The opinion of the court was delivered by: Katherine B. Forrest, District Judge
In 2009, plaintiff Realtime Data, LLC d/b/a IXO ("Realtime") sued a number of companies involved in some aspect of the financial services industry (including banks, exchanges, and information services) for infringing three of its patents: U.S. Patent No. 7,417,568 (the "'568 Patent"), U.S. Patent No. 7,714,747 (the "'747 Patent"), and U.S. Patent No. 7,777,651 (the "'651 Patent" and collectively with the '568 and '747 Patents, the "patents-in-suit").
This Court has already issued several decisions on various issues in this litigation, and refers to those decisions for additional facts. See, e.g., Realtime Data, LLC v. Morgan Stanley, 11 Civ. 6696, 2012 WL 3158196 (S.D.N.Y. Aug. 2, 2012); Realtime Data, LLC v. Morgan Stanley, 11 Civ. 6696, 2012 WL 2545096 (S.D.N.Y. June 27, 2012); Realtime Data, LLC v. Morgan Stanley, 11 Civ. 6696, 2012 WL 2434750 (S.D.N.Y. June 26, 2012); Realtime Data, LLC v. Morgan Stanley, 11 Civ. 6696, 2012 WL 2394433 (S.D.N.Y. June 22, 2012); Realtime Data, LLC v. Morgan Stanley, 11 Civ. 6696, 2012 WL 1711117 (S.D.N.Y. May 10, 2012).
Defendants have counterclaimed for non-infringement and invalidity. On July 19, 2012, the Court ordered that the trial as to the Exchange Defendants will proceed first.*fn1 (See 11 Civ. 6696, Dkt. No. 539.) That jury trial is scheduled to commence on November 26, 2012.
Defendants and plaintiff now have 19 separate, fully briefed motions for summary judgment (on the question of liability) pending before this Court.*fn2 The motions put forth a smorgasbord of separate arguments. Each motion asserts more than one basis for the proposition that as to one or more of the accused instrumentalities, Realtime cannot prove a required claim limitation. Accordingly, the 19 motions require the Court to evaluate the merits of far more than 19 arguments.*fn3
Buried in one of those motions are issues amenable to resolution on summary judgment; however, many are not. It is important that a jury not be burdened with arguments that are properly resolved by the Court now. It is even more important that this Court not usurp the role of the jury by making determinations of fact, weighing evidence, or making credibility determinations.
Finding a path evenly distributed between judicial efficiency and the merits has been challenging. To assist the Court in sheer organization of the volume of paper, this Court assigned a number to each motion, and requested that the parties submit their views as to the order in which the Court should resolve the motions.
Based upon the Court's review of the letters submitted pursuant to that request (see 11 Civ. 6697, Dkt. Nos. 834 & 835), as well as its own review of the motions and the likelihood that resolving certain motions might assist in more rational trial preparation, this Court resolves the following motions in this Opinion: International Securities Exchange's ("ISE's") Motion for Summary Judgment of Noninfringement (Motion No. 4); CME Group Inc.'s ("CME") Motion for Summary Judgment of Noninfringement Based on the Lack of Determining a Data Block of Field Type (Motion No. 5); NYSE and Options Price Reporting Authority, LLC ("OPRA")'s Motion for Summary Judgment of Noninfringement Due to the Absence of the Encoding, Data Block (or Field) Type, and Selecting Limitations (Motion No. 6); NYSE, et al.'s Motion for Summary Judgment of Non-Infringement Descriptor Limitation (Motion No. 8); and Credit Suisse's Motion for Summary Judgment of Noninfringement: Descriptor Limitation (Motion No. 9).*fn4 For ease of reference, the Court refers to the various motions by assigned number throughout this Opinion. When referring to all five motions collectively, the Court uses the term "Motions."*fn5
Each Motion delves deeply into claim limitations of the patents-in-suit. Resolution of the Motions requires some understanding of the inventions at issue read against the backdrop of this Court's prior ruling on claim construction. See generally Realtime Data, LLC, 2012 WL 2394433 (referred to herein as the "Markman opinion").
Both the '651 and '568 Patents are entitled "System and Method for Data Feed Acceleration and Encryption." (See '568 Patent at ; '651 Patent at .) The '568 Patent issued first and discloses a system and methods for providing accelerated transmission of broadcast data, such as financial data and news feeds, over a communication channel using data compression and decompression to increase bandwidth and reduce latency. (See '568 Patent col.5 ll.25-32) The claims of the '568 Patent relate generally to methods for compressing data through encoding applied to a data stream. Certain claims relate to the method and application of selected encoders.
In contrast, the '651 Patent relates to a method of decoding one or more encoded messages. The decoding method requires receiving an encoded message, determining which decoder to utilize, and performing the decoding.
The '747 Patent claims both methods for decompressing one or more compressed data packets using multiple decoders that apply lossless decompression techniques, as well as methods for using multiple encoders that apply lossless compression techniques.
Key aspects of the inventions relate to, inter alia, how and when encoders and decoders are selected, how and when they are applied, to what they are applied, and whether they are in fact lossless.
Defendants universally claim that they have adopted an industry protocol referred to a compression and decompression standard called "FAST," and that FAST does not infringe on plaintiff's patents. Further, the "FIX Protocol" was copyrighted in 2006. It has been utilized by defendants.
In connection with the Motions, there are certain facts relating to the FAST standard that are not materially in dispute.
A basic and overriding contention in this litigation is that FAST infringes the patents-in-suit. FAST is described in the Abstract of the FIX Protocol as "a space and processing efficient encoding method for message oriented data streams. It defines the layout of a binary representation and the semantics of a control structure called a template . . . ." (See Decl. of James Storer In Support of NYSE and OPRA Defs.' Mot. for Summ. J. of Noninfringement Based on the Absence of Encoding, Data Block (Or Field Type), and Selecting ("Storer Decl. Mot. 6") Ex. 1 at NYSE00083123.) According to the FIX Protocol, the FAST encoding method reduces the size of a data stream on two levels.
First, a concept referred to as Field Operators allows the data affinities of a stream to be leveraged and redundant data to be removed. Second, serialization of the remaining data is accomplished through binary encoding which draws on self-describing field lengths and bit maps indicating the presence or absence of fields. (Id. at NYSE00083128.)
FAST uses a template, or table, that identifies for each field the data type expected to be present in that field, and a field operator*fn6 that will be applied to the field during the encoding process. (See Decl. of James Storer in Support of Defs.' Mot. for Summ. J. of Non-Infringement: Descriptor Limitation ("Storer Decl. Mot. 8.") ¶ 11.) The template is not attached to the data block that is compressed. Instead, it acts as a reference tool to identify the appropriate field operator. (See id. ¶ 19.) A template identifier (or "template ID") along with a presence map (or "PMAP") are used to reference the template and determine which field operator was used. (Id. ¶¶ 21-23.) The template ID does not itself state which field operator was used. (Id. ¶ 23.) The template is never transmitted with the compressed data from encoder to decoder. (Id. ¶ 21.)
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 establishing the lack of a genuine issue of material fact has been met 'in 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. Phonometrics, 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 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.
ISE is accused of infringing both the '568 and '651 Patents, and has moved for summary judgment as to all claims of infringement asserted against it. It presents 11 arguments supported by an expert declaration from Dr. James A. Storer ("Storer Decl. Mot. 4") and a declaration from ISE's System and Product Strategy Officer, Gregory J. Maynard ("Maynard Decl.").
In opposition, Realtime offers multiple responses to each of the 11 arguments as well as what it believes is support for its position(s) from the declaration of its own expert, Dr. Michael Ian Shamos ("Shamos Decl.").
According to Realtime, three of ISE's encoding products and methods are infringing instrumentalities: (1) ISE.Fast Encoding; (2) MIDAS Encoding; and (3) ISE.FastProcessing Encoding (collectively, the "ISE Accused Encoding Instrumentalities"). Realtime also accuses four of ISE's decoding products or methods of being infringing instrumentalities: (1) ISE.FastProcessing decoding; (2) Exergy OPRA Decoding; (3) OPRA Decoding; and (4) ISE.FastSpec Greeks Decoding (collectively, the "Accused Decoding Instrumentalities" and with the ISE Accused Encoding Instrumentalities, the "Accused Instrumentalities").
In order for any of the accused instrumentalities to infringe, it must satisfy the limitations in each asserted claim.
A. Do ISE's FAST Applications "Analyze" or "Recognize" to Determine Data Type?
Each of the claims that ISE is accused of infringing require "analyzing" or "recognizing" to determine data type. ISE argues that Realtime relies on a "value check" performed by the instrumentality at issue to determine the data block type of data field type, and that this fails to comply with this Court's Markman opinion which requires "content categorization," not checking a value. (See Mem. of Law in Support of ISE's Mot. for Summ. J. of Noninfringement ("ISE Mem.") (11 Civ. 6697, Dkt. No. 685) at 3-4.)
According to ISE, checking the value of a particular field is not the same as "analyzing" it to determine data type. ISE refers to the following example: if the COPY operator is being applied to a particular field, and the previous message had a "5" associated with the same field, a program implementing FAST's COPY operator will check to see if the value of the current field is "5"--but it will not try to determine data type. (See ISE Mem. at 4.) ISE argues that the FAST data types are already known and are set forth in templates prior to compression.
Realtime responds that the encoder is not simply checking a value. According to Realtime, even in the example that ISE provides, ISE is checking the value against the value in a prior message. Realtime argues that this is sufficient to constitute an "analysis." (Realtime Data, LLC's Mem. in Opp'n to ISE's Mot. for Summ. J. of Non-Infringement ("Opp'n Mot. 4") at 5-6.)
There is no dispute that there is a comparison of values that occurs as part of ISE's encoding process. The issue is whether the two-step process constitutes an "analysis."*fn8
(Notably, as presented, that argument is not based on the type of content to which the "analysis" relates.) The parties have submitted dueling expert opinions on this question. The Court cannot resolve the question of fact as to whether ISE's two-step process constitutes an "analysis." Accordingly, the Court rejects this argument as a basis for a finding of summary judgment, and denies this aspect of Motion No. 4.
B. Are Fast Field Operators Encoders?
ISE argues that its Accused Instrumentalities do not employ encoders. ISE correctly notes that this Court has previously construed the term "encoder" to mean "hardware or software that compresses data by converting the contents of a data block (or data field) into a coded representation of those contents." See Realtime Data, 2012 WL 2394433, at *16. The Court's construction makes clear that a key distinction is that encoding must be more than simply "compression"--it must include some form of "coding" or changing of representation. See id. at *8-9. The Court also determined that throwing data "away" or "no change" does not constitute "encoding." Id. at *9.
Realtime has asserted that three of ISE's accused instrumentalities use or include encoders: COPY, DEFAULT and INCREMENT. According to ISE, none of those instrumentalities use or include encoders because none "code" data. (See ISE Mem. at 6.) Realtime asserts that in fact all three of the accused instrumentalities generate a coded representation. (See, e.g., Shamos Decl. ¶¶ 16, 17.) It relies upon the fact that ISE products all use FAST encoding techniques, as stated by Dr. Storer. (See Opp'n Mot. 4 (citing Storer Decl. Mot. 4 at 5-8).) According to Realtime, lossless encoding techniques can include "field encoding"--and field encoding includes copy, default and increment encoding. (Id. at 7-8.) Realtime also argues that such encoding techniques are content dependent--i.e., that default encoding is applied when the content of the data block or field has a data type "most common value"; "most common value" is determined based on prior knowledge of the data stream. (See id. at 7-8.)
Realtime asserts that all of ISE's accused products use copy encoding, citing Exhibit 2 of the Shamos Declaration. (Opp'n Mot. 4 at 8.) Exhibit 2 does not, however, provide this level of detail. (See Shamos Decl. Ex. 2.) Assuming some of the coding is copy encoding, that is when the content of a data block or field in the current message is analyzed by comparing the content with the content of the corresponding data block or field of a prior message. If two data types are the same, copy encoding is selected as the optimal encoding for the "redundant" data block type of the data block. (Shamos Decl. ¶¶ 17, 71, 73.) When copy encoding is utilized, the question is whether there has been any actual "encoding" at all. According to Dr. Shamos, there has been because a coded representation of the data block is sent with the message in a PMAP that is included with the message. (See id. ¶¶ 17, 71, 73.) Dr. Shamos also states that some of the accused instrumentalities use increment encoding but he does not explain how. (See id. ¶ 17.)
Finally, according to Realtime, each of ISE's accused instrumentalities use "stop bit encoding" (also called "transfer encoding" or "variable byte encoding"). (Opp'n Mot. 4 at 9.) Stop bit encoding is used by ISE's accused instrumentalities when the data is not suitable for copy, default, or increment encoding. (Shamos Decl. ¶¶ 30, 35.) According to Dr. Shamos, this renders stop bit encoding a content independent compression technique. (See id. ¶ 35.) In addition, Dr. Shamos supports the proposition that "with stop bit encoding, the data field (or block) is converted into a coded representation comprising only the information content bits of the field (or block), which is transmitted along with one or more stop bits that indicate the unused bits of the data field that would not be transmitted." (Opp'n Mot. 4 at 9-10 (citing Shamos Decl. ¶¶ 19, 30, 35).) Thus, according to Dr. Shamos, the "stop bits" along with the information content bits of the encoded data together comprise a coded representation of the data block. (See Shamos Decl. ¶¶ 30, 35.)
ISE argues that stop bit encoding is not, in fact, content independent. (ISE's Reply Br. in Support of its Mot. for Summ. J. of Noninfringement ("ISE Reply") (Dkt. No. 795) at 7-8.) ISE's System and Products Strategy Officer Maynard states, though, that stop bit encoding embeds intelligence into each byte in a field. (See Maynard Decl. ¶ 20.)
There is a material dispute of fact as to whether the Accused Instrumentalities employ encoders and if so, what type. Accordingly, summary judgment is denied on this basis.
C. Are ISE's Encoders 'Selected' During the Compression Process?
The third basis upon which ISE moves for summary judgment is that, according to ISE, all but two claims (claims 20 and 22 of the '568 Patent) require that an Accused Instrumentality "select" an encoder. (See ISE Mem. at 7.) According to ISE, none of its Accused Instrumentalities meet that requirement.
This Court has previously construed the phrase "selecting an encoder" as "choosing (or choose) an encoder (or lossless encoders) during the compression process based on analyses of content of the data blocks (or data fields)." See Realtime Data, 2012 WL 2394433, at *16. As the Court noted in its Markman opinion, the essential difference between the parties with respect to their proposed constructions has to do with the temporal moment when the encoder is selected. Id. at *12. The Court concluded that the selection occurs during the compression process and that this requires an analysis of the content of the data block. Id. at *13.
According to ISE, the selection of its encoders is preordained--i.e., the encoders are set forth in a template prior to the compression process. Thus, they cannot be selected during the compression process. (ISE Mem. at 8.) According to ISE's Maynard, the selection of the encoder could date back to March 2008 when the template was written. (Maynard Decl. ¶ 12; see also ISE Mem. at 8.)
Realtime disagrees. The essential difference between the parties is whether the encoder "selects" at the time of the creation of the template (which sets forth possible encoders), or whether the selection occurs when the data block is being analyzed during the compression process, when the template is referenced. According to Realtime, ISE's encoders are selected based on an analysis of the content of the data block. Part of that comparison involves an analysis of ...