United States Court of Appeals for the Federal Circuit 

05-1177, -1192 

LAVA TRADING, INC, 

Plaintiff- Appellant, 

v. 

SONIC TRADING MANAGEMENT, LLC, JOSEPH CAMMARATA, 

 and LOUIS FENG LIU, 

Defendants-Appellees, 

and 

ROYALBLUE GROUP PLC, 

ROYALBLUE FINANCIAL CORPORATION 

and ROYALBLUE FINANCIAL PLC, 

 Defendants-Appellees. 

Albert L. Jacobs, Jr., Greenberg Traurig LLP, of New York, New York, argued for 

plaintiff-appellant. With him on the brief were Daniel A. Ladow and Barry J. Schindler. 

Robert R. Brunelli, Sheridan Ross P.C., of Denver, Colorado, argued for 

defendants-appellees, Sonic Trading Management, LLC, et al. With him on the brief 

was Scott R. Bialecki. Of counsel was Bill Vaslas, Vaslas Lepowsky Hauss & Danke 

LLP, of Stanten Island, New York. 

Claude M. Stern, Quinn Emanuel Urquhart Oliver & Hedges, LLP, of Redwood 

Shores, California, argued for defendants-appellees, Royalblue Group PLC, et al. With 

him on the brief was Michael B. Carlinsky and Edward J. DeFranco, of New York, New 

York. 

Appealed from: United States District Court for the Southern District of New York 

Judge Thomas P. Griesa 
United States Court of Appeals for the Federal Circuit 

05-1177,-1192 

LAVA TRADING, INC, 

 Plaintiff-Appellant, 

v. 

SONIC TRADING MANAGEMENT, LLC, JOSEPH CAMMARATA, 

and LOUIS FENG LIU, 

 Defendants-Appellees, 

and 

ROYALBLUE GROUP PLC, 

ROYALBLUE FINANCIAL CORPORATION 

And ROYALBLUE FINANCIAL PLC, 

 Defendants-Appellees. 

___________________________ 

 DECIDED: April 19, 2006 

___________________________ 

 

Before MAYER, RADER, and LINN, Circuit Judges. 

Opinion for the court filed by Circuit Judge RADER. Dissenting opinion filed by 

Circuit Judge MAYER. 

RADER, Circuit Judge. 

This appeal stems from two stipulated judgments of non-infringement of 

U.S. Patent No. 6,278,982 (the ’982 patent). Lava Trading, Inc. v. Sonic Trading

Mgmt., LLC, 03-CV-9382 (S.D.N.Y. Dec. 8, 2004) (Royalblue Stipulation); Lava 

Trading, Inc. v. Sonic Trading Mgmt., LLC, 03-CV-0842 (S.D.N.Y. Dec. 8, 2004) 

(Sonic Stipulation). Because flaws in the district court’s interpretation of claim 9 
call the stipulated judgments into question, this court vacates and remands for 

further proceedings. 

I. 

Lava Trading, Inc. (Lava) owns the ’982 patent, which claims software that

aggregates and integrates securities trading and order placement information 

from various alternative trading systems. ’982 patent, col. 1, ll. 7-13. Lava sued 

Sonic Trading Management LLC, Joseph Cammarata and Louis Feng Liu 

(collectively Sonic) and Royalblue group plc, Royalblue financial corporation and 

Royalblue financial plc (collectively Royalblue) in the United States District Court 

for the Southern District of New York for infringement of the ’982 patent, among 

other state law claims. The defendants denied infringement and counterclaimed 

for a declaratory judgment that the ’982 patent is invalid, unenforceable, and not

infringed. Royalblue Stipulation, slip op. at 1; Sonic Stipulation, slip op. at 1. 

On May 24-26, 2005, the district court held a Markman hearing and issued 

a claim construction ruling from the bench. Thereafter, the parties stipulated to 

final judgments of non-infringement. See Royalblue Stipulation; Sonic 

Stipulation. Lava appeals the stipulated final judgment orders. 

II. 

At the onset, the procedural posture of this appeal presents problems. For 

instance, this court notes that defendants’ counterclaims of invalidity and 

unenforceability are still pending before the trial court. These pending

counterclaims put this court in the awkward position of reviewing a claim

construction that may implicate issues and claims beyond this court’s current 

05-1177,-1192 2
reach. See Int’l Commc’n Materials, Inc. v. Ricoh Co., 108 F.3d 316, 318-19 

(Fed. Cir. 1997) (commenting that, when substantial issues remain open on 

appeal, this court should first “provide the district judge and parties the 

opportunity to complete the picture.”). 

In addition, this record on appeal does not supply any meaningful 

comparison of the accused products to the asserted claims. Without knowledge 

of the accused products, this court cannot assess the accuracy of the 

infringement judgment under review and lacks a proper context for an accurate 

claim construction. “While a trial court should certainly not prejudge the ultimate 

infringement analysis by construing claims with an aim to include or exclude an 

accused product or process, knowledge of that product or process provides

meaningful context for the first step of the infringement analysis, claim

construction.” Wilson Sporting Goods Co. v. Hillerich & Bradsby Co., 

2006 WL 722127, slip op. at 7 (Fed. Cir. 2006) (citing SRI Int’l v. Matsushita Elec.

Corp. of Am., 775 F.2d 1107, 1118 (Fed. Cir. 1985); Scripps Clinic & Research

Found. v. Genentech, Inc., 927 F.2d 1565, 1580 (Fed. Cir. 1991); Multiform 

Dessicants, Inc. v. Medzan, Ltd., 133 F.3d 1473, 1476-78 (Fed. Cir. 1998); Pall 

Corp. v. Hemasure Inc., 181 F.3d 1305, 1308 (Fed. Cir. 1999)). Without the vital 

contextual knowledge of the accused products or processes, this appeal takes on 

the attributes of something akin to an advisory opinion on the scope of the ’982 

patent. The problems with such an appeal, even if within this court’s jurisdiction, 

have been noted in many of the court’s prior cases. See, e.g., id. (citing Bayer 

05-1177,-1192 3
AG. v. Biovail Corp., 279 F.3d 1340, 1349 (Fed. Cir. 2002); CVI/Beta Ventures 

Inc. v. Tura LP, 112 F.3d 1146, 1160 n.7 (Fed. Cir. 1997)). 

Nonetheless, the court notes that the district court issued a Rule 54(b) 

certification in this case. See Fed. R. Civ. P. 54(b). Rule 54(b) allows a district 

court to act as a “dispatcher” and “determine, in the first instance, the appropriate 

time when each ‘final decision’ upon ‘one or more but less than all’ of the claims

in a multiple claims action is ready for appeal.” Pause Tech. LLC, v. Tivo Inc., 

401 F.3d 1290, 1294 n.2 (Fed. Cir. 2005). Thus, while troubled by the pending 

counterclaims and the absence of a detailed infringement analysis, this court has 

jurisdiction under 28 U.S.C. § 1295(a)(1) (2000). 

III. 

Turning to infringement, the ’982 patent claims software that aggregates

and integrates information from various systems for buying and selling securities

(e.g., stocks, bonds, commodities and derivatives). See ’982 patent, col. 1, ll. 7-

13. The ’982 patent specifically addresses a problem wherein a user with access 

to only a subset of these systems confronts substantial fluctuations in prices 

amongst these systems for a given security. Id. at col. 3, ll. 6-31. To illustrate, a 

buyer may not know of lower prices available on another system and/or a seller

may not know of higher prices available on another system. 

Embodiments of the ’982 patent solve this problem by aggregating and 

integrating information from these various systems. One embodiment of the ’982 

patent depicted in Figure 5, for example, aggregates and integrates pricing data 

for a single security (e.g., DELL): 

05-1177,-1192 4
Id. at col. 9, ll. 9-25. As shown above, the screen 280 “provides the customer 

with the ability to take advantage of price variations in a rapidly changing 

environment.” Id. at col. 9, ll. 23-25. Thus, the user is provided with 

considerable pricing information for a given security and, armed with this 

information, can make a transaction. The patent also discloses other 

embodiments. 

With this backdrop, an infringement analysis is a two-step process: “First, 

the court determines the scope and meaning of the patent claims asserted . . . 

[and second,] the properly construed claims are compared to the allegedly

infringing device.” Cybor Corp., 138 F.3d at 1454 (citations omitted). “Step one, 

claim construction, is a question of law, that we review de novo. Step two, 

05-1177,-1192 5
comparison of the claims to the accused device, is a question of fact, and 

requires a determination that every claim limitation or its equivalent be found in 

the accused device.” N. Am. Container, Inc. v. Plastipak Packaging, Inc., 

415 F.3d 1335, 1344 (Fed. Cir. 2005) (citations omitted). 

A. Waiver/Estoppel

Before this court can construe the claims, however, it must first address a 

potential waiver/estoppel issue surrounding Lava’s current claim construction 

theory. The waiver/estoppel issue relates to a change in Lava’s counsel during 

proceedings before the district court. Before and during the district court’s 

Markman hearing(s), Lava’s initial counsel argued the term “distributing” should 

be construed as “providing the consolidated or composite single list of open 

orders for a given security . . . to the users of the present invention” - i.e., for only

one security. Pl. Lava Trading Inc.’s Opening Claim Constr. Br. at 53, 

Lava Trading Inc. v. Sonic Mgmt., LLC, 03-CV-842 & 03-CV-9382 (S.D.N.Y.

2003) (emphasis in original altered). The district court, however, rejected Lava’s 

proposed definition and adopted a construction requiring the distribution of data 

for all securities in the combined order book. Lava Trading, Inc. v. Sonic Trading

Mgmt., LLC, 03-CV-9382 & 03-CV-0842, slip op. at 442-43 (S.D.N.Y. Dec. 8, 

2004) (Claim Construction Order). Lava then obtained new counsel who 

advanced Lava’s current claim construction theory in a motion for 

reconsideration. Lava now interprets “distributing” as “providing to traders 

combined order book information . . . for one security or more than one security, 

as desired by the traders” - i.e., a subset of the combined order book.

05-1177,-1192 6
Memorandum In Support Of Lava’s Motion For Reconsideration Of A Portion Of 

The Court’s Decision On Claim Constr. at 2, Lava Trading, Inc. v. Sonic Trading

Mgmt., LLC, 03-CV-842 & 03-CV-9382 (S.D.N.Y. July 29, 2004) (emphasis

added). The district court rejected Lava’s motion for reconsideration without

comment. Lava Trading, Inc. v. Sonic Trading Mgmt., LLC, 03-CV-842 & 03-CV9382 (S.D.N.Y. Aug. 10, 2004). 

Seizing on this change in Lava’s claim construction theory, the defendants

argue that Lava has waived its current theory and should be estopped from 

raising it on appeal. The defendants rely on cases in which a party presented an 

argument on appeal that substantially changed the scope of a prior position 

taken before a trial court. See, e.g., NTP, Inc. v. Research in Motion, Ltd., 418 

F.3d 1282, 1296 (Fed. Cir. 2005) (waiver applied because RIM attempted to add 

a pull technology limitation to the claim that it did not raise before the trial court); 

SuperGuide Corp. v. DirecTV Enter., Inc., 358 F.3d 870, 889 (Fed. Cir. 2004) 

(waiver applied because SuperGuide stipulated to construction of the term “meet” 

at the trial court); Finnigan Corp. v. Int’l Trade Comm’n, 180 F.3d 1354, 1363 

(Fed. Cir. 1999) (waiver applied because Finnigan’s petition to the Commission 

did not point out the relevance of the lack of the term “unstable” in claim 17); 

Sage Prods., Inc. v. Devon Indus., Inc., 126 F.3d 1420, 1426 (Fed. Cir. 1997)

(waiver applied because Sage did not present its construction of “elongated slot”

to the trial court). Upon review, the court concludes these cases do not govern 

the facts of this case. 

05-1177,-1192 7
At the outset, judicial estoppel does not normally apply on appeal to 

prevent a party from altering an unsuccessful position before the trial court. 

See RF Del., Inc. v. Pacific Keystone Tech., Inc., 326 F.3d 1255, 1262 (Fed. Cir.

2003) (quoting Data Gen. Corp. v. Johnson, 78 F.3d 1556, 1565 (Fed. Cir. 1996))

(“The doctrine of judicial estoppel is that where a party successfully urges a 

particular position in a legal proceeding, it is estopped from taking a contrary 

position in a subsequent proceeding where its interests have changed.”) 

(emphasis in original). Thus, estoppel would not bar Lava from departing from a 

claim construction theory unsuccessfully advocated before the trial court. 

Moreover, on the limited record on appeal, this court cannot discern any

practical difference between Lava’s two theories. In response to both theories, 

the defendants counter that the intrinsic record limits the claims to a system that 

distributes and displays information for all securities. Thus, the slight change in 

Lava’s theory has not resulted in any meaningful change in the defendants’ 

position or evidence relied upon by the defendants at the trial court or on appeal.

The absence of any practical differences in the case reinforces this court’s

determination that Lava has not waived its current theory. See Harris Corp. v. 

Ericsson Inc., 417 F.3d 1241, 1252 (Fed. Cir. 2005) (waiver did not apply 

because the technical distinction in Ericsson’s argument did not make any 

practical difference in the case). 

05-1177,-1192 8
B. The Disputed Limitations

On the merits, the parties dispute the meaning of two related limitations in 

the ’982 patent, “distributing” and “displaying” a combined order book to a trader.

Independent claim 9 recites both limitations:

9. A data processing method for providing trading information to 

traders in a security or commodity from two or more alternative 

trading systems, comprising the steps of: 

receiving order book information from each participating alternative 

trading system in order book information protocols native to the 

particular alternative trading system; 

converting the information to a common system order book 

protocol; 

integrating the order book information from each alternative trading 

system into a single order book; 

distributing the combined order book to the traders in the common 

system order book protocol; and 

displaying said combined order book to the traders. 

’982 patent, col. 14, ll. 1-14 (emphasis added). The district court construed the 

disputed limitations during a Markman hearing without issuing a formal claim 

construction order. Instead, the district court stated its claim construction from 

the bench at the close of the hearing. A district court retains discretion to rule in 

this manner, but in this instance the trial court’s oral recitation provides a very 

sparse explanation of the findings and reasoning supporting the claim 

construction. 

Regarding the distributing limitation, the district court concluded that it 

“simply means distributing the combined order book -- that means in terms of the 

specification the consolidated order book -- pertaining to all orders from all ECN 

05-1177,-1192 9
members.” Claim Construction Order at 442-43. In other words, the distributing 

limitation requires the distribution of the whole combined order book to the trader. 

The district court similarly construed the displaying limitation, concluding the 

system must display the whole combined order book for the trader. Upon review, 

the district court’s interpretation of the “distributing” and “displaying” limitations

conflicts with the plain meaning of claim 9 and excludes embodiments disclosed 

in the specification. 

According to its preamble, claim 9 “provid[es] trading information to 

traders in a security or commodity” rather than “all” securities or commodities.

’982 patent, col. 14, ll. 1-2 (emphasis added). By selecting the word “a” instead 

of “all,” the Applicant set forth a method wherein the traders may request and 

receive information for only a subset of the securities (i.e., one or more). 

See KCJ Corp. v. Kinetics Concepts, Inc., 223 F.3d 1351, 1356 (Fed. Cir. 2000) 

(the word “a” generally means “one or more” in open-ended claims). Thus, the 

language of the claim itself does not require the system to distribute or display

the whole combined order book. 

Furthermore, the specification discloses embodiments that distribute and 

display information for only a subset of the combined order book. As an 

example, the specification describes one embodiment in which 

the CCS 100 collects orders from each ECN, (ECN150 and 

ECN251) and electronic exchanges (NASDAQ 52), distributes a 

composite order book to the customers according to each

customer’s memberships in the ECNs and rights to use an 

electronic exchange. Thus customer 10 may only receive a subset

of the complete order book compiled by the CCS 100

corresponding to where the customer 10 is permissioned. 

05-1177,-1192 10
’982 patent, col. 6, ll. 59-66 (emphasis added).1

 According to this embodiment 

the customer only receives a “subset” of the combined/complete order book from 

the system. Thus, this embodiment must also make the system capable of 

“distributing” less than the whole combined order book to the customer – i.e., a 

subset of the combined order book. 

The specification also discloses an embodiment in which bid and offer 

prices for Dell, a single security, are displayed on a market data screen: 

Fig. 4 depicts a typical market data screen 250 of the present 

invention. Such screens can be customized as to data or order to 

conform to the customer’s trading style. . . . The security under

review is Dell Computer Corp. It was elected by inserting its ticker 

symbol DELL in space 252. 

’982 patent, col. 8, ll. 47-54. This embodiment is further described in reference to 

Figure 5: 

FIG. 5 shows pricing data that would be available to a customer of 

the present invention. Here, space 251 has been checked on

screen 280 and ECN information integrated into the display. Screen

280 shows not only NASDAQ Level II data but also the full order 

book for the following three ECNs: Instinet, Island and Strike. For 

these ECN’s, there are multiple bids and offers available for DELL,

as opposed to just the best bid and offer. . . . Screen 280, thus, 

offers access to a greater amount of pricing information (thus 

greater liquidity), consolidated in one display. Thus, the entire order

books of all ECN members and the market makers’ bids and offers

are consolidated into a single informative screen for any particular 

security. This additionally provides the customer with the ability to 

take advantage of price variations in a rapidly changing 

environment. 

 1 While NASDAQ information comes from a particular electronic 

exchange rather than an alternative trading system, claim 9 is an open-ended 

claim that encompasses more than simply information from alternative trading 

systems. See U.S. Patent No. 6,278,982, col. 2, ll. 16-29, col. 14, l. 3. 

05-1177,-1192 11
Id. at col. 9, ll. 9-25. Hence, the specification discloses embodiments that 

distribute and display information for only a subset of the securities (e.g., one in 

the embodiment of Figures 4 and 5) in the combined order book. 

Reading the claim language and these embodiments in the specification, 

one of ordinary skill in this art would not limit the distributing and displaying 

limitations in the manner suggested by the district court. See Phillips v. AWH 

Corp., 415 F.3d 1303, 1313 (Fed. Cir. 2005) (en banc) (“Importantly, the person 

of ordinary skill in the art is deemed to read the claim term not only in the context 

of the particular claim in which the disputed term appears, but in the context of

the entire patent, including the specification.”). Rather, one of ordinary skill in the 

art would construe the distributing and displaying limitations as covering an 

embodiment that distributes and displays information for only a subset of the 

combined order book. 

For at least these reasons, this court sets aside the district court’s claim

construction. Because the final judgment orders are premised on the flawed 

claim construction, they too must be set aside. The case is remanded to the 

district court for further proceedings consistent with this opinion. 

COSTS 

Each party shall bear its own costs. 

VACATED and REMANDED

05-1177,-1192 12
United States Court of Appeals for the Federal Circuit 

05-1177, -1192 

LAVA TRADING, INC., 

 Plaintiff-Appellant, 

v. 

SONIC TRADING MANAGEMENT, LLC, JOSEPH CAMMARATA, 

and LOUIS FENG LIU, 

Defendant-Appellees, 

and 

ROYALBLUE GROUP PLC, 

ROYALBLUE FINANCIAL CORPORATION 

and ROYALBLUE FINANCIAL PLC, 

 Defendants-Appellees. 

MAYER, Circuit Judge, dissenting. 

Because there was no final judgment from which to appeal in the district court 

due to the interrelatedness of the infringement claim and the unresolved 

unenforceability counterclaim, I would dismiss this case for lack of jurisdiction. 

Therefore, I dissent. 

The decision today is yet another example of the unfortunate consequences of 

Markman v. Westview Instruments, Inc., 52 F.3d 967 (Fed. Cir. 1995) (en banc), Cybor 

Corp. v. FAS Techs., Inc., 138 F.3d 1448 (Fed. Cir. 1998) (en banc), and Phillips v. 
AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) (en banc), which cemented this court’s

jurisprudence with respect to claim construction as being purely a matter of law subject 

to de novo review. Because claim construction is treated as a matter of law chimerically 

devoid of underlying factual determinations, there are no “facts” on the record to prevent 

parties from presenting claim construction one way in the trial court and in an entirely

different way in this court. By not dismissing this case, we issue a decision based on an

undeveloped record. We set ourselves up to have to decide claim construction again 

later, which could well differ from the ruling today. Furthermore, allowance of an appeal 

of the trial court’s perfunctory, offhand ruling from the bench, for all intents and 

purposes allows an interlocutory appeal of claim construction, which portends chaos in 

process. 

05-1177,-1192 2