Finjan, Inc. v. Sophos, Inc.

244 F.Supp.3d 1016

FINJAN, INC., Plaintiff,

v.SOPHOS, INC., Defendant.

Case No. 14–cv–01197–WHO

United States District Court, N.D. California.

Signed March 14, 2017

Paul J. Andre, Hannah Yunkyung Lee, James R. Hannah, Kristopher Benjamin Kastens, Lisa Kobialka, Kramer Levin Naftalis & Frankel LLP, Menlo Park, CA, Benu C. Wells, Cristina Lynn Martinez, Shannon Hedvat, Kramer Levin Naftalis and Frankel LLP, New York, NY, Yuridia Caire, Menlopark, CA, for Plaintiff.

Amy H. Walters, John Allcock, Kathryn Riley Grasso, Sean C. Cunningham, Jacob Daniel Anderson, David Rae Knudson, Peter Patrick Maggiore, DLA Piper LLP, San Diego, CA, Summer Kristen Torrez, Eduardo J. Blanco, DLA Piper LLP, Palo Alto, CA, Andrew Neal Stein, DLA Piper LLP, Washington, DC, Jeffrey Reuben Cole, Todd Scott Patterson, DLA Piper LLP, Austin, TX, Krista Anne Celentano, Summer Krause, DLA Piper LLP, East Palo Alto, CA, for Defendant.

ORDER RE POST–TRIAL MOTIONS

William H. Orrick, United States District Judge

INTRODUCTION

In this patent case, plaintiff Finjan, Inc. ("Finjan") accuses Sophos, Inc. ("Sophos") of infringing five of Finjan's patents in the malware security software space. Following a two week trial, a jury found that Sophos infringed all five of Finjan's asserted patents and awarded damages of $15 million for the life of the patents. The parties have filed five post-trial motions: Finjan filed a Motion for Attorneys' Fees and Costs, a Motion for a New Trial, or in the Alternative, Remittitur, and a Motion to Amend the Judgment and for an Injunction; and, Sophos filed a Renewed Motion for Judgment as a Matter of Law and a Motion for a Partial Judgment and Finding of Fact. All five motions are DENIED, with the exception that Finjan's request for Pre- and Post–Judgment Interest is GRANTED. Pre- and Post–Judgment interest will be awarded at the treasury bill rate.

MOTION FOR ATTORNEYS' FEES

BACKGROUND

Finjan moves for Attorneys' Fees and Costs under 35 U.S.C. § 285 of the Patent Act, which permits courts to award attorneys' fees in "exceptional cases." Finjan asserts that this is an "exceptional case" because Sophos: (1) pursued objectively unreasonable invalidity defenses premised on egregious litigation misconduct; (2) pursued meritless non-infringement defenses; (3) engaged in pre-trial misconduct by refusing to streamline issues for trial; (4) engaged in discovery misconduct related to its production of source code; and (5) improperly delayed document production and produced irrelevant documents. After reviewing the parties' briefs and the facts presented, I conclude that this is not an exceptional case warranting attorneys' fees and costs.

LEGAL STANDARD

Section 285 permits a court to award attorneys' fees only in "exceptional cases" or ones that are "uncommon, rare, or not ordinary." Octane Fitness, LLC v. ICON Health & Fitness, Inc. , ––– U.S. ––––, 134 S.Ct. 1749, 1756, 188 L.Ed.2d 816 (2014). A case is exceptional when it "stands out from others with respect to the substantive strength of a party's litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated." Id. "District courts may determine whether a case is 'exceptional' in the case-by-case exercise of their discretion, considering the totality of the circumstances." Id. Relevant factors in assessing whether a case is exceptional include "frivolousness, motivation, objective unreasonableness (both in the factual and legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence." Id. at 1756, n.6. Most courts awarding attorneys' fees post- Octane "have generally cited egregious behavior." Aylus Networks, Inc. v. Apple, Inc. , No. 13-cv-4700-EMC, 2016 WL 1243454, at *7 (N.D. Cal. Mar. 30, 2016).

DISCUSSION

I. SOPHOS'S INVALIDITY DEFENSES

Finjan first argues that Sophos engaged in egregious litigation misconduct by putting forward meritless invalidity defenses. It asserts that Sophos relied on a trial demonstrative and third-party components that were not prior art to satisfy claim elements of its Asserted Sweep–InterCheck Art. Review of the record undermines Finjan's claims.

A. The Demo2 Demonstrative

Finjan asserts that Sophos improperly relied exclusively on "Demo2", a trial demonstrative, to show certain elements of Claim 7 of the '844 Patent, Claim 18 of the '926 patent, and Claim 14 of the '494 Patent ("the Script Claim Elements") that were necessary to its anticipation argument. Because Demo2 was created as a trial demonstrative, it is not prior art and could not be used as direct evidence of anticipation. Indeed, in my May Order on Finjan's summary judgment motion for validity, I noted that "Dr. Cohen obviously cannot rely on the Demo2 programs as distinct prior art references." Dkt. No. 205 at 18. Finjan asserts that Sophos violated this order because for the Script Claim Elements Dr. Cohen directed the jury only to his slides on the Demo2 demonstrative and not to any actual source code. Finjan argues that this is serious misconduct and makes this an exceptional case. See, z4 Techs., Inc. v. Microsoft Corp. , No. 6-c-142, 2006 WL 2401099, at *23 (E.D. Tex. Aug. 18, 2006), aff'd , 507 F.3d 1340 (Fed. Cir. 2007) (awarding fees where defendant submitted false declaration to beat summary judgment).

Despite Finjan's assertions, the trial record shows that Sophos did not attempt to rely on Demo2 as prior art. Dr. Cohen was clear that Demo2 was a "program that is compiled from a source code program that [he] wrote that is intended to demonstrate the things that we're talking about SWEEP–InterCheck doing." Trial Tr. at 1369:7–13. He added that Demos 2 was used to "test that [his] analysis of the code was correct." Trial Tr. at 1461:18–19. When asked by Finjan's counsel whether Demo2 satisfied a limitation of the asserted claims Dr. Cohen responded that "SWEEP–InterCheck is the thing that meets the limitations." Trial Tr. at 1495:7–10.

As the record shows, Dr. Cohen used Demo2 as a demonstrative to help explain and demonstrate his analysis of SWEEP–InterCheck. That Dr. Cohen pointed to his slides from the Demo2 presentation when asked about the Script Claim Elements does not indicate that Dr. Cohen attempted to use Demo2 itself as prior art. Given the full context of Dr. Cohen's testimony it appears that Dr. Cohen was referring the jury generally to his testimony and analysis on SWEEP–InterCheck and the portions of his Demo2 demonstration that helped illustrate the testimony most relevant to the Script Claim Elements. Dr. Cohen's use of Demo2 as a demonstrative was appropriate and not misconduct.

B. Demo2's Programming and Reference to JavaScript

Finjan next argues that Sophos engaged in misconduct because Dr. Cohen programmed Demo2 to display words referencing "JavaScript" or "script." Finjan contends that this misleadingly gave the impression that SWEEP–InterCheck can execute JavaScript, when it cannot, and that Sophos relied on this misimpression to argue that SWEEP–InterCheck was able to receive and inspect Downloadables, even when "the Downloadable includes JavaScript script." Ex. 3 Trial Tr. at 1407:24–1408:13; 1483:22–1484:1. It argues that because the Asserted Sweep Art could not execute JavaScript, Sophos's attempt to show that it was able to receive and inspect JavaScript Downloadables was frivolous and misleading.

Sophos's attempt to show that SWEEP–InterCheck satisfied this claim element was not misleading. Sophos did not attempt to argue that SWEEP–InterCheck could execute JavaScript—instead it argued that the claim did not require that the product "execute JavaScript" but merely receive and inspect it. This is a reasonable, plain language interpretation of the claim and does not demonstrate any kind of misconduct. Further, Dr. Cohen was clear to explain that SWEEP–InterCheck does not execute JavaScript. Oppo. to Fees Mot. at 6. When asked whether he had tried to show that SWEEP can execute a JavaScript program, Dr. Cohen testified, "No, that's not what I said. What I said was pretty clear, that the executable program contained JavaScript, that it printed it, that it wasn't interpreted or run in anyway. It just included it. That's what the patent says." Trial Tr. at 1463:18–25.

Dr. Cohen's inclusion of the "JavaScript" language in his Demo2 program was reasonable and was not part of a scheme to mislead the jury about SWEEP's ability to execute a JavaScript program. Dr. Cohen's programming does not make this an exceptional case.

C. Ethernet Cards and Web Browsers

Finally, Finjan argues that Sophos's invalidity arguments were frivolous because Dr. Cohen testified that an Ethernet and Web Browser satisfied certain elements of the patents for the purposes of anticipation, but these items were not part of the Asserted Sweep Art source code. Mot. for Fees at 12. Sophos rebuts that it did not attempt to argue that the Ethernet and Web Browser were prior art, but that SWEEP–InterCheck is prior art and necessarily requires these outside elements to work. Oppo. to Fees at 7.

"A prior art reference may anticipate without disclosing a feature of the claimed invention if that missing characteristic is necessarily present, or inherent, in the single anticipating reference." Schering Corp. v. Geneva Pharm. , 339 F.3d 1373, 1377 (Fed. Cir. 2003). Sophos argues, "Just as a computer is necessary to run SWEEP–InterCheck, an Ethernet Card and Microsoft operating system are necessary components of the computer system." Oppo. to Fees at 7. Notably, in the prior case between Finjan and Sophos, the Delaware court permitted Sophos to rely on these outside elements in asserting its prior art. Id. ; Finjan, Inc. v Symantec Corp. , 2013 WL 5302560, at *18 (D. Del. Sept. 19, 2013) ( JMOL Order ) ("[A]s SWEEP–InterCheck receives incoming Downloadables, a functionality that the jury observed, it is clear that a network interface would be necessary to receive that...