Realtime Data, LLC D/B/A/ IXO, v. CME Group Inc. et al

Filing 859

OPINION AND ORDER: For the reasons set forth above, summary judgment is GRANTED to NYSE and OPRA as to all asserted claims of the '568 Patent; summary judgment is DENIED on the bases set forth above relating to the '651 and '747 Patents.The Clerk of the Court is directed to terminate the motion at 11 Civ. 6697, Dkt. No. 697; 11 Civ. 6699, Dkt No. 123; 11 Civ. 6702 Dkt. No. 165. (Signed by Judge Katherine B. Forrest on 11/09/2012) (ago)

USDCSDNY
DOCUMENT

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
--------.-----------------.-.-.-.-.------------------------------.J{
REALTIME DATA, LLC d/b/a IXO,

ELECTRONiCALLY FILED
DOC#:
DA TE F=IL:-:E=rr.i'IT>~-:::---1I

11 Civ. 6696 (KBF)
11 Civ. 6701 (KEF)
11 Civ. 6704 (KBF)

Plaintiff,

-vMORGAN STANLEY, et al.,
Defendants.
------------.-----.--.--------....----...-.---.-.-.-.----------.-J{
REALTIME DATA, LLC d/b/a IXO,
11 Civ. 6697 (KBF)
11 Civ. 6699 (KBF)
11 Civ. 6702 (KBF)

Plaintiff,

-vCME GROUP INC., et al.,
Defendants.
---.----------------------------------.-----.--------------------.J{
REALTIME DATA, LLC d/b/a IJ{O,
11 Civ. 6698 (KBF)
11 Civ. 6700 (KBF)
11 Civ. 6703 (KEF)

Plaintiff,

-vOPINION AND ORDER
(Motion 10)

THOMSON REUTERS, et al.,
Defendants.
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KATHERINE B. FORREST, District Judge:

From June through September 2012, this Court rendered decisions on a
number of summary judgment motions made by various defendants in the abovecaptioned series of sprawling and related patent suits. This Opinion and Order is

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the Court's last decision on the numerous and voluminous summary judgment
motions at this time.
In keeping with its practices of referring to the summary judgment motions
by Court-assigned number, this Court refers to the motion addressed in this
Opinion and Order as "Motion No. 10"--the Motion for Summary Judgment of NonInfringement: Data Stream, Content Independent Encoding and Lossless Claim
Limitations by defendants NYSE Euronext, NYSE ARCA, Inc. ("ARCA"), NYSE
AMEX, LLC ("AMEX"), Securities Industry Automation Corporation ("SIAC," and
with NYSE Euronext, ARCA, and AMEX, "NYSE"), and Options Price and
Reporting Authority, LLC ("OPRA").l
For the reasons discussed below, the motion is GRANTED IN PART and
DENIED IN PART.
L

BACKGROUND
Plaintiff Realtime Data, LLC ("Realtime") has asserted that NYSE and

OPRA infringe claims from U.S. Patent No. 7,417,568 (the "'568 Patent"), 7,777,651

1 Motion No. 10 is joined by the Bank Defendants--The Goldman Sachs Group, Inc.; Goldman, Sachs
& Co., Goldman Sachs Execution & Clearing L.P.; J.P. Morgan Chase & Co.; J.P. Morgan Securities,
Inc.; J.P. Morgan Clearing Corp.; Morgan Stanley; Morgan Stanley & Co., Incorporated; Credit
Suisse Holdings (USA), Inc.; Credit Suisse Securities (USA) LLC; HSBC Bank USA, N.A.; and HSBC
Securities (USA), Inc.-·as well as defendants Factset Research Systems, Inc., Bloomberg L.P.,
Interactive Data Corporation, BATS Trading Inc., NASDAQ OMX Group, Inc.; and NASDAQ OMX
PHLX, Inc.

Although the parties had requested that the Court rule only upon the "data stream" issue presented
in Motion No. 10 as it related to NYSE and OPRA, for sake of completeness, the Court has ruled on
all issues presented by the motion..consistent with its rulings in Realtime Data LLC v. Morgan
Stanley. et aL, -.. F. Supp. 2d "., 2012 WL 4341808 (S.D.N.Y. Sept. 24, 2012).

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(the '''651 Patent"), and 7,714,747 (the "'747 Patent," and with the '568 and 651
Patents, the "patents-in-suits").2
The Court assumes familiarity with its various prior summary judgment
decisions in this matter, see Realtime Data LLC v. Morgan Stanley, et al.,

u_ F.

Supp. 2d ---, 2012 WL 4341808 (S.D.N.Y. Sept. 24, 2012) (the "September Opinion"
or "Sept. Op."); Realtime Data LLC v. Morgan Stanley et al., 2012 WL 3158196
(S.D.N.Y. Aug. 2, 2012); Realtime Data LLC v. Morgan Stanley, et al., 2012 WL
2545096 (S.D.N.Y. June 27,2012); Realtime Data LLC v. Morgan Stanley, et al.,
2012 WL 2434750 (S.D.N.Y. June 26, 2012), as well as the Court's opinion on claims
construction, Realtime Data, LLC v. Morgan Stanley,

u_

F. Supp. 2d

u

-,

2012 WL

2394433 (S.D.N.Y. June 22, 2012) (the "Markman opinion"), Together, these
opinions summarize various aspects of the inventions at issue and provide
background helpful to understanding the instant motion. 3
NYSE and OPRA assert three separate bases for summary judgment, each of
which bears similarity to arguments made by different defendants, and addressed
in the September Opinion, see Realtime Data LLC, 2012 WL 4341808:
First, NYSE and OPRA urge that all of the asserted claims in the '568 Patent
require the analysis of a data field that is in a "data stream" fall short since, prior to
compression, each of their Accused Instrumentalities removes data, adds data, or

2 Asserted claims of the '568 Patent against these defendants include 15, 20, 22 and 32. Asserted
independent claims of the '651 Patent against these defendants include 13,22,29,43,91 and 108.
Asserted independent claims ofthe '747 Patent against these defendants include 14 and 19.

Defined terms or proper names used herein have the same meaning as in the Court's September
Opinion.

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does not transmit the data blocks in sequence. ISE moved for summary judgment
on the basis that the required analysis of the data field in the data stream was not
met. (See, e.g., Mem. of Law in Support of ISE's Mot. for Summ. J. of
Noninfringement (11 Civ. 6697, Dkt. No. 685) ("ISE Mem. Mot. 4") at Arguments A
and G.) With respect to ISE, the Court found that on the record before it, summary
judgment was warranted based on ISE's Argument G. See Sept. Op., 2012 WL
4341808, at *10-11. Based upon the record relating to NYSE and OPRA, this Court
finds that Realtime has not raised a triable issue of fact as to the particular
arguments NYSE and OPRA have made in this regard and thus, that summary
judgment is warranted.
Second, certain claims of the '747 and '651 Patents require the application of
content independent encoding ("CIC"). OPRA and NYSE argue that the transfer
encoding they employ is not content independent. This is similar to the argument
made and by ISE and determined by the Court in the portion of the September
Opinion relating to Motion No.4. Sept. Op., 2012 WL 4341808, at *5-6. The Court
denied summary judgment to ISE based on a similar argument as that pursued by
NYSE and OPRA here.
According to NYSE and OPRA, their Accused Instrumentalities do not utilize
CIC. However, there are expert declarations submitted on both sides of this issue-­
and the Court cannot resolve the disputed issues on a motion for summary
judgment. Accordingly, summary judgment on this basis is denied.

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Third and finally, NYSE and OPRA argue that certain claims of both the '747
and '651 Patents require "lossless" encoding or decoding--and that their Accused
Instrumentalities use "stop bit encoding" which is not lossless. This is similar to an
argument raised by ISE in Argument F in Motion No.4. There, the Court found
that expert testimony on this issue raised a material issue of fact properly decided
by a jury. Sept. Op., 2012 WL 4341808, at *9-10. Here, similar issues preclude
summary judgment.
II.

DISCUSSION
A.

Legal Standard

Summary judgment is warranted if the pleadings, the discovery and
disclosure materials, along with any (admissible) affidavits, demonstrate that there
is no genuine issue of fact necessitating resolution at trial. Fed. R. Civ. P. 56(c); see
also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986); Celotex Corp. v.
Catrett, 477 U.S. 317, 322-323 (1986). A party moving for summary judgment bears
the initial burden of demonstrating that no genuine issue of material fact exists; all
reasonable inferences should be drawn in favor of the non-moving party. See
Liberty Lobby, 477 U.s. at 255; Cont'l Can Co. USA. Inc. v. Monsanto Co., 948 F.2d
1264, 1265 (Fed. Cir. 1991). The burden then shifts to the non-moving party to
come forward with "admissible evidence sufficient to raise a genuine issue of fact for
trial in order to avoid summary judgment." Jaramillo v. Weyerhauser Co., 536 F.3d
140, 145 (2d Cir. 2008); see also Glaverbel Societe Anonyme v. Northlake Mktg. &
Supply, Inc., 45 F.3d 1550, 1560-61 (Fed. Cir. 1995) ("When the movant's burden of

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establishing the lack of a genuine issue of material fact has been met lin facial
terms,' the non movant must point to 'some evidence in the record sufficient to
suggest that his view of the issue might be adopted by a reasonable factfinder.'"
(quoting Resolution Trust Corp. v. Juergens, 965 F.2d 149, 151 (7th Cir. 1992»).
Where the non-moving party would bear the ultimate burden of proof on an issue at
trial, the moving party satisfies its burden on the motion by pointing to an absence
of evidence to support an essential element of the non-movant's claim. See
Intellicall, Inc. v. Phonometries, Inc., 952 F.2d 1384, 1389 (Fed. Cir. 1992).
Where it is clear that no rational trier of fact could find in favor of the non­
moving party, summary judgment is warranted. See Liberty Lobby, 477 U.S. at 248.
However, the mere possibility that a dispute may exist, without more, is not
sufficient to overcome a convincing presentation by the moving party. Id. at 247-48.
Similarly, mere speculation or conjecture is insufficient to defeat a motion. W.
World Ins. Co. v. Stack Oil, Inc., 922 F.2d 118, 121 (2d Cir. 1990).
In ruling on a motion for summary judgment, a court cannot, however, weigh
the evidence or make credibility determinations: those are the functions of the jury.
See Liberty Lobby, 477 U.S. at 255. Further, when there are dueling experts, both
of whom have put forward opinions in contradiction with each other, and when
those opinions are important to resolution of a material factual dispute, summary
judgment may not be appropriate. See Hodosh v. Block Drug Co., Inc., 786 F.2d
1136, 1143 (Fed. Cir. 1986) ("The fact issues herein must be resolved by trial in

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which the conflicting views of the experts will be subject to the refining fire of cross
examination.") .
The question is whether, at this stage of the proceeding, the court can
determine whether the expert is merely asserting his own ipse dixit, which would be
insufficient to defeat summary judgment, or whether two experts in the field could
have reasonable differences. If it is the latter, then the Court must leave credibility
determinations and the weighing of the experts' opinions to the jury.
B.

Do the Accused Instrumentalities Meet the "Data Stream"
Requirement?

In the Markman opinion, the Court construed the term "data stream" as
requiring "one or more blocks transmitted in sequence from an external source
whose characteristics are not controlled by the encoder or decoder." See Markman
opinion, 2012 WL 2394433, at *16.
There are four different encoders that Realtime asserts infringe claims 15,
20, 22 and 32 of the '568 Patent: OPRA Encoding, ArcaBook Encoding, Filtered
Options Feed Encoding, and XDP Depth of Book. 4 Each of those Accused
Instrumentalities has its own technology that must be considered in connection
with an infringement claim:
1. OPRA Encoding

(a)

Internal OPRA encoding: the OPRA system receives a
message from PartiApps; PartiApps deblocks the
message, converts it into binary format, inserts a time

Realtime has not pursued its claim with respect to XDP Depth of Book; the Court therefore will not
address that product further.

4

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stamp message, and regroups the messages by option
symbol. After these steps have all occurred, the message
now has internally sourced data and sequencing changes.
(See Decl. of Robert Jakob in Supp. ofNYSE and OPRA's
Mot. for Summ. J. (Dkt. No. 702) ("Jakob Dec.")

~~14-15,

Ex. A.)
(b)

High Speed Line Applications ("HSlApps") receive the
message from PartiApps. Prior to those messages
undergoing FAST compression, they are altered again:
HS lApps are deblocked, a time stamp is inserted, a
sequence number is inserted, and a retransmission
requester field is inserted. The messages are then
regrouped. As with PartiApps, the HSlApps now have
internally sourced data and sequence changes.

2. ArcaBook Encoding
(a)

ArcaBook for Equities utilizes both front- and back-end
servers. When a message is received at its front-end
server, the server adds a sequence number to each
message and places the message into the send buffer. As
a result, the characteristics of the data have been
internally altered; when these messages get to the back­

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end server they are therefore different from what was
externally received by the front-end server.
(b)

ArcaBook for Options works differently--it does not have a
front-end server. The messages that ArcaBook for
Options compresses are generated by the back-end server
itself; the messages therefore do not come from an
external source.

3. Filtered Options Feed
(a)

OPRA's Filtered Option Feed receives data encoded in the
OPRA FAST format. Prior to compression, the feed
decodes the OPRA FAST message, creates message
objects (including by discarding certain objects), and
inserts sequence numbers into the message. As a result,
the messages that enter the Filtered Option Feed from
the external source are internally altered prior to
compression

NYSE and OPRA correctly point out that Realtime fails to make any specific
evidentiary showing with respect to whether the three specific Accused
Instrumentalities encode data that is in the form of a data stream at the time of
encoding: this includes, for instance, an absence of any specific facts relating to how
any of the specific encoding products work.

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Realtime relies on the generalized statements of its expert, Dr. Ian Shamos.
In paragraphs 20-22 of that declaration, Dr. Shamos provided general opinions
regarding the data stream requirement for all Accused Products (from any of the
dozens of defendants). There is simply nothing in Dr. Shamos' declaration that
specifically addresses the NYSE and OPRA data streams, the content of those
streams, or the particular way in which their specific encoders act on the data.
The descriptions ofNYSE and OPRA's three Accused Instrumentalities here
are therefore supported by what is basically an unrebutted factual declaration by
defendants' expert: The descriptions of the Accused Instrumentalities all indicate
that the data that enters those instrumentalities is internally altered in some
fashion and out of the original sequence. That fact is therefore taken as true; there
is no triable issue of fact. These three Accused Instrumentalities cannot meet the
definition of "data stream" necessary for the asserted claims in the '568 Patent.
Summary judgment is granted on this basis.
C.

Is Transfer Encoding Content Independent?

This Court has previously construed "content independent data compression"
to mean
compression that is applied to input data that is not compressed with
content dependent data compression, the compression applied using
one or more encoders without regard to the encoder's (or encoders')
ability to effectively encoded the data block type (or data field type).
Markman opinion, 2012 WL 2394433, at *16.
According to NYSE and OPRA (and as ISE argued in Motion No.4),
Realtime's infringement contentions (and Dr. Shamos) rely upon stop bit encoding
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to meet the content independent data compression requirement. Defendants argue
that stop bit encoding--or transfer encoding--is only used on certain data types and
not others and therefore must be content dependent. According to Dr. Storer, on
whose declaration defendants rely, stop bit encoding always results in an expansion
of the data block. Dr. Storer refers to the "principal creator of FAST, Rolf
Anderson" for the point that "byte vectors" are used when stop bit encoding is not
optimal. (Decl. of James Storer in Support ofNYSE & OPRA's Mot. for Summ. J.
("Storer Decl. Mot. 10") Ex. Cat 7.) Moreover, section 10.6 of the FAST standard
also states that stop bit encoding is useful for only certain data types. (ld.

~~18,

21-22, Ex. B. §10.6.)
Realtime responds to defendants' arguments in a manner similar to its
response to ISE's motion: transfer encoding--which defendants concede they use--is
used when other types of encoders are not optimal; that does not mean that the
content of the data block is known. In fact, according to Realtime, the content of the
data block can nonetheless be one of several different types including fields
containing integer numbers, signed integers, unsigned integers, scaled numbers and
ASCII strings. The debate between the parties can be characterized as whether
transfer or stop bit encoding must work with all types of content in order for it to be
considered "content independent." This is not a question this Court can resolve on
the record before it.
Whether transfer encoding--which is used when other encoding techniques
are not optimal, but when the content can be one of a number of different types--is

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content independent is a question of fact for the jury. Accordingly, the Court denies
summary judgment on this basis.
D.

Is Stop Bit Encoding Lossless?

Defendants argue that each of the asserted claims in the '651 and '747
Patents require lossless encoding or decoding. This Court previously construed
"lossless" to mean "technique, software or hardware that fully preserves the original
unencoded data such that the decoded data is identical to the unencoded data."
Realtime Data, 2012 WL 2394433, at *16. The heart of the dispute on this issue is
not whether stop bit encoding adds or drops bits--the issue is whether once stop bit
encoding has been applied, would the decoded data be identical to the original
encoded data.
Defendants argue, without citation to an expert declaration or any other
evidence, that "it is impossible to losslessly decode data that was not losslessly
encoded." That mayor may not be true--the Court certainly cannot make that
judgment at this stage of the proceeding. In contrast, Dr. Shamos' declaration in
support of Realtime's position (and motion for summary judgment on infringement)
does claim that data that has been stop bit encoded can be decoded with the result
being bit for bit identical data. (Shamos Decl.

~

35.)

Accordingly, there is a triable issue of fact as to whether stop bit encoding is
lossless and summary judgment is denied on this basis.

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III.

CONCLUSION
For the reasons set forth above, summary judgment is GRANTED to NYSE

and OPRA as to all asserted claims of the '568 Patent; summary judgment is
DENIED on the bases set forth above relating to the '651 and '747 Patents.
The Clerk of the Court is directed to terminate the motion at
•

11 Civ. 6697, Dkt. No. 697

•

11 Civ. 6699, Dkt. No. 123

•

11 Civ. 6702, Dkt. No. 165

SO ORDERED:
Dated:

New York, New York
November ~ , 2012

/<­
KATHERINE B. FORREST
United States District Judge

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