Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca13-16-01616/USCOURTS-ca13-16-01616-0/pdf.json

Parties Involved:
CQG, Inc.
Appellant
CQG, LLC
Appellant
Trading Technologies International, Inc.
Appellee

Document Text:

NOTE: This disposition is nonprecedential.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, Garrett & Dunner, LLP, Reston, VA, argued for plaintiffappellee. 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. 

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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, Christopher Frerking, Irina D. Manta, Adam Mossoff, Kristen J. 

Osenga, Michael Risch, Mark F. Schultz, Ted M. Sichelman, 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. 

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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 method and system for the electronic trading of stocks, bonds, 

futures, options and similar products. The patents explain problems that arise when a trader attempts to enter 

an order at a particular price, but misses the price because 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 reducing 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 desirable 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.

 

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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 relating to and facilitating trading of a commodity 

being traded in an electronic exchange having an 

inside market with a highest bid price and a lowest 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 corresponding to a price level along the common static price 

axis, the second indicator representing quantity 

associated with at least one order to sell the commodity at the lowest ask price currently available 

in the market;

displaying the bid and ask display regions in relation to fixed price levels positioned along the 

common static price axis such that when the inside 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 plurality of locations for receiving commands to send 

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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 parameters for a trade order relating to the commodity 

and sending the trade order to the electronic exchange.

’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 nature, natural phenomenon, or abstract idea, and 

(2), if so, the particular elements of the claim, considered “both individually and ‘as an ordered combination,’” do not add enough to “‘transform the 

nature of the claim’ into a patent-eligible application.”

Id. at 2355 (citations omitted). Patent eligibility under 

§ 101 is an issue of law, and receives de novo determination 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 requirements for patentability are satisfied, we need not 

address this dispute.

 

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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 improvements in existing graphical user interface devices that 

have no “pre-electronic trading analog,” and recite more 

than “‘setting, displaying, and selecting’ data or information that is visible on the [graphical user interface] 

device.” Id.

The district court explained that the challenged patents do not simply claim displaying information on a 

graphical user interface. The claims require a specific, 

structured graphical user interface paired with a prescribed 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 articulated 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 

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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 distinguished 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 precedent. Precedent has recognized that specific technologic 

modifications to solve a problem or improve the functioning 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. Similarly, “claimed process[es] us[ing] a combined order of specific 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 improvement 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 another location” were held patent-ineligible in Apple, Inc. v. 

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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 information 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 improvements. Enfish, 822 F.3d at 1339 (“Much of the advancement 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 generalized 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 generalized knowledge that characterizes ineligible subject 

matter. This analysis is facilitated by the Court’s guidance 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 Diamond v. Diehr, 450 U.S. 175, 188 (1981).

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As demonstrated in recent jurisprudence directed to 

eligibility, and as illustrated in the cases cited ante, the 

claim elements are considered in combination for evaluation 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 softwareimplemented programmatic met. For Section 101 purposes, 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

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