From the April 01, 2011 issue of Futures Magazine • Subscribe!

RCG sanctioned in patent case

Double Whammy

While it may seem that court battles over Trading Technologies’ "static ladder" and related patents that once threatened to disrupt futures markets’ cost structure are old news, there are still cases being disputed. In one, Rosenthal Collins Group (RCG) was levied a fine by a Chicago federal judge for misconduct in a patent infringement case with TT. Additionally, the judge ruled in favor of TT and ordered RCG to pay litigation costs of the case.

The patent in question concerned a "double-click" feature on a front-end order entry trading screen. RCG claimed to have a "non-party fact witness" that had discovered "prior-art" showing they were already using the feature before TT patented it. The witness supposedly found zip disks in his barn dating to the late 1990s and was able to reconstruct the program from those.

As the case unfolded, TT and the court discovered that the witness had tampered with the dates on the saved files by resetting the clock on his computer. Further, the witness had wiped files from the disks and hard drives submitted as evidence.

"At best, this demonstrates a failure to preserve evidence. At worst, it is the intentional destruction of evidence and the fabrication of prior art in a deliberate attempt to deceive this Court and invalidate TT’s patents," U.S. District Judge Sharon Johnson Coleman wrote in her decision. "RCG offered virtually nothing but semantics and denials in rebuttal of the evidence presented by TT, lending credence to a conclusion that the latter scenario is more plausible."

It was for this misconduct that RCG was sanctioned $1 million by the court. "This Court finds that both RCG and its counsel acted willfully in bad faith by engaging in conduct that resulted in deception of both the opposing party and the Court, the destruction of relevant evidence, the waste of judicial resources, and the undermining of the judicial process," Judge Coleman wrote.

While TT has won several judgments over its static ladder patent and forged licensing agreements with some competitors, most technology competitors were able to execute work around solutions to the patent that allowed them to avoid ongoing licensing fees.

RCG and TT spokesmen both declined to comment.

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