The opinion of the court was delivered by: THOMAS GRIESA, Senior District Judge
THE COURT: In the recess I went over the specifications and the
figures, and that seems to me quite important. Now, I just want to
summarize this, because I do think it's quite important.
The abstract says that the combined information is displayed to a
customer by security. I'm not reading whole
sentences, and I may be paraphrasing, so these are not intended to
be exact or complete quotes, but the substance is what I believe I'm
Now, figure 2 is discussed in column 7. And column 7 at line 6,
starting at line 6, says: The customized order book is displayed on the
customer's terminal, normally organized by security and price.
Now, I want to jump to figure 5, And figure 5 is described in column 9.
Now, the discussion of figure 5 starts at line 9 of column 9, and it
says: Figure 5 shows pricing data that would be available to a customer
of the present invention.
And going on, it says that the screen shows something about NASDAQ. And
then it goes on to say the screen also shows the full order book for the
following three ECNs: Instinet, Island and Strike. And then it describes
the fact that for these ECNs there is the information about multiple bids
and offers on the particular stock about which this screen is created,
and it talks about the fact that for the particular stock, Dell, there is
a certain amount of information. And it describes that.
Then it says at line 21: 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. And of course
figure 5 shows a screen for
the security Dell or the company Dell, and it shows what we have
looked at many times.
Now, let's go to the discussion of figure 3. Figure 3 is described in
column 7. The discussion of figure 3 is quite lengthy, going from column
7, line 14, all the way over to column 8, line 46. It's all of interest,
but the high points are, I believe, what I'm pointing out now.
Starting at line 35 of column 7 it says: The data from the first ECN,
after conversion by the protocol converter, is combined with the
converted data from the second ECN in a data distribution server
which is item 203 of figure 3.
Then it goes on. Column 7 goes on to say: This information is organized
by the distribution server that is, item 203 in figure 3
first by security, then by price and then by information such as volume,
time or other parameters as desired.
Oh, let me start again and backtrack a little bit.
The data from the first ECN, after conversion by the protocol
converter, is combined with the converted data from the second ECN in a
data distribution server. The data distribution server generates a
consolidated order book containing all orders from all ECN members
connected to the CCS. And then it goes on to speak about how the
information is organized by security, etc.
But the consolidated order book which is generated
contains all orders from all ECN members connected to the CCS.
Now, the rest of column 7 deals with certain things that I think are
not germane to our problem. It talks about market metrics perhaps being
displayed, that is, historical liquidity and price volatility. It talks
about a certain customer may not be entitled to get information from a
particular ECN so there has to be ECN filtering.
And then at line 57 it talks about the subscriber server, item 205 of
figure 3, supplying the resulting consolidated order book to an
analytical engine, which is item 206 of figure 3. And the analytical
engine performs certain functions that are not relevant here, as far as I
can see it.
Now, going to column 8, line 6, it says that the subscriber server,
item 205 of figure 3, forwards the customized consolidated ECN order book
and customer analytics to trader terminal 101 that's simply the
desktop computer of the trader if the customer is not a NASDAQ
market maker or user. If, however, the customer is a NASDAQ market maker
or user, the customer's NASDAQ information feed may also be operatively
connected to the desktop computer through a NASDAQ protocol converter and
integrator, which is item 207 of figure 3. The converter integrator
converts NASDAQ information protocol to systems protocol and integrates
the data into the ECN order book information and supplies it to terminal
Now, there is some crucial language: Supplies it to
terminal 101. That's the desktop computer of the trader. And then
there is this language which I quote exactly, "resulting in a
consolidated display as seen in figure 5 on trading terminal 101.'I
Now, what you have in this description of figure 3, you have what is
clearly the integrating step resulting in what is spoken of as a
consolidated order book containing all orders from all ECN members. Then
you have a way to work in NASDAQ information. And I think it's quite
clearly implied that it's all NASDAQ information.
And then, with no explanation at all of how it's done, you suddenly go
from this consolidated order book to the display in figure 5 of a single
security, but there is no description whatever of the steps or process by
which that is done. It simply says all this consolidation is carried out,
and finally you've got everything cranked in from NASDAQ, all on a
consolidated basis, ...