Finjan CEO Says Paid Verdict Didn't Earn Blue Coat IP Rights
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Law360, San Jose (January 9, 2018, 11:08 PM EST) -- Finjan’s CEO took the stand in California federal court Tuesday in a retrial of the company’s cybersecurity patent suit against Symantec unit Blue Coat, testifying that the latter didn’t gain the right to use its technology by paying a previous $39.5 million patent infringement verdict.
Finjan Chief Executive Officer Phil Hartstein was asked Tuesday during cross-examination about the $39.5 million that a prior jury ordered Blue Coat to pay in 2015 for infringement of six patents held by Finjan, including one that Blue Coat is accused in the current case of infringing.
Blue Coat attorney Daralyn Durie of Durie Tangri LLP asserted that Finjan had asked for a “lump sum” for the patents at issue in that case, and questioned whether the amount given for a patent also at issue in the current case was “for the life of the patent.”
Hartstein maintained that the payment tied to that patent — $24 million, according to court records — covered only the specific Blue Coat technology at stake in the first case. The current case centers on a second round of products Blue Coat has since introduced.
Finjan’s current suit alleges Blue Coat didn’t get a license before using Finjan’s intellectual property, which covers appliances and software for protecting computers from hostile files downloaded from the internet. Two patents are at stake in the case: U.S. Patent Numbers 8,677,494 and 6,154,844.
Finjan's claims against Blue Coat on those two patents had already gone to trial in 2017, but after the jury hung on them in November, the court allowed for a retrial.
During opening statements Monday, an attorney for Finjan told the eight new jurors that his client seeks $30 million for infringement of the two patents. The '844 patent was also involved in the 2015 trial.
During redirect, an attorney for Finjan, Lisa Kobialka of Kramer Levin Naftalis & Frankel LLP, had Hartstein confirm that the 2015 jury found that Blue Coat infringed the ‘844 patent with its WebPulse product at that time, a web security product.
“Is it your understanding that the verdict is limited to that version?”
Hartstein said yes.
“The technologies at issue in this case are not the same as those that were at issue in the first case,” the Finjan CEO said. “The technology that Blue Coat has deployed into the market is different now.”
Underscoring that point is key to Finjan’s argument that Blue Coat’s infringement was willful and egregious and thus deserving of enhanced monetary damages — particularly since the jury in November appeared to side with Blue Coat’s assertion that it believed the 2015 award meant it could continue to use its allegedly infringing products.
Finjan is seeking enhanced worldwide damages of at least $29.8 million on the '844 patent and at least $16.2 million on the '494 patent.
After the November ruling, Blue Coat asked the judge overseeing the case, U.S. District Judge Beth Labson Freeman, to issue a ruling on the two patents without taking the matter to another jury. Blue Coat claimed Finjan had failed during the trial to provide “sufficient evidence for a reasonable jury to find infringement as to those patents.” In that motion, Blue Coat also argued that Finjan hadn’t shown any infringement was willful.
“It was reasonable for Blue Coat to believe that it was allowed to continue providing its products,” Blue Coat states. “That Blue Coat did not design around ... patents for which it had already been assessed lump sum damages is not evidence of willfulness.”
In an order issued Monday, Judge Freeman handed Blue Coat a partial victory, trimming worldwide damages on Finjan’s claims related to the ‘844 patent. She determined that Finjan had to show infringement of the two patents was “literal,” meaning every claimed element of the patents had to be found in the allegedly infringing Blue Coat product. She also ruled the jury could not be asked to consider the “doctrine of equivalents,” which allows infringement to be found if the accused product performs basically the same function in the same way as the patented invention.
The judge however, denied Blue Coat’s motion for a ruling that any infringement on its part wasn’t willful.
During Monday's opening statements, Finjan attorney Paul Andre of Kramer Levin Naftalis & Frankel LLP told jurors that at issue in the current trial are two of Finjan’s early “foundational patents” for technology that proactively detect the behavior of online viruses and other malicious code.
While Finjan and Blue Coat once produced a product together, around 2009 Blue Coat began developing its own technology and became a competitor, Andre said. But around 2011, Finjan found that Blue Coat was using its technology in its products. The patents expired last year, so a “reasonable royalty” for use of the patents up until that time is “a little over $30 million,” the attorney said.
Durie offered the opening statement for Blue Coat, telling jurors that while Finjan may have once been a cybersecurity pioneer, the innovator in the field is now Blue Coat. Finjan’s patents, which trace back to 1996 and 1997, are outdated and haven’t kept up with computer speeds and the growing number of online threats, Durie said.
During the 2017 trial, Finjan had argued to the jury that despite the 2015 jury verdict finding that Blue Coat infringed five of Finjan’s patents, Blue Coat developed a new round of products that also incorporate Finjan’s security technology. The products include Blue Coat’s Global Intelligence Network, or GIN, a cloud-based service for detecting malware that’s part of many of the rival company’s products, Finjan said.
The patents-in-suit are U.S. Patent Numbers 8,677,494 and 6,154,844.
Finjan is represented by Paul J. Andre, Lisa Kobialka, James Hannah and Hannah Lee of Kramer Levin Naftalis & Frankel LLP.
Blue Coat is represented by Stefani E. Shanberg, Nathan B. Sabri, Robin L. Brewer, Eugene Marder, Madeleine E. Greene, Michael J. Guo and Alex N. Hadduck of Morrison & Foerster LLP and Daralyn J. Durie and Stephen J. Elkind of Durie Tangri LLP.
The case is Finjan Inc. v. Blue Coat Systems Inc., case number 5:15-cv-03295, in the U.S. District Court for the Northern District of California.
--Additional reporting by Dorothy Atkins, Ryan Davis and Y. Peter Kang. Editing by Dipti Coorg
