Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Finjan, Inc. v. Sophos, Inc.

United States District Court, N.D. California

March 14, 2017

FINJAN, INC., Plaintiff,
SOPHOS, INC., Defendant.


          William H. Orrick United States District Judge


         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.



         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.


         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., 134 S.Ct. 1749, 1756 (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).



         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 Downloadable.”).

         Sophos did not engage in misconduct by arguing that SWEEP-InterCheck included an Ethernet Card and Web Browser. It has made a plausible showing that SWEEP included an Ethernet Card and operating system even though these elements are not disclosed in the claimed invention. Further, because Sophos successfully made this argument before the Delaware court, it was not objectively frivolous or unreasonable for it to assert the same argument here. Sophos's reliance on the Ethernet and Web Browser as part of its anticipation argument does not make this an exceptional case.


         A. Mr. Klausner's Construction of the term “database”

         Finjan argues that Sophos acted extraordinarily because its non-infringement expert, Mr. Klausner, offered an unreasonable interpretation of the term “database.” Mot. for Fees at 12. At claim construction, I construed the term “database” to mean “[a] collection of interrelated data organized according to a database scheme to serve one or more applications.” Dkt. No. 73 at 3. (emphasis added). At trial, and previously in his expert report, Klausner opined that the requirement to “serve one or more applications” required a database to serve at least two applications. Trial Tr. at 1241:18-19. Finjan asserts that this opinion is a frivolous perversion of the English language and so entitles them to fees and costs.

         Although Klausner's interpretation of “database” was not particularly convincing, this single aspect of his opinion does not render this an extraordinary case. First, Klausner's non-infringement opinion did not hinge on this interpretation. As he testified at trial, he did not base his non-infringement opinion on whether a database “has to be more than one application.” Indeed the issue was only raised by Finjan on cross examination for impeachment purposes. Trial Tr. 1241:4-6. The focus of Klausner's non-infringement opinion was instead that Sophos's accused products do not have “databases” within the meaning of the patent because they do not have a “database manager” and because they do not store information. For example, he explained that Sophos's Blackboard system does not have a database manager and does not store information because when it receives a downloadable security profile system “it just sits in memory, just for the scan of that one particular file, and then goes away.” Trial Tr. at 1222:3-14. Mr. Klausner's interpretation that “database” must serve more than one application was irrelevant to this testimony.

         While Klausner's interpretation that a “database” must serve more than one application was not persuasive, his non-infringement opinion did not rely on this interpretation. This minor aspect of his opinion had virtually no impact on the case. If anything, Klausner's interpretation of “database” provided Finjan a strong line of attack on Klausner's credibility, an issue that Finjan successfully emphasized on cross-examination and in closing arguments. Klausner's interpretation of “database” does not make this an exceptional case.

         B. Klausner relied on the Delaware case

         Finjan asserts that Sophos acted unreasonably because its infringement expert Mr. Klausner relied on and referenced the Delaware action in his expert report. Mot. for Fees at 8. Finjan claims that this was improper because the Delaware action involved different patents and different products and so was irrelevant to the claims here. Id. While I have previously expressed skepticism that the Delaware action is relevant to the issues of infringement and invalidity in this case, Klausner did not engage in gross misconduct by referencing it in his report. An expert is entitled to rely on anything typically relied on by experts in their field. Fed.R.Evid. 703. The '194 patent, asserted in the Delaware case, is directly related to four of the patents asserted in this case, and the accused products and technology are similar in both cases. Klausner's attempt to draw parallels to the Delaware case was not unreasonable and does not justify awarding attorneys' fees.


         Finjan argues that Sophos acted unreasonably because it refused to narrow its election of SWEEP-InterCheck products early in the litigation. Mot. for Fees at 15. Early in the case, Sophos asserted hundreds of versions of Sweep and InterCheck as prior art, despite requests from Finjan to elect particular versions and combinations. Sophos maintained that it was unnecessary for it to elect particular versions of SWEEP and InterCheck because there were no substantive differences between individual versions. When Sophos's expert Dr. Cohen used previously undisclosed versions of the products in his expert report, Finjan filed a motion to strike his opinions, which I granted. I subsequently ordered Sophos to elect a single combination of SWEEP-InterCheck to assert as prior art, which it then did. Finjan argues that Sophos's failure to elect a single version of prior art earlier in the litigation, or otherwise narrow its election to fewer versions, caused Finjan to waste considerable time and expense and was unreasonable.

         Sophos's position that SWEEP-InterCheck is a single product and that it was therefore not necessary for it to elect particular versions was not wholly unreasonable. There is no evidence that Sophos engaged in misconduct by failing to narrow its election of particular SWEEP-InterCheck versions earlier in the litigation. Sophos's failure to comply with Finjan's request does not make this an exceptional case.

         IV. SOURCE CODE

         Finjan asserts that Sophos engaged in misconduct by attempting to obfuscate its source code productions. It contends that Sophos required Finjan to pay to have the source code transferred from Texas to California; that it produced source code that was organized in a confusing way with no discernible directory structure; that it pointed Finjan to a particular directory containing 29, 000 files that it later admitted did not have relevant code; that Sophos's engineers testified that the source code production did not appear to be organized the way it was organized in the ordinary course; that Sophos presented a “blueprint” of the source code that failed to make the code discernible; that Sophos eventually gave Finjan access to its Perforce system where Finjan could see previously unviewable comments and references to Finjan that later disappeared; and that Sophos produced highly relevant source code near the end of discovery. Mot. for Fees at 17-19.

         Sophos rebuts that it did not do anything improper and that Finjan's trouble with understanding its source code does not amount to misconduct on the part of Sophos. It responds to Finjan's accusations by explaining that it produced its source code as it was kept in the ordinary course and only altered the code by dividing it into three top-level folders for the purposes of production; that Sophos provided Finjan with information on where the master build files were in its source code so that it could make sense of the code and offered to help Finjan's reviewer find the master build files; that it provided Finjan with access to its internal Perforce source code repository which includes both released code and code that is still in development - something that most technology companies would never provide access to; that it did not restrict Finjan's access to comments and references to Finjan in the Perforce system and demonstrated during the deposition of Robert Cook that it was still possible to access these files using Finjan's credentials; and that the code produced near the end of discovery was updated versions of the code Finjan already had that had previously not been available for production. Oppo. to Fees at 10-12.

         Discovery of complex information, such as source code, is expensive and difficult and often requires substantial time and energy from all parties. Finjan highlights a number of problems in making sense of the Sophos source code and some hiccups in the production process, but these sorts of problems are to be expected during complex discovery. There is no evidence that Sophos intentionally obfuscated its code. All relevant code was produced by the discovery deadline. The conduct here does not rise to the level of misconduct: Sophos did not refuse to produce relevant information, did not violate any court orders, and did not display a “shifting litigation position.” Juniper Networks, Inc. v. Toshiba Am., Inc., No. 5-c-479, 2007 WL 2021776, at *3-5 (E.D. Tex. July 11, 2007); Fleming v. Escort, Inc., No. 9-c-105, 2015 WL 713532, at *2 (D. Idaho Feb. 21, 2014); Trs. of Bos. Univ. v. Everlight Elecs. Co., No. 12-c-11935, 2016 WL 3976603, at *3-4 (D. Mass. July 22, 2016). Sophos's conduct was reasonable and does not evidence misconduct.


         Finally, Finjan argues that Sophos acted unreasonably by producing over ten thousand pages of irrelevant documents; by producing thousands of spam emails; and by producing a substantial number of documents late in the discovery period, even though it had printed many of those documents many months earlier. Mot. for Fees at 21.

         Sophos acknowledges that it inadvertently produced some irrelevant documents, but notes that these documents represented a fraction of the total documents produced and asserts that this does not make this an exceptional case. Vehicle IP, LLC v. Gen. Motors Corp., No. 07-c-345, 2008 WL 2273682, at *4 (W.D. Wis. June 2, 2008) (the production of irrelevant documents was “not so unusual (unfortunately) as to make this an exceptional case”). It explains that it produced the “spam” emails because these emails were responsive to specific search-term requests Finjan had made and it was trying to comply with those requests. Oppo. to Fees at 14. Finally, it notes that it produced all responsive documents before the close of fact discovery and asserts that a minor discovery dispute, such as this, does not make this an exceptional case. Indus., Inc. v. Kari-Out Club, LLC, No. 08-c-5349, 2013 WL 4730653, at *3 (D.N.J. Sept. 3, 2013) (“[P]edestrian discovery disputes of the type concomitant with intellectual property litigation” do not make a case exceptional). Sophos's conduct during document production appears to have been reasonable and does not make this an exceptional case.

         As Finjan's arguments reveal, this was a hard fought and zealously litigated case. Finjan has pointed to various disputes between the parties that arose during the two years of this litigation but has failed to identify any conduct by Sophos that would rise to the level of misconduct necessary to find this an “exceptional case” and award attorneys' fees under Section 285. I conclude that attorneys' fees are not appropriate. Finjan's motion for attorneys' fees and costs is DENIED.



         Sophos moves for a new trial, or in the alternative, remittitur. Mot. for New Trial (Dkt. No. 423). It argues that it is entitled to a new trial on invalidity because (1) collateral estoppel should apply to the issue of anticipation by SWEEP-InterCheck; (2) the jury's verdict was against the clear weight of the evidence; (3) and Finjan intentionally presented evidence of post-grant proceedings at trial in violation of an in limine order. Id. at 2. It also contends that it is entitled to a new trial on infringement because the jury's verdict was against the clear weight of the evidence. Id. In the alternative, Sophos asserts that it is entitled to a remittitur on damages because Finjan improperly included fictional revenue in its royalty base. As discussed below, Sophos has failed to show that collateral estoppel applies to this case or that the jury's verdict was against the clear weight of the evidence. It has also failed to show that the jury's damage award included SophosLabs revenues. Sophos's motion for a new trial or a remittitur is denied.


         Under Federal Rule of Civil Procedure 59(a), a court may grant a new trial to any party on some or all issues after a jury trial. Fed.R.Civ.P. 59(a)(1). In patent cases, the local Circuit's law on Rule 59 governs the standard for granting a new trial. Finisar Corp. v. DirecTV Grp., Inc., 523 F.3d 1323, 1328 (Fed. Cir. 2008). In the Ninth Circuit, a “district court can grant a new trial under Rule 59 on any ground necessary to prevent a miscarriage of justice.” Experience Hendrix L.L.C. v. Ltd., 762 F.3d 829, 842 (9th Cir. 2014).



         A. Collateral Estoppel

         Sophos asserts that it is entitled to a new trial on invalidity because collateral estoppel should apply to the issue of anticipation by SWEEP-InterCheck. Mot. for New Trial at 3. It contends that this exact issue was litigated in the prior Delaware action between the parties. Id. Collateral estoppel applies where (1) the issue to be resolved is identical to an issue raised in the prior litigation; (2) the issue was actually litigated in the prior litigation; and (3) the determination of the issue in the prior litigation was a necessary part of the judgment in that action. Littlejohn v. United States, 321 F.3d 915, 923 (9th Cir. 2003).

         Sophos argues that collateral estoppel applies because “a jury in Delaware found all asserted claims of Finjan's '194 patent anticipated by SWEEP-InterCheck.” Mot. for New Trial at 4. The '194 patent was not asserted in this case but is related to four of the five asserted patents: the '494, '844, '780, and '926 patents. Id. These four patents and the '194 patent all claim priority to the same provisional patent application (No. 60/30, 639) and the four patents asserted in this case incorporate the '194 patent by reference. Because of the close relationship between the '194 patent and the patents asserted here, Sophos contends that many of the anticipation arguments for the asserted patents are collaterally estopped by the Delaware judgment.

         Sophos previously raised this issue in its motion for partial summary judgment. It argued that collateral estoppel should apply because it was asserting the same combination of SWEEP-InterCheck in this case that it had asserted in the Delaware case - SWEEP-2.72 & InterCheck-2.11. However, I ruled that Sophos could not assert the SWEEP-2.72 & InterCheck-2.11 combination because it did not timely elect and disclose that combination in this case. Dkt. No. 205 at 34. Because Sophos's collateral estoppel argument hinged on the fact that it was asserting combination SWEEP-2.72 & InterCheck-2.11, and I ruled it could not assert that combination, I rejected its collateral estoppel argument. Id. In this case Sophos ultimately elected SWEEP-2.72 & InterCheck-2.01. Sophos argues that, despite my prior ruling, collateral estoppel should apply because (1) there is no legal requirement that a party assert an identical version of prior art to sustain a finding of invalidity; (2) there is no functional difference between the combinations of SWEEP-2.72 & InterCheck-2.11 and SWEEP-2.71 & InterCheck-2.01; and (3) it actually asserted SWEEP-2.72 & InterCheck-2.01 in the Delaware case.

         First, Sophos contends that it is irrelevant that it asserted a different combination of SWEEP-InterCheck in the Delaware case than the combination asserted here because “all that is required is that the prior art product be the same in both cases, not the particular version of the product.” Mot. for New Trial at 3. Sophos cites to Leader Techs. v. Facebook, Inc., 678 F.3d 1300, 1307 (Fed. Cir. 2012), in which the Federal Circuit upheld an invalidity verdict based on evidence presented of a post-critical date version of the asserted prior art software reasoning that the patentee failed “to point to any contemporaneous evidence in the record that indicates that [a prior version] was substantively different from the post-critical date software.” Sophos seems to argue that Leader Technologies establishes a legal rule that all versions of software are interchangeable for the purposes of prior art. But this argument is unsupported by the case: the Leader Technologies court did not conclude that all versions of software are inherently interchangeable as a matter of law, but that the relevant versions of software in that case were not substantively different. Id. Indeed, the court acknowledged that “as a general matter a computer scientist can easily modify and change software code and that two versions of the same software product may function differently.” Id. Whether two versions of software are identical or interchangeable for the purposes of prior art is a factual issue, not a legal one. As the party asserting collateral estoppel it is Sophos's burden to show that the combination of SWEEP-InterCheck asserted in the Delaware case is interchangeable with the combination asserted here.

         Sophos next addresses this exact issue, arguing that the version of SWEEP-InterCheck asserted in the Delaware case is materially identical to the combination asserted here. Sophos made this same argument in its motion for partial summary judgment, asserting that it was “undisputed” that the combination of SWEEP-2.72 & InterCheck-2.11 is materially identical to all other combinations of SWEEP-InterCheck. In my May 24 Order I responded to this argument as follows:

[C]ontrary to Sophos's repeated assertions, it is not undisputed that the various SWEEP-InterCheck combinations at issue in this case are materially identical. The only evidence identified by Sophos on this point - Dr. Cohen's report - says nothing about whether the different combinations of SWEEP-InterCheck are materially identical. Meanwhile, Finjan has presented evidence indicating that at least some of the SWEEP-InterCheck combinations are considerably different, in that certain of them - including SWEEP-2.72 & InterCheck-2.11 - are in fact “incompatible . . .and would result in faulty operation.” Jaeger Rpt. ¶ 185 (Kastens Decl. Ex. 38, Dkt. No. 143-40)

         Sophos does not cite to any additional evidence demonstrating the similarity between the combination of SWEEP-InterCheck asserted in the Delaware case and the one asserted here and again relies exclusively on evidence that InterCheck 2.01 and 2.11 are substantively similar to each other. As I concluded in my prior order, this evidence does not address the similarity between the asserted combinations. Finjan has presented evidence that different combinations of SWEEP-InterCheck, including the SWEEP-2.72 & InterCheck-2.11 combination may be materially different from other asserted combinations. Jaeger Rpt. ¶ 185 (Kastens Decl. Ex. 38, Dkt. No. 143-40). Sophos has not demonstrated that the combination of SWEEP-2.72 & InterCheck-2.11 is materially identical to SWEEP-2.72 & InterCheck-2.01.

         Finally, Sophos argues that SWEEP-2.72 & InterCheck-2.01, the combination asserted in this case, was also asserted in the Delaware case. It points to a reference from the Delaware court's JMOL order in which the court noted that “Mr. Klausner testified specifically as to which release he used in his invalidity analysis, stating that he relied on SWEEP version 2.72 and InterCheck version 2.11, as well as on InterCheck versions 2.01 and 2.10, which were earlier versions of the program incorporated into version 2.11.” JMOL Order, 2013 WL 5302560 at *17. While this reference does suggest that Mr. Klausner considered the SWEEP-2.72 & InterCheck-2.01 combination, the Delaware court's discussion indicates that Sophos did not rely on this combination and instead relied exclusively on the SWEEP-2.72 & InterCheck-2.11 combination in pursuing its invalidity defense. The court noted that “the specific prior art reference on which Sophos and Websense rel[ied] [was] version 2.72 of Sweep and version 2.11 of Intercheck.” Id. at *14. It also explained that “Sophos notes that its citations to source code were to a single version of SWEEP (version 2.72) and a single version of InterCheck (version 2.11), which were sold together as a single software product.” Id. at *17. Despite Sophos's argument that it relied on the SWEEP-2.72 & InterCheck-2.01 combination in the Delaware case, the Delaware court's JMOL Order indicates that, in fact, it relied exclusively on the SWEEP-2.72 & InterCheck-2.11 combination.

         Sophos has failed to show that collateral estoppel should apply in this case. It did not rely on the same combination of SWEEP-InterCheck in the Delaware case and has failed to present evidence that the combination of SWEEP-2.72 & InterCheck-2.01 (asserted here) and the combination of SWEEP-2.72 & InterCheck-2.11 (asserted in the Delaware case) are substantively identical. As a result, Sophos has failed to demonstrate that this case involves identical factual issues to the ones actually litigated in the Delaware action and collateral estoppel does not apply.

         B. Clear and Convincing Evidence

         Sophos next argues that it is entitled to a new trial on invalidity because it proved, by clear and convincing evidence, that its asserted SWEEP-InterCheck Art (1) was a single anticipatory reference; (2) was publicly available in the United States before 1995; and (3) satisfied every claim element of the asserted patents. As addressed below, Finjan presented evidence on all three of these issues that would have given the jury a reasonable basis for declining to find invalidity.

         1. Single Anticipatory Reference

         Sophos argues that it proved by clear and convincing evidence that SWEEP-InterCheck is a single prior art reference for anticipation purposes because Sophos witnesses testified that (1) after InterCheck was released, it was provided with SWEEP at no extra charge; (2) although SWEEP could work on its own, InterCheck was developed to work with SWEEP and could not function as a separate product; and (3) SWEEP-InterCheck was a single product. Mot. for New Trial at 15.

         In response, Finjan asserts that there were substantial doubts that SWEEP-InterCheck was a single product because it presented evidence that (1) the programs were developed and released at different times; (2) had different source code repositories; (3) were distributed to customers on separate disks; (4) and that SWEEP could work separately from InterCheck. Oppo. to New Trial at 16 (Dkt. No. 16).

         Although Sophos presented evidence in support of its claim that SWEEP-InterCheck was a single product, Finjan provided sufficient evidence to raise doubts and give the jury a reasonable basis to conclude that SWEEP-InterCheck was not a single product.

         2. Available in the United States

         Sophos next argues that it presented clear and convincing evidence that SWEEP-InterCheck was available in the United States prior to November 8, 1995 because (1) Sophos's witness Dr. Lammer testified that it was “impossible to imagine” that SWEEP-2.72 & InterCheck-2.01 were not sent to the United States before that time; (2) it presented a 1993 press release that announced a worldwide license between Sophos and the U.S.-based company Digital Equipment Corporation; (3) it showed that the backups for the SWEEP-2.75 & InterCheck-2.01 programs predate November 8, 1995; (4) it demonstrated that the server code for a 1994 version of SWEEP-InterCheck includes a comment indicating that Dr. Lammer made an adjustment “for a U.S. customer” indicating that SWEEP-InterCheck was being sent to the United States prior to 1995; (5) it presented Sophos's Data Security Reference Guide from March of 1995, which indicated that SWEEP-InterCheck was available for sale and listed Sophos's U.S. distributer for Sophos products; (6) it presented evidence that Sophos took steps to promote its products in the United States starting in March of 1995; and (7) it presented a contract showing that Sophos sold SWEEP-InterCheck to the World Bank in Washington, D.C. in August, 1995 following negotiations that likely began prior to June 1995. Mot. for New Trial at 15-18.

         In response, Finjan argues that Sophos failed to present clear and convincing evidence on this point because (1) not a single Sophos witness had actual knowledge of whether InterCheck 2.01 was actually sent to any U.S. customers; (2) Sophos did not have any sales or shipping record evidencing sales of InterCheck 2.01 or shipments of InterCheck 2.01 to U.S.-based customers; and (3) Dr. Lammer testified that the August 1995 contract with the World Bank only applied to later versions of SWEEP-InterCheck and not to the asserted SWEEP-2.71 & InterCheck-2.01 combination. Oppo. to New Trial at 16-17.

         Although Sophos presented a considerable amount of circumstantial evidence that InterCheck 2.01 may have been used by customers in the United States prior to November 8, 1995, it did not present any direct testimony or direct evidence confirming this point. The jury could have found the lack of sales and shipping records or Dr. Lammer's inability to remember whether InterCheck 2.01 was actually mailed to any U.S. customers compelling. Further, although Sophos presented a range of evidence showing that SWEEP-InterCheck was generally available in the U.S. prior to November 8, 1995, it presented very little evidence on the availability of version 2.01 of InterCheck specifically. Without specific corroborating evidence about this particular version of InterCheck, the jury was asked to rely heavily on Dr. Lammer's somewhat speculative testimony that it was “impossible to imagine” that InterCheck 2.01 was not mailed to any U.S. customers. As the Federal Circuit has held, “uncorroborated oral testimony, particularly that of interested persons recalling long-past events, ” is not clear and convincing evidence. Woodland Trust v. Flowertree Nursery, Inc., 148 F.3d 1368, 1369, 1371-73 (Fed. Cir. 1998). Given the uncertainty of Dr. Lammer's testimony and the lack of direct evidence that InterCheck 2.01 was sent to any U.S. customers, the jury had a reasonable basis to conclude that Sophos's asserted combination of SWEEP-InterCheck was not publically available in the United States prior to November 8, 1995.

         3. Anticipation

         Finally, Sophos argues that it presented clear and convincing evidence that SWEEP-InterCheck meets every claim element of the asserted patents and directs the court to various excerpts of trial testimony from its invalidity expert, Dr. Cohen who opined that SWEEP-InterCheck anticipated each of the prior patents. Mot. for New Trial at 18.

         In response, Finjan explains, at length, that there were numerous ways that Sophos failed to show that SWEEP-InterCheck meets the various claim elements. Finjan notes that it presented evidence that: (1) SWEEP-InterCheck did not meet the '844 patent's “generating” element because the technology was limited to byte-matching to identify known viruses and could not broadly identify suspicious code and did not meet the '844 patent's “linking” requirement because the “linking” does not occur before a web server makes the Downloadable available to web clients; (2) SWEEP-InterCheck did not satisfy various elements of the '494 patent including the “downloadable scanner” limitation (because the source code Dr. Cohen introduced did not include a list of suspicious operations) and the “database manager” limitation (because Dr. Cohen did not show that the hash table he presented included a schema); (3) SWEEP-InterCheck did not satisfy the '926 patent's “receiving an incoming Downloadable” limitation (because SWEEP searches for known viruses) and the '926 patent's “transmit an incoming Downloadable” limitation (because InterCheck forwards unknown files to the SWEEP server, which never sends them back to InterCheck); (4) SWEEP-InterCheck did not meet the '780 patent's “communications engine that obtains Downloadables” limitation (because SWEEP-InterCheck only scans local file systems, not Downloadables from the Internet, and did not have the ability to fetch software components); and, finally, (5) SWEEP-InterCheck did not satisfy the '154 patent's “dynamically-generated malicious content” element (because SWEEP-InterCheck only checks for known viruses).

         In its reply, Sophos engages these issues more deeply. It attempts to rebut each of Finjan's arguments by explaining that SWEEP-InterCheck either does meet each element that Finjan describes, and/or that the claim elements do not require the specific details that Finjan claims Sophos failed to show. Reply for New Trial at 9-12.

         This case involved complex patents and technologies. Substantial evidence regarding the issue of invalidity was presented by both sides. The parties dispute both what the patent claims required and what SWEEP-InterCheck actually does. While Sophos presented expert testimony and evidence asserting that SWEEP-InterCheck anticipated all five of the asserted patents, Finjan presented conflicting expert testimony asserting that SWEEP-InterCheck failed to meet a number of necessary elements of each patent. Sophos, unsurprisingly, asserts that Finjan's evidence was meritless and that Sophos's evidence should have been credited instead. But there is no reasonable dispute that Finjan presented sufficient evidence on the issues of invalidity to provide the jury with a reasonable basis to conclude that SWEEP-InterCheck did not anticipate the '844, '494, '926, '780, and '154 patents.

         There was a reasonable basis for the jury to conclude (1) that SWEEP and InterCheck were not a single product; (2) that the elected combination of SWEEP-2.72 & InterCheck-2.01 was not publicly available in the United States prior to November 8, 1995; and (3) that SWEEP-InterCheck did not meet each and every element of the asserted patents. Each of these issues provided the jury an independent basis to conclude that SWEEP-2.72 & InterCheck-2.01 did not anticipate the asserted patents. Because the jury's verdict on invalidity was supported by substantial evidence, its verdict was not against the clear weight of the evidence. Sophos is not entitled to a new trial on invalidity on this basis.

         C. Use of Post-Grant proceedings

         Sophos argues that it is entitled to a new trial on invalidity because Finjan violated an in limine ruling excluding evidence on post-grant proceedings before the patent office. Mot. for New Trial at 19. Prior to trial Sophos moved to preclude Finjan from presenting “evidence or argument about post-grant proceedings before the United States Patent & Trademark Office.” Dkt. 217 at 19. I granted the motion and ruled that the parties could not produce any evidence related to post-grant proceedings explaining “it would take a significant amount of time and effort to adequately explain the relevance and limitations of the PTO proceedings to the jury and because I believe there is a substantial risk that the jury will improperly substitute its own judgment for the PTO decisions.” Dkt. No. 291 at 25.

         At trial, in attempting to show that SWEEP-InterCheck was considered by the patent office, Finjan briefly displayed two slides that were excerpts from the prosecution history of the '844 patent reexamination filed by a different company, Proofpoint, and asked Dr. Cohen four to five questions related to whether the patent office considered the SWEEP-InterCheck product. Trial Tr. at 1471:15-1473:2. Sophos contends that this was an intentional violation of the in limine order. Finjan responds that Sophos had “opened the door” to evidence related to the post-grant proceedings by stating in its opening statement that “The Patent Office did not know about the software code that you're going to see and the demonstrations that you're going to see of how our product operated before their system, before their patents were filed.” Trial Tr. at 137:24-138:5.

         As I stated during trial outside the presence of the jury, Finjan's line of questioning on this issue and display of the reexamination slides, without giving prior notice to Sophos or the court, was improper. Finjan “stepped over [the] line” established by the in limine ruling on this issue. Id. at 1532:16-20. Although Sophos requested that I instruct the jury that “there's been no evidence that the Patent Office considered the SWEEP-InterCheck Product, ” I instead issued the following instruction: “The parties dispute the extent to which SWEEP and InterCheck was considered by the Patent and Trademark Office before some of the patents were issued, if at all. And you should not consider the questions asked on this subject yesterday of Dr. Cohen, his responses, or any documents that were shown during his testimony related to that.” Id. at 1579:4-9. Then, when the issue came up regarding what statements could be made during closing arguments, I stated that “we would say nothing - - well, nothing would be said with respect to the PTO, and [Sophos] couldn't make an argument that no evidence has been shown.” Id. at 1643:3-5. Similarly, I said that “Finjan may not use [the lack of evidence on the PTO] as a shortcoming in [Sophos's] opening or the evidence.” Id. at 1644:17-18. Sophos argues that “[t]he net effect of Finjan's intentional violation of the Court's in limine order was to discredit a key theme of Sophos's defense-that the jury was the first to consider the SWEEP-InterCheck source code and demonstrations in determining the validity of Finjan's patents.” Mot. for New Trial at 21.

         Sophos's inability to rely on the lack of evidence presented with regards to the PTO proceedings was a consequence of its successful motion in limine. Sophos wanted an instruction from the court, or alternatively to make the argument itself, that there had been no evidence that SWEEP-InterCheck was considered by the patent office. But as Finjan attempted to show with its slides from the '844 patent reexamination, SWEEP-InterCheck was submitted to the patent office as prior art. The parties therefore disputed whether the patent office “considered” this evidence, but all of Finjan's potential evidence on the issue was excluded by the in limine ruling. Allowing Sophos to argue that there was no evidence that the patent office considered SWEEP-InterCheck would have been unfair and prejudicial to Finjan, since this was only true because Sophos successfully moved to exclude that evidence.

         Sophos explained to the court that it sought its in limine ruling and made its opening argument because it knew that “Under the reexam, under the initial thing, the SWEEP-InterCheck product was not considered [by the PTO].” Trial Tr. at 1539: 12-14. If Sophos was confident in its evidence on this issue, and intended to rely on this fact for a major theme of its case, it should have attempted to resolve the issue on summary judgment or in some other format - not through a motion in limine. Id. at 1644:4-6. Instead of attempting to definitively resolve this fact issue in its favor in advance of trial, Sophos successfully moved to exclude all of Finjan's potential evidence on the issue. Then, because none of Finjan's evidence disputing Sophos's position would be admissible, it planned to make the argument at trial that no evidence was presented that the patent office considered SWEEP-InterCheck. While Sophos was not able to follow through with its theme that the jury was the first to consider the SWEEP-InterCheck source code and demonstration, this result was largely a self-created issue resulting from Sophos's strategic maneuvering.

         Although Finjan overstepped by displaying evidence related to the '844 patent reexamination proceedings, this error was addressed with an instruction that the jury was not to consider any evidence or testimony related to whether the PTO office considered SWEEP-InterCheck. My ruling prevented Sophos from emphasizing in its closing that the jury was the first to consider the SWEEP-InterCheck source code and demonstration; it did not prevent the jury from actually considering the SWEEP-InterCheck source code and demonstration and assessing the evidence on the merits. Because the only prejudice Sophos identifies is that it was not able to carry-through on one of its themes, and because this issue arose predominantly as the result of Sophos's own choices and trial strategy, Finjan's use of the post-grant proceedings evidence did not result in a miscarriage of justice and does not justify a new trial on the issue of invalidity.


         Sophos argues that it is entitled to a new trial on the issue of infringement because the jury's verdict was against the great weight of the evidence. It incorporates by reference its Motion for Judgment as a Matter of Law (“JMOL”). Mot. for New Trial at 21. For the reasons set forth in my discussion of Sophos's JMOL motion, there was a reasonable basis for the jury's verdict on infringement and Sophos is not entitled to a new trial on this basis.


         Sophos asserts that it is entitled to a remittitur because Finjan improperly included revenue related to SophosLabs in its royalty base, a service that Sophos asserts earns no revenue and operates entirely outside the United States. Mot. for New Trial at 21. It is undisputed that SophosLabs is not a separate product and does not generate separate revenue for Sophos. Trial Tr. at 1076:2-7; 1077:4-20. Sophos contends that any indirect value for SophosLabs is captured by the revenue for ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.