Cisco's 'Odious' Defense May Survive In IP Suit, Judge Says
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Law360 (August 30, 2018, 11:17 PM EDT) -- A California federal judge indicated Thursday she would not strike Cisco's inequitable conduct defense to Finjan Inc.’s infringement suit over anti-virus technology, but called the tech giant’s assertion that one patent is unenforceable due to allegedly false statements a Finjan attorney made to the U.S. Patent and Trademark Office “pretty odious.”
U.S. District Judge Beth Labson Freeman didn’t issue a final ruling Thursday on Finjan’s motion seeking to trim some of the defenses Cisco Systems Inc. has put forward against Finjan’s infringement claims, saying she would give the matter additional consideration.
But she told the parties she was "not inclined" to strike Cisco’s contention that one of the allegedly infringed patents is unenforceable due to alleged false statements and other misconduct by Finjan before the USPTO, saying it is “sufficiently pled.”
Finjan maintained that Cisco mischaracterized the statements related to U.S. Patent No. 8,677,494 made by Finjan’s founder Shlomo Touboul pertaining to the conception date of the inventions claimed in the patent and whether he was the sole inventor, along with statements made by a Finjan attorney during an inter partes review proceeding before the Patent Trial and Appeal Board.
Finjan attorney Paul Andre of Kramer Levin Naftalis & Frankel LLP also argued during Thursday’s hearing that even if the court took what Cisco pled as true, it still didn’t amount to inequitable conduct.
“We said there were co-inventors of these asserted claims and there were certain claims that Mr. Touboul was the sole inventor,” Andre said. “So looking at that in and by itself, taking that as true, I don’t think that there’s a factual allegation for this very serious charge of intent to deceive.”
With regard to statements at the PTAB made by Finjan attorney James Hannah, also of Kramer Levin, Andre said arguments made by attorneys during the trial-like patent proceeding involved different interpretations of evidence, and that advocacy shouldn’t be viewed as an attempt to defraud.
Judge Freeman agreed that Cisco’s defense was a serious charge and said she couldn’t recall ever seeing an inequitable conduct claim based on a statements made in an IPR proceeding. She said she was concerned that Cisco’s defense was a “strategy” to insert a “wedge” between Finjan and its counsel.
An attorney for Cisco, Jarrad M. Gunther of Duane Morris LLP, said a ruling on its inequitable conduct matter could be dealt with by the judge and wouldn’t need to come before a jury.
“This is ugly stuff, Mr. Gunther,” the judge said. “I’m sure that you’ve been on both sides of the bar on these cases. And to have to monitor everything an attorney says in argument, fearing that this wedge will be driven between him and his client later, is something that’s pretty odious frankly.”
Cisco’s attorney said he didn’t disagree, but maintained that Hannah owed a “duty of disclosure” to the PTAB about allegedly inconsistent statements made by Touboul.
The judge said she planned to allow Cisco to proceed with its inequitable conduct defense with regard to Touboul’s statements, but that she was “very concerned” about also roping in the attorney.
“In your average, garden variety $10 million case, now we’re hiring a whole separate law firm to defend on this claim that involves the attorneys, so now it’s a $12 million garden variety case,” Judge Freeman said. “I’m very concerned about it — it seems like it’s a concoction of leverage.”
In its suit, Finjan alleges Cisco is infringing five of its patents covering ways to protect computers from malicious software and viruses when connected to the internet, citing Cisco’s failure to enter a licensing agreement despite knowledge of Finjan’s patent portfolio. The infringement began when Cisco acquired technology that infringes the patents-in-suit from a company called Sourcefire Inc., the complaint says.
Finjan sued in January 2017, alleging the infringement occurred after Cisco bailed on patent licensing discussions. The plaintiff company said it spent about two years attempting to negotiate a licensing agreement with Cisco for patents that cover the technology acquired in the Sourcefire deal. But Cisco continued to sell the accused products — products that contain its Advanced Malware Protection, among others — without regard for Finjan’s IP rights, the complaint claimed.
Cisco denies that it has infringed any of Finjan’s patents and contends that its accused products were developed independently of Finjan.
After Finjan filed an amended complaint in March 2017, the court granted Cisco’s motion to dismiss Finjan’s willfulness allegations. Finjan subsequently filed a second amended complaint in July 2017, amending its willful infringement allegations, which Cisco again moved to dismiss. In February, the court denied the motion.
The patents-in-suit are U.S. Patent Numbers 6,154,844; 6,804,780; 7,647,633; 8,141,154; and 8,677,494.
Finjan is represented by Paul Andre, Lisa Kobialka and James Hannah of Kramer Levin Naftalis & Frankel LLP.
Cisco is represented by Patrick S. Salceda, L. Norwood Jameson, Matthew C. Gaudet, David C. Dotson, Jennifer H. Forte, Joseph A. Powers and Jarrad M. Gunther of Duane Morris LLP.
The case is Finjan Inc. v. Cisco Systems Inc., case number 5:17-cv-00072, in the U.S. District Court for the Northern District of California.
--Additional reporting by Daniel Siegal. Editing by Philip Shea.
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