Gain Capital Holdings, Inc. v. Oanda Corp.

• Decision Date: 16 March 2022
• Docket Number: CBM2020-00023,534 B2,Patent 7,496
• Parties: GAIN CAPITAL HOLDINGS, INC., Petitioner, v. OANDA CORPORATION, Patent Owner.
• Court: United States Patent and Trademark Office. United States Patent and Trademark Office, Patent Trial and Appeal Board

GAIN CAPITAL HOLDINGS, INC., Petitioner, v. OANDA CORPORATION, Patent Owner.

No. CBM2020-00023

Patent 7, 496, 534 B2

United States Patent and Trademark Office, Patent Trial and Appeal Board

March 16, 2022

FOR PETITIONER:

Michael Rosato

Matthew Argenti

Wesley Derryberry

WILSON SONSINI GOODRICH & ROSATI

FOR PATENT OWNER:

Drew Koning

KONING ZOLLAR LLP

Before SALLY C. MEDLEY, JUSTIN T. ARBES, and SUSAN L. C. MITCHELL Administrative Patent Judges.

JUDGMENT

Final Written Decision Determining All Challenged Claims Unpatentable Denying Patent Owner's Motion to Amend 35 U.S.C. § 328(a)

ARBES Administrative Patent Judge.

I. INTRODUCTION

A. Background and Summary

Petitioner GAIN Capital Holdings, Inc. filed a Petition (Paper 2, "Pet.") requesting a covered business method ("CBM") patent review of claims 1-12 of U.S. Patent No. 7, 496, 534 B2 (Ex. 1001, "the '534 patent") pursuant to 35 U.S.C. § 321(a). Patent Owner OANDA Corporation filed a Preliminary Response (Paper 8) pursuant to 35 U.S.C. § 323. On March 18, 2021, we instituted a covered business method patent review of the sole challenge raised in the Petition. Paper 10 ("Decision on Institution" or "Dec. on Inst."). Patent Owner subsequently filed a Patent Owner Response (Paper 16, "PO Resp."), and Petitioner filed a Reply (Paper 18, "Reply"). Patent Owner did not file a Sur-Reply.

Patent Owner also filed a Motion to Amend (Paper 17) and requested that we provide preliminary guidance concerning the Motion in accordance with the Board's pilot program concerning motion to amend practice and procedures. Petitioner filed an Opposition (Paper 19). We issued Preliminary Guidance (Paper 20) determining, based on the record at the time, that Patent Owner had not shown a reasonable likelihood that it satisfied the statutory and regulatory requirements associated with filing a motion to amend, and Petitioner had shown a reasonable likelihood that proposed substitute claim 13 is unpatentable. Patent Owner then filed a Revised Motion to Amend (Paper 21, "Mot."), and Petitioner filed an Opposition (Paper 23, "Opp."). Patent Owner did not file a Reply to the Opposition. An oral hearing was held on January 14, 2022, and a transcript of the hearing is included in the record (Paper 28). Petitioner presented arguments during the hearing, and Patent Owner rested on its papers. Id. at 4:15-16:19.

We have jurisdiction under 35 U.S.C. § 6. This Final Written Decision is issued pursuant to 35 U.S.C. § 328(a). For the reasons that follow, we determine that Petitioner has shown by a preponderance of the evidence that claims 1-12 are unpatentable. We also determine that Petitioner has met its burden to show by a preponderance of the evidence that proposed substitute claim 13 is unpatentable. Accordingly, we deny Patent Owner's Revised Motion to Amend.

B. Related Matters

Petitioner states that the '534 patent is related to two other patents, U.S. Patent Nos. 8, 392, 311 B2 and 7, 146, 336 B2, asserted in OANDA Corp. v. GAIN Capital Holdings, Inc., No. 2:20-cv-5784 (D.N.J.), and challenged, respectively, in Cases CBM2020-00021 and CBM2020-00022 where institution of covered business method patent review was denied. See Pet. 2-3. Although the '534 patent is not asserted in the district court case, Patent Owner charged Petitioner with infringement of the '534 patent in two letters dated October 25, 2018, and March 5, 2020. Id. at 17 (citing Exs. 1033, 1035).

C The '534 Patent

The '534 patent discloses "methods of using real-time trading models to trade on foreign exchange markets." Ex. 1001, col. 1, ll. 13-15. "An exchange rate is the price at which one national currency can be exchanged for another. The most common currency value notion is the bilateral exchange rate (or simply the foreign exchange (FX) rate) quoted by an FX trader or reported by a quote vendor." Id. at col. 1, ll. 19-23. The '534 patent explains that "[a]lthough the FX market operates continuously, individual traders or institutions generally participate in this market for only part of each day. There [was] thus a need for trading models that take . . . local business hours and holidays into account." Id. at col. 1, ll. 42-45. There was also "a need for trading models that offer real-time analysis of FX-rate movements and generate explicit trading recommendations" and “a further need for models that follow the FX market and imitate it as closely as possible.” Id. at col. 1, ll. 46-48, 63-64. According to the '534 patent, a trading model should go "beyond predicting a price change: it should decide whether a certain action has to be taken" based on "the specific risk profile [of the model's user], the trading history [of the user], and institutional constraints such as business hours." Id. at col. 1, ll. 50-60. The '534 patent explains that

[a]t the most general level, a preferred trading model comprises a set of indicator computations combined with a collection of rules. . . . [I]ndicator computations provide an analysis of past price movements. The indicators are mapped into actual trading positions by applying various rules. For instance, a model may enter a long position if an indicator exceeds a certain threshold. Other rules determine whether a deal may be made at all, and the timing of a recommendation. Thus, indicator computations are based on price history, and a collection of rules determines the applicability of the indicator computations to the generation of trading recommendations.

Id. at col. 3, ll. 38-50. An indicator "provides a measure of whether a new position should be entered." Id. at col. 6, ll. 4-5. "In the simplest form, an indicator crossing a predefined threshold may cause a rule to be activated that in turn causes such a change in position to occur. Thus the relative values of the indicators signify internal trading recommendations that are subsequently refined through the application of various rules." Id. at col. 6, 11. 8-13. An example of a "rule" is a prohibition on new deals when "price movements since the previous deal are too small in either direction." Id. at col. 6, ll. 13-19.

Figure 1 of the '534 patent is reproduced below.

(Image Omitted)

Figure 1 depicts “a data flow and structure diagram of preferred trading model software.” Id. at col. 3, ll. 15-16. Price collector 110 “collects price quotes from data feeds received over a computer network”; price filter 120 receives the collected price quotes and filters them in real-time, storing filtered price quotes in a price database 130”; gearing calculator 140 specifies the recommended gearing (exposure size), based on indicator computations that depend on the received and filtered price quote data, trading rules that depend on past dealing history, current position, and other quantities such as current unrealized return of an open position"; deal acceptor 160 "validates the recommendations of the gearing calculator 140" based on specified conditions; stop-loss detector 150 checks for whether a "stop-loss price" has been reached; opportunity catcher 170 "searches for a realistic price at which to execute the deal," "executes a simulated deal," and "provides signals to a human dealer"; and book-keeper 180 calculates "trading model statistics." Id. at col. 3, 1. 51-col. 4, 14. As shown in Figure 1, the trading model operates in a "data-flow paradigm" where reception of a new price from a commercial quote-vendor or a timer causes a defined event, which triggers the next action in sequence. Id. at col. 9, 1. 62-col. 10, 1. 16. "Software of a preferred embodiment [of the invention] is not constructed as a single huge program with all the required functionality residing in that one entity," but rather "as a collection of separate programs" each having a primary function (i.e., "a distributed system [where] the various programs run in parallel on several computers"). Id. at col. 5, 1. 19-26. Doing so provides "several benefits," such as increased reliability. Id. at col. 5, ll. 33-49.

The gearing calculator is "the heart of a preferred trading model," as it provides the "intelligence and the ability to capitalize on movements in the FX markets." Id. at col. 5, ll. 50-53. The gearing calculator analyzes "a set of indicators that are produced from the input price data" according to "trading rules that are functions of the past dealing history, the current position, and other quantities (e.g., the current unrealized return of an open position)" to "determine whether ... a change of position" should be made. Id. at col. 5, 1. 65-col. 6, 1. 8. "The gearing calculator re-evaluates its position every time a new price tick is received from the quote-vendors." Id. at col. 5, ll. 61-62.

The '534 patent explains that trading models based on "24 hours of business time (and therefore characterized by a specific hour of the day)" are inadequate because they are not "high-frequency data models" and only provide "trading recommendations at the same hour of each day." Id. at col. 23, ll. 55-62, col 25, 11. 1-4. As a solution to this problem, the '534 patent describes using "models at different hours" as "sub-models that are ingredients of a final model" (e.g., taking into account 24 sub-models, one for each hour of the day). Id. at col. 25, ll. 4-16.

Figure 7 of the '534 patent is reproduced below.

(Image Omitted)

Figure 7 depicts a trading model with two input indicators and where "the combination of different sub-models at the end leads to the final gearing recommendation of the gearing calculator." Id. at col. 32, ll. 63-67. "Sub-models can be seen as complete trading models, but the final goal is to combine sub-models of different time horizons into one main model. The different sub-models share the same structure and...