for decision on the merits.
While Judge Pallmeyer commented on the substance of the motion when she orally denied it, it is
clear from the bolded language above that her decision was not based on the merits of the motion,
but rather because the consolidation motion remained pending before this Court. Consequently, the
Court will address the motion on the merits.
Summary judgment is proper when “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
moving party is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c)(2). In determining
whether a genuine issue of fact exists, the Court must view the evidence and draw all reasonable
inferences in favor of TT as the party opposing the motion. See Bennington v. Caterpillar Inc., 275
F.3d 654, 658 (7th Cir. 2001); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).
However, the Court will “limit its analysis of the facts on summary judgment to evidence that is
properly identified and supported in the parties’ [Local Rule 56.1] statement.” Bordelon v. Chicago
Sch. Reform Bd. of Trustees, 233 F.3d 524, 529 (7th Cir. 2000). Where a proposed statement of fact
is supported by the record and not adequately rebutted, the court will accept that statement as true
for purposes of summary judgment. An adequate rebuttal requires a citation to specific support in
the record; an unsubstantiated denial is not adequate. See Albiero v. City of Kankakee, 246 F.3d 927,
933 (7th Cir. 2001); Drake v. Minn. Mining & Mfg. Co., 134 F.3d 878, 887 (7th Cir. 1998) (“‘Rule
56 demands something more specific than the bald assertion of the general truth of a particular
matter[;] rather it requires affidavits that cite specific concrete facts establishing the existence of the
truth of the matter asserted.’”).
Regional circuit law applies to general principles of claim preclusion or claim splitting,
whereas Federal Circuit precedent governs “[w]hether two claims for patent infringement are
identical” because it is a question “particular to patent law.” Acumed LLC v. Stryker Corp., 525 F.3d
1319, 1323 (Fed. Cir. 2008); see also Hallco Mfg. Co. v. Foster, 256 F.3d 1290, 1294 (Fed. Cir.
2001) (applying Federal Circuit precedent to question of claim preclusion under patent law).
Generally, claim preclusion applies were (1) the parties are the same; (2) there has been a
final judgment on the merits of a claim; and (3) the second claim is based on the same set of
“transactional facts” as the first claim. See Jet, Inc. v. Sewage Aeration Sys., 223 F. 3d 1360, 1362
(Fed. Cir. 2000) (citing Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326 n.5 (1979)). The
prohibition against claim splitting is application of familiar claim preclusion principles to two
actions that are pending simultaneously but neither has reached final judgment. See CHARLES ALAN
WRIGHT & ARTHUR MILLER, FEDERAL PRACTICE AND PROCEDURE § 4406 (2d ed. 2011) (noting that
dismissals based on claim splitting are driven by docket management considerations). Courts will
dismiss a second suit pending between the same parties for claim splitting if the second suit would
be barred by claim preclusion if it is assumed the first suit reached final judgment. See e.g., Single
Chip Sys. Corp. v. Intermec IP Corp., 495 F. Supp. 2d 1052, 1059 (S.D. Cal. 2007); Kim v. Sara Lee
Bakery Grp., Inc., 415 F. Supp. 2d 929, 941-42 (N.D. Ill. 2006) (“under the doctrine of claim
splitting, that a party cannot avoid the effects of res judicata by splitting her cause of action into
separate grounds of recovery and then raising the separate grounds in successive suits. Rather, a party
must bring in one action all legal theories arising out of the same transaction or series of
TT Has Not Split Its Claims
Here, there is no dispute that the parties are the same in the 2005 Actions as in the 2010
Actions. The only question is whether the two cases arise from the same set of facts. According to
the SunGard Defendants, the “transactional facts” are the same in both sets of actions because both
arise from alleged infringement by the same products, namely the GL Win/Quick Trade and
PhotonTrader systems. The SunGard Defendants claim that TT must include in the 2005 Actions
all patents that TT alleges are infringed by GL Win/Quick Trade and PhotonTrader systems.
The Federal Circuit’s decision in Kearns v. General Motors Corporation rejects the SunGard
Defendants’ view and is dispositive of the instant motion. See 94 F.3d 1553 (Fed. Cir. 1996). In that
case, the plaintiff initially brought suit in Michigan against a car maker for infringement of five
patents. Id. at 1554. That first case was dismissed pursuant to Rule 41(b) when the plaintiff failed
to comply with various deadlines and court orders. Id. at 1555. The plaintiff then sued the same
defendant in Virginia, this time asserting infringement of 21 patents, including the same five patents
he asserted in the Michigan litigation. The Virginia district court dismissed the second suit as claim
precluded, finding that all 21 patents should have been brought in the Michigan suit. Id. at 1554.
The Federal Circuit upheld the Virginia district court’s claim as to the five patents originally asserted
in the Michigan suit, finding that the Rule 41(b) dismissal operated as a dismissal on the merits. Id.
As to the other 16 patents, the Federal Circuit reversed. The Court noted that each patent is,
as a matter of law, “directed to a separate invention” and “two independent and distinct inventions
can not be claimed in the same patent.” Id. (citing 35 U.S.C. §§ 101, 121.) The Court continued:
“[e]ach patent establishes an independent and distinct property right
. . . . Each patent asserted raises an independent and distinct cause of
action . . . . In the case at bar it is not possible to show that the
identical issue was presented in the sixteen patents that were not
before the Michigan court, as in the five patents that were; for each
patent, by law, covers an independent and distinct invention. Further,
infringement must be separately proved as to each patent . . . .
Precedent cautions that res judicata is not readily extended to claims
that were not before the court, and precedent weighs heavily against
denying litigants a day in court unless there is a clear and persuasive
basis for that denial.
Id. at 1555-56; see also Foster v. Hallco Mfg. Co., 947 F.2d 469, 476 (Fed. Cir. 1991) (defining
“cause of action” in a patent context as “a suit on the same device alleged to infringe the same
patent.”) In other words, where the patents involved in the two suits are different, Kearns takes the
view that each patent creates a unique set of “transactional facts” for purposes of claim preclusion.
By implication, the Federal Circuit rejects the view that a plaintiff must include in a single suit, at
the risk of claim preclusion, every patent allegedly infringed on by the product at issue. The Federal
Circuit re-affirmed its view in Kearns in an unpublished opinion. See Abbey v. Mercedes Benz of
N. Am., Inc., 138 Fed. Appx. 304, 307 (Fed. Cir. 2005) (finding that the plaintiff was not barred from
asserting a patent that was not at issue in the first suit and holding “Kearns provides that normally
when patents are not included in a suit, they are not before a court, and while preclusion may attach
to certain issues, causes of action based on patents that are not included in a suit are ordinarily not
captured, and therefore precluded, by judgments that pertain to other patents.”); see also SciMed Life
Sys. v. Advanced Cardiovascular Sys., Inc., No 99 C 112, 1999 WL 33244568, at *1 (D. Minn. May
17, 1999) (“Kearns is . . . dispositive of the defendants’ suggestion that a procedural bar should lie
against this suit under a “should have been brought” theory, because each patent constitutes its own
independent cause of action.”) Further, another district court applied Kearns to reject dismissal of
a second, co-pending suit involving different patents on claim splitting grounds. See Stratos
Lightwave, Inc. v. Picolight, Inc., No. 03 C 917, 2005 WL 681308, at *2 (D. Del. Mar. 23, 2005).
Here, it is undisputed that the patents asserted by TT in the 2005 Actions are different than
the ones it asserts in the 2010 Actions. Under Kearns, each of the new patents asserted in the 2010
Actions is an independent cause of action and consequently, the 2010 Actions would not be barred
by final judgment in the 2005 Actions. TT has not split its claims.
The cases cited by the SunGard Defendants are readily distinguishable because they involve
the same patents in both suits. In those cases, when the patents-in-suit are the same in both the first
and second suit, the question becomes whether the accused product is “essentially the same” and
therefore whether the facts underlying both suits are the same. Roche Palo Alto LLC v. Apotex, Inc.,
531, F.3d 1372, 1379 (Fed. Cir. 2008); see also Mars Inc. v. Nippon Conlux Kabushiki-Kaisha, 58
F.3d 616, 617-68, 620 (Fed. Cir. 1995) (applying claim preclusion because the same patent and
product were at issue in both suits); Acumed, 525 F.3d at 1326 (rejecting claim preclusion even
where the same patent was at issue in both suits but the product was different).
Finally, in their motion the SunGard Defendants also assert that TT could have amended its
pleadings in the 2005 Actions to include the infringement alleged in the 2010 Actions. While TT
could have moved for leave of court to amend its pleadings in the 2005 Actions (see Fed. R. Civ. P.
15(a)(2)), it was not required to seek such leave to add the patents that issued well after the 2005
Actions began. See Gillig v. Triple Tee Golf, Inc., 602 F.3d 1354, 1363 (Fed. Cir. 2010) (holding
claim preclusion does not apply to “new rights acquired during the action which might have been,
but which were not, litigated” and “[a] plaintiff may seek leave to file a supplemental pleading to
assert those claims, but the doctrine of res judicata does not punish a plaintiff for exercising the
option not to supplement the pleadings with an after-acquired claim.”)
For the above reasons, SunGard’s motion for summary judgment (Doc. 136, Case. No. 10
C 716) is denied.3
Virginia M. Kendall
United States District Court Judge
Northern District of Illinois
Date: July 26, 2011
In a footnote, TT requests that the Court enter summary judgment in its favor on the claim splitting issue.
However, TT has not cross-moved for summary judgment and there is no functional difference between the Court’s
denial of the SunGard Defendants’ motion and granting summary judgment for TT.
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