Finjan LLC v. ESET, LLC et al

Finjan Holdings, Inc. has seen a new setback in its Southern District of California lawsuit against ESET (3:17-cv-00183), roughly a year after the first wave of the COVID-19 pandemic ended a trial in the case three days in. On March 23, District Judge Cathy Ann Bencivengo invalidated five of the six anti-malware patents-in-suit, ruling that “convenient” yet unsupported testimony from the plaintiff’s expert on the meaning of the term “downloadable” failed to overcome the defendant’s argument that the patents’ claims are indefinite. That ruling follows another notable decision against Finjan in January, when Northern District of California Judge William Alsup largely granted Juniper Networks’s request for attorney fees due to the NPE’s litigation conduct in a case that he deemed a “fiasco”.

Finjan, which was acquired by Fortress Investment Group LLC in July 2020, sued ESET in January 2017, accusing the company of infringing six patents (6,154,844; 6,804,780; 7,975,305; 8,079,086; 9,189,621; 9,219,755) through the provision of various cybersecurity products. Five of those six patents (all but the ‘305 patent) include the contested term “Downloadables”—the capitalization of which “signal[ed that] it is a specifically defined term”, as later observed by Judge Bencivengo. Significantly, the term also appears in other Finjan patents, though as Judge Bencivengo further noted in her March 23 order, courts have defined it at varying levels of specificity. For instance, one court construed the term as used in the related 6,092,194 patent as “an executable application program which is downloaded from a source computer and run on a destination computer”. However, Judge Bencivengo faulted subsequent courts for incorporating that definition by reference for other patents without accounting for narrowing language in those patents—including one ruling that incorporated the aforementioned “broader” language from the ‘194 patent for another (6,480,962), even though the latter explicitly requires that the “executable application program” be “small”. Judge Bencivengo’s November 2017 construction of that term, in contrast, inserted that qualifier—defining “Downloadables” as “a small executable or interpretable application program which is downloaded from a source computer and run on a destination computer” (emphasis added).

The inclusion of the term “small” would ultimately trigger the just-resolved dispute over indefiniteness. In April 2019, ESET moved for summary judgment of invalidity on that basis, arguing that a person with ordinary skill in the art as of January 27, 1997, the filing date of the related 6,167,520 patent, would not have known “what would constitute ‘small’ with respect to ‘executable programs from a source computer that run on the destination computer’”. The company cited alleged inconsistencies in Finjan’s expert testimony on the subject, arguing that the NPE had failed to provide objective boundaries for the upper limit of “small”—boundaries that were not reflected in the intrinsic record, asserted ESET. Finjan, for its part, pointed to example programs in the patent disclosure that would allegedly provide adequate notice to such a person of skill. Concluding that the record at that point was “conflicted” on this issue, the court denied ESET’s motion in November 2019 without prejudice to refile.

The parties then revisited the definition of “small” when the case went to trial in March 2020, with Finjan’s expert Eric Cole testifying that “an application would be understood to be small if it ‘did not require installation’ and opined that ‘small’ depends not on size but on the function”. Under his definition, a “small executable is an application that does not require installation[,] is ‘self-contained’[,] and is ‘just running automatically’[, . . .] which is ‘typical if you go to any website nowadays,’ whereas an executable that is not small ‘requires installation’ and has ‘a lot of shared libraries and [DLLs] and other programs’ in order to run”. On the trial’s fourth day, however, Judge Bencivengo declared a mistrial in light of the pandemic with the agreement of counsel—though, crucially, after Cole finished his testimony.

Based on that testimony, the court subsequently permitted ESET to renew its summary judgment motion, with the defendant arguing in August 2020 that Cole’s testimony failed to fix any of the defects it had identified—leaving “Downloadables . . . hopelessly indefinite”. Indeed, the company noted that “size does not matter when determining what constitutes ‘small’ because a two terabyte Downloadable would meet his ‘construction’ of the term ‘small’” (emphasis in original).

Judge Bencivengo agreed with ESET in her March 23 order granting the defendant’s motion, faulting Finjan for “present[ing] an explanation how a skilled artisan would interpret ‘small’ that was neither disclosed in his previous declaration to the Court . . . or anchored to the specification or prosecution history”. She underscored that the NPE “never offered evidence of a reasonable range for the size of a small executable or interpretable application program as understood by a skilled artisan in 1997 based on examples provided in the patent specification”, as it would have needed to do in order to overcome ESET’s indefiniteness argument. “It may be convenient to support Finjan’s infringement contentions against ESET’s accused devices, but Finjan’s new explanation does [not] provide clear notice of what constitutes a ‘small executable or interpretable application program’”, held Judge Bencivengo. While Finjan suggested that Cole would replace his completed testimony at a subsequent trial, Judge Bencivengo countered that he would not get a second bite at the apple, ruling that “a subsequent trial is not an opportunity for Dr. Cole to change his opinions or supplement them with support he did not provide on the record at the first trial”.

That same day, the court set a status conference for the following week, advising the parties that they “shall be prepared to discuss a path forward for this case and whether they prefer to stay the case while Finjan appeals the Courts invalidity order”. No such appeal has yet been docketed as of the publication date of this article.

As noted above, this ruling is not the first time that Finjan’s litigation has hit a speedbump this year. On January 9, Judge Alsup ruled that much of the NPE’s case against Juniper had been “exceptional” under Octane, due in part to Finjan’s attempt to switch out its infringement theory on the eve of trial—a misstep that led Judge Alsup to throw out its entire damages case. That decision has set the stage for an award of attorney fees against Finjan for its litigation conduct, which Judge Alsup repeatedly decried as having “wasted a great deal of everyone’s time and energy”. A special master has since been appointed to recommend the appropriate fee award in a report due May 20, with objections due on June 10.

Further details on Judge Alsup’s attorney fee decision in that case can be found here: “Judge Alsup Tees Up Fee Award Against Finjan, Calling Case Against Juniper a ‘Fiasco’” (January 2021).

Judge Alsup also recently dealt Finjan another blow in that case with respect to confidentiality, following the NPE’s attempt to “seal references to its patent valuation and licensing activity” that he had included in a December 2018 Daubert order—an attempt that Judge Alsup rebuffed, and that the Federal Circuit also rejected. On February 10, Judge Alsup once again denied Finjan’s request to withhold that information, holding that the NPE had “offer[ed] no compelling interest that outweighs the public’s own compelling interest in disclosure” (emphasis in original)—citing his own prior ruling against another Fortress NPE, Uniloc 2017 LLC, on a similar sealing dispute.

For more on Judge Alsup’s ruling against Uniloc 2017, and for details on a related battle over its standing to sue in litigation against Apple and other defendants, see “Uniloc Ordered to Unseal Licensing Info as Ruling on Standing Triggers New Dismissals” (December 2020).

Finjan, Inc. has just seen another setback in its Northern District of California litigation against Juniper Networks (3:17-cv-05659). On January 9, District Judge William Alsup ruled that much of the NPE’s case against Juniper had been “exceptional” under Octane, due in part to Finjan’s attempt to switch out its infringement theory on the eve of trial—a misstep that led Judge Alsup to throw out its entire damages case. That decision sets the stage for an award of attorney fees against Finjan for its litigation conduct, which Judge Alsup repeatedly decried as having “wasted a great deal of everyone’s time and energy”.

Finjan, which was acquired by Fortress Investment Group LLC last July, filed its lawsuit against Juniper in September 2017 (3:17-cv-05659). The NPE’s complaint accused the company of infringing eight patents—with two later dropped, and another added—through the provision of various antivirus, cloud, and sandboxing products and technologies, including Juniper’s SRX Gateways, Sky ATP, and/or Junos Space Security Director. The following February, Judge Alsup ordered the parties to engage in a “shootout”, a narrowing procedure that he first introduced in early 2017 as a way, in his opinion, to more efficiently get to the merits of a patent case. In a shootout, the plaintiff is required to choose a single patent claim for which it thinks it has the strongest arguments and then to move for summary judgment of infringement and validity as to that sole claim. The defendant, in turn, must pick a “weakest claim” and move for summary judgment of noninfringement and invalidity. If successful, the plaintiff would possibly be awarded a preliminary injunction; and if unsuccessful, the court might “impose a sanctions award on them sua sponte for bringing such a ridiculous claim”.

Two such shootouts occurred over the course of the litigation, and the manner in which Finjan pursued certain key aspects of its case throughout both of those stages led him to conclude in his January 2021 order that the case had been “exceptional”.

The first of the two shootouts were partially resolved in Juniper’s favor in August 2018, when Judge Alsup granted the defendant’s shootout motion as to noninfringement—holding that the company’s SRX Gateway and Sky ATP products do not infringe claim 1 of Finjan’s 6,804,780 patent under the construction of the phrase “performing a hashing function”. Later that month, Judge Alsup then issued an order addressing Finjan’s motion, in which the NPE sought a judgment of infringement and validity as to claim 10 of the 8,677,494 patent. While Judge Alsup partially granted the motion as to infringement for certain claim limitations, he struggled with the application of the parties’ agreed-upon definition of “database” to the identified structures before him, deferring any further, clarifying construction of the term “until the jury is instructed so that the Court will have the benefit of the trial record before construing the term”. He scheduled a trial as to Juniper’s infringement under that construction in December 2018, leading to a verdict of noninfringement as to claim 10 of the ‘494 patent later that month. That verdict, and the case’s other judgments in Juniper’s favor, were later summarily affirmed by the Federal Circuit, before which Finjan had already stipulated to the dismissal with prejudice of its other claims.

Finjan’s pursuit of a flawed damages case both immediately before and during the December 2018 trial led to several rebukes from the court—and Judge Alsup would later describe that conduct, in his January 2021 exceptionality order, as a “fiasco [that] wasted a great deal of everyone’s time and energy”. Key among the underlying missteps was the NPE’s belated attempt to revamp its infringement case: as subsequently recounted by Judge Alsup, “[a]fter discovering its infringement theory covered only a minute portion of Juniper’s revenue base, on the eve of [trial] Finjan flip flopped and came up with a new infringement theory, one which would capture more of Juniper’s products and inflate the target revenue base”. In particular, as previously reported by RPX, Finjan had sought to establish a $7.2M royalty base through the testimony of its damages expert, but Juniper argued that this opinion overreached, in that it counted SRX devices for which the Sky ATP addon had not been installed (as required for infringement). Rather, the company argued, the maximum royalty base—including revenue from the paid version of Sky ATP (a freemium product) and from SRX devices with Sky ATP installed—was just $1.8M. Judge Alsup apparently agreed and excluded the entire damages theory: “Finjan tried to sneak this theory in with its expert-damages report, but we caught it, and the Daubert order excluded that trick”.

Finjan then tried to present a “facts-only damages case” to the jury—an attempt, Judge Alsup underscored, that “utterly failed”. For example, a Finjan executive testified as to what the NPE would have asked from Juniper during negotiations, but Judge Alsup struck that “prejudicial testimony” as “patently irrelevant to the question of the hypothetical royalty that two reasonable parties might have agreed to” (as later summarized; emphasis in original). He then gave Finjan a “stern rebuke” and provided the jury with a limiting instruction. “More broadly”, continued Judge Alsup, “Finjan made no effort at trial to allocate the target revenue base between allegedly infringing product functions and noninfringing functions”, while its facts-only damages case “artificially attempt[ed] to inflate revenue to which it would be entitled” just as its expert had sought to do on the eve of trial. For those reasons, Judge Alsup ultimately struck Finjan’s entire damages case as “woefully inadequate”.

Between its insufficient damages case, and the fact that no injunction was available for the expired ‘494 patent, Judge Alsup lamented in his exceptionality order that the “whole song and dance came to nothing, even before the jury later rejected the merits of the infringement claim”. As a result, he concluded that “[t]he entire assertion of the ‘494 patent thus stood out as exceptional”.

Judge Alsup further faulted Finjan for its litigation conduct during the second shootout, during which Juniper sought and won summary judgment of noninfringement and invalidity of claim 9 of the ‘780 patent, the same patent that it had successfully targeted in the first round. Here, Judge Alsup found that Finjan should have dropped the patent from the case after Juniper’s initial victory, since claim 9 shared the claim limitation that formed the basis for the court’s ruling as to claim 1. Yet the NPE did not; indeed, Judge Alsup noted, Finjan not only kept that claim “in the running” for round two, it “even expanded the scope of accused products”—only to fail to oppose Juniper’s second shootout motion as to the majority of those products. “Just as both parties have a joint duty to frame dispositive issues with good judgment”, explained Judge Alsup, “each party has an individual duty to continually reevaluate the viability of its claims. Finjan shirked its end of both of those duties and again wasted everyone’s time and energy in instigating this motion aspect”. Between those errors and several others related to the second shootout, Judge Alsup found that “Finjan’s assertion of the ‘780 patent stands out as exceptional as well”.

That said, Judge Alsup also declined to find that Finjan’s conduct had been exceptional across the board. For instance, he held that the NPE was within its rights not to accept “claim constructions regarding the ‘154 patent from other tribunals”, countering that the plaintiff “had every right to distinguish and even argue against earlier nonbinding claim constructions by the Patent Trial and Appeal Board and unpublished Federal Circuit memoranda” (emphasis in original). Under the circumstances, Judge Alsup ruled that a fee award in this case should be “limited narrowly to time spent defending against the specific patents tainted by that misconduct”.

Having so ruled, Judge Alsup concluded by reiterating his exceptionality finding as to Finjan’s litigation of the ‘494 and ‘780 patents but declining to award fees just yet. Rather, he ordered Juniper to resubmit its billing records in order to limit them to fees incurred for time spent on those two patents. In a separate order issued that same day, Judge Alsup then proposed the appointment of a special master to oversee the remainder of the fee dispute.

Judge Alsup’s January rulings are the latest of several setbacks suffered by Finjan since the start of last year. In March, the NPE’s Southern District of California case against ESET (3:17-cv-00183) made its way to trial, only to see District Judge Cathy Ann Bencivengo declare a mistrial on the fifth day, with the agreement of counsel, in light of COVID-19. Also delayed was its Northern District of California trial against Cisco (5:17-cv-00072), which in mid-December District Judge Beth Labson Freeman pushed from January 11 to June 4. While that order does not specifically cite the pandemic as the reason, the court had already thrice continued the case as a result of COVID-19. After reportedly stating in April that she was “fairly confident” the trial could be held on its originally scheduled date in June 2020, Judge Freeman continued the trial the following month—moving it to October 19 to allow the court to clear its backlog of criminal cases. Judge Freeman then delayed the case again to November 2 after Cisco raised additional public health concerns, and postponed the case one more time on October 26 to the just-vacated date of January 11.

Also impacted by COVID-19 has been a lawsuit filed against Intel by another Fortress subsidiary, VLSI Technology LLC, in the Western District of Texas (1:19-cv-00977)—where presiding District Judge Alan D. Albright has taken more of a wait-and-see approach to jury trials during the pandemic. Late last year, he moved a trial scheduled in that case from Austin, where the courthouse remains closed, to Waco, in an attempt to proceed with a scheduled January trial. However, the Federal Circuit ruled on December 23 that Judge Albright moved the trial without proper authority and that doing so would require a complete convenience analysis to determine whether the entire case could be transferred to Waco. On December 31, Judge Albright granted plaintiff VLSI’s emergency motion for such a transfer, also announcing that he would push the trial back to mid-February to give Intel time to appeal.

As that appeal proceeds, another issue being litigated is the impact of Fortress’s acquisition of Finjan on the VLSI campaign. Late last year, Intel disclosed that it holds a license to Finjan’s portfolio under a 2012 license agreement that grants to it rights to patents held by Finjan and its “affiliates”. On January 11, Intel filed suit against Fortress in the Delaware Court of Chancery, reportedly seeking a judgment that that Finjan license now also covers all patents held by Fortress and its affiliates, including VLSI, because when Fortress acquired Finjan, they all became “affiliated” under the terms of the agreement.

See here for more on other recent developments in the VLSI campaign.

As the COVID-19 pandemic forces California into a second lockdown, courts in two of the state’s federal districts have pushed back scheduled patent trials. On December 14, District Judge James V. Selna of the Central District of California vacated a jury trial previously scheduled for April in litigation between TCL and Ericsson over a standard essential patent (SEP) licensing dispute. Two days later, District Judge Beth Labson Freeman postponed a Northern District of California trial from January to June in litigation filed by NPE Finjan Holdings, Inc. against Cisco following a series of prior continuances entered due to the pandemic. These delays come as other top patent venues contend with the impact of the novel coronavirus: while Chief District Judge Rodney Gilstrap of the Eastern District of Texas recently halted all jury trials before him after an outbreak in a nearby division, District Judge Alan D. Albright of the Western District of Texas has indicated that he may still continue to hold trials.

The Central District of California Delays a Notable SEP Trial

The nation’s most popular patent venues have varied widely in their approach to jury trials during the pandemic, as noted in RPX’s prior coverage, with some districts giving judges the discretion over whether to hold trials in light of local conditions. However, the Central District of California—which includes the state’s four hardest-hit counties, Los Angeles, San Bernardino, Riverside, and Orange—has never greenlit the resumption of jury trials, which have remained suspended with no room for discretion since the court imposed its first COVID-19 restrictions in March. The district has since established a three-stage reopening plan, under which jury trials are not to be resumed until the third stage, based on 14-day infection trends; such trials remain suspended until further notice. Additionally, on December 9—shortly after the state imposed a regional stay-at-home order based on dwindling ICU capacity—Chief District Judge Philip S. Gutierrez activated the district’s Continuity of Operations plan, closing all courthouses to the public except for certain criminal matters and leaving civil trials suspended.

On December 14, Judge Selna cited the pandemic in a two-page order that vacated the April 6 trial date scheduled in TCL v. Ericsson. That decision came at the joint request of the parties, which in a December 2 status joint report cited the “current trajectory of various metrics related to COVID-19, the fact that Orange County moved into the Purple Tier on November 17, 2020, and the Court’s prior comments about the logistical issues associated with conducting a civil trial and summoning a jury panel (e.g., that Orange County be well-established in the Orange Tier prior to summoning a jury, which in turn requires 49 days of lead time)”. (The cited tiers are part of California’s COVID-19 mitigation plan, with purple representing the highest COVID-19 risk level based on a county’s new infection rates.)

That newly delayed trial in the TCL v. Ericsson litigation will be the second time that the SEP issues at play come before the district court, following a notable trip back from the Federal Circuit. Judge Selna had previously issued a bench trial order establishing that certain licensing offers made by Ericsson to TCL had purportedly not been fair, reasonable, and non-discriminatory (FRAND), further setting the terms of a FRAND license—just the fourth US ruling in which a court has determined a FRAND rate for a SEP portfolio. Significantly, the court also denied Ericsson’s request for a jury trial on the claims decided. However, in December 2019, the Federal Circuit overturned that decision, ruling that the lower court had deprived Ericsson of its constitutional right to a jury trial by deciding a key license term from the bench.

In setting a new trial as a result of that opinion, Judge Selna indicated to the parties in April 2020 that under the Federal Circuit’s ruling, the “key error” was failing to “afford a jury trial on the release payment” (the license term previously decided from the bench) because that payment is best characterized as “patent damages”—i.e., damages for past patent infringement. Such a determination is both “intertwined” with the determination that Ericsson’s offers to TCL were not FRAND and “inextricably tied” to the determination of a forward royalty rate. As a result, Judge Selna held, the entire prior judgment must fall and a jury must be seated.

More recently, in August, the Federal Circuit further established that the question of whether a patent is essential to a standard should also be determined by a jury—upholding an infringement ruling for a subsidiary of IP Bridge, Inc. against TCL.

For more on the appeal ruling in TCL v. Ericsson, see “California FRAND Ruling Deprived Ericsson of Right to Jury Trial, Holds Federal Circuit” (December 2019).

Finjan’s Trial Against Cisco Gets Delayed Following Spring Setback in Another Case

Meanwhile, the Northern District of California’s penultimate coronavirus order, dated September 16, cleared the way for civil and criminal jury trials, to be conducted “in accordance with the logistical considerations necessitated by the Court’s safety protocols”, following prior suspensions of all such trials. However, as a result of state and local shelter-in-place orders, the court subsequently updated its website to state that “the court will suspend all in-person, in-court proceedings at all Northern District of California courthouses. This suspension will remain in effect through January 10, 2021, with a planned resumption of some limited proceedings, if possible, on January 11, 2021”.

The trial continuance that Judge Freeman entered in the Finjan v. Cisco litigation pushes back a trial previously set to begin on January 11 to June 4. While the order does not specifically cite COVID-19 as the reason, the court had already thrice delayed the case as a result of the pandemic. After reportedly stating in April that she was “fairly confident” the trial could be held on its originally scheduled date in June 2020, Judge Freeman continued the trial the following month—moving it to October 19 to allow the court to clear its backlog of criminal cases. Judge Freeman then delayed the case again to November 2 after Cisco raised additional public health concerns, and postponed the case one more time on October 26 to the just-vacated date of January 11. This Finjan lawsuit was the second to see a trial undercut by COVID-19: the NPE’s Southern District of California case against ESET (3:17-cv-00183) made its way to trial in March, but District Judge Cathy Ann Bencivengo declared a mistrial on the fifth day, with the agreement of counsel, in light of the pandemic.

Texas Judges Have Begun to Diverge on Jury Trials

Worsening COVID-19 infection rates have also led formerly bullish courts to walk back earlier efforts to proceed with patent trials. Among the most notable examples is Judge Rodney Gilstrap of the Eastern District of Texas, who resumed jury trials this past August, holding the nation’s first patent jury trial since the start of the pandemic—resulting in one notable verdict—after coronavirus infection rates in and around his district began to drop. However, as the pandemic’s second wave began to worsen, a trial in a breach of contract case in a nearby division under District Judge Amos L. Mazzant III ended in a mistrial after a COVID-19 outbreak struck the participants—with 15 people, including multiple jurors, members of the plaintiff’s and the defendant’s legal team, and court staff, getting infected. In light of that outbreak and rising case numbers nearby, Judge Gilstrap took the significant step of halting all jury trials before him. Judge Gilstrap stated that he was doing so “reluctantly” but asserted that he had no alternative—arguing that the face-to-face aspect of in-person trials is essential for due process. Judge Mazzant, for his part, has since cancelled a retrial previously scheduled for January 25 in the aforementioned breach of contract case, providing no reason for doing so.

In contrast to Judge Gilstrap, District Judge Alan D. Albright of the Western District of Texas appears to be moving forward with his next trial—at least, for now. In late November, in litigation filed by Fortress Investment Group LLC subsidiary VLSI Technology LLC (1:19-cv-00977), defendant Intel asked to push back a trial scheduled for January 11 to March, observing that “[c]ase and death numbers in McLennan County and in Texas now mirror or are approaching those from July 2020, when the Waco Division was closed to jury trials” and further warning that “those numbers are only expected to continue to rise after the holidays”. A hearing was held on Intel’s requested continuance on December 15; while the minutes for that hearing are unavailable, Judge Albright’s calendar still lists the trial as scheduled on January 11—suggesting that Judge Albright did not grant the motion (or at least, has not yet decided it). That hearing comes shortly after Judge Albright, speaking at a recent IP conference, reportedly expressed confidence about his court’s ability to safely conduct IP trials, following what he described as a positive experience conducting a patent trial this past October.

For details on that October trial, see “Roku Wins Noninfringement Verdict in Judge Albright’s First Patent Trial” (October 2020).

Publicly traded NPE Finjan Holdings, Inc. has announced a product partnership with German security software provider Avira, the same day that the two companies entered into an apparently separate $4.9M patent license agreement. Under the terms of the partnership, formed on April 21 and revealed in an April 26 press release, Finjan subsidiary Finjan Mobile, Inc. will integrate Avira’s Virtual Private Network (VPN) platform into its own VitalSecurity mobile browser suite. This deal is the first of its kind for Finjan, which continues to wage a decade-long litigation campaign that has seen multiple trials and settlements, and comes as other publicly traded NPEs have signaled that they intend to diversify their activities and move beyond patent assertion alone.

In a Form 8-K filed on April 26, Finjan disclosed that it had agreed, as part of a cross-license agreement, to pay Avira $3.9M in licensing fees, paid in twelve quarterly installments of $325K, for access to its VPN technology along with technical support. Although the assets covered by that license agreement have not been disclosed, the agreement is apparently distinct from the other confidential license agreement executed on April 21, which was disclosed in a separate 8-K filed on April 25. Under the latter transaction, Avira will receive a license to “the Finjan patent portfolio” in exchange for a $4.9M license fee, with $2.3M to be paid within ten days of April 21, another $1.3M on or before January 31, 2018, and the final $1.3M on or before January 31, 2019.

Finjan’s efforts to bolster its product offerings follow a series of pivots away from patent assertion by other publicly traded NPEs, some of which have variously expanded their active product operations, reduced their reliance on patent assertion, and even exited the patent market altogether. In February, Tessera Holding Corporation changed its name to Xperi Corporation as part of a broader realignment, with the company now increasingly focused on research and development as well as product licensing. That rebranding and strategic shift began last year and led to the company’s $955M acquisition of DTS, a company specializing in digital surround sound and audio technology, in December 2016. (For more information on Xperi’s new business strategy and the impact of the DTS acquisition on its 2016 financial results, see “InterDigital’s Q4 2016 Revenue Surges as Rebranded Tessera Reports Loss After DTS Acquisition” (February 2017).)

Additionally, on April 17, Wi-LAN Inc. (WiLAN) announced a dramatic restructuring of its business model under which the company will de-emphasize patent licensing. By June of this year, WiLAN intends to change its name to Quarterhill, Inc. and will operate its patent licensing business as a subsidiary, while pursuing a new growth strategy focused on the acquisition of companies in the Industrial Internet of Things (IIoT) sector. Meanwhile, Acacia Research Corporation has announced a strategic refocus on “viable IP” after having filed markedly less litigation in 2016 than in years past. The first step in that refocus is Acacia’s $20M investment in Veritone, a cloud-based artificial intelligence company, with a further $30M in funding contingent on Veritone’s performance. Finally, certain NPEs have exited the patent assertion business altogether. In June 2016, Unwired Planet sold its patent portfolio to Leslie Ware’s Optis UP and has since changed its name to Great Elm Capital Corp., with the company now focused on business development. (For more details on these latest developments for WiLAN, Acacia, and other publicly traded NPEs, see “Amid Announcement of a New Growth Strategy, Questions Remain About WiLAN’s Threat to Operating Companies” (April 2017).)

While Finjan’s latest actions also indicate a possible shift away from patent assertion, the litigation campaign waged by subsidiary Finjan, Inc. remains active. On March 30, the NPE entered into a confidential settlement agreement with campaign defendant Sophos (3:14-cv-01197), roughly two weeks after the company was denied a new trial in the wake of a September 2016 infringement verdict. Meanwhile, the NPE filed a pair of new cases in January against Cisco (3:17-cv-00072) along with Avast and subsidiary AVG (4:17-cv-00283). On March 27, the Avast/AVG case was dismissed after the parties reached a reported, confidential agreement, while Cisco filed a motion to dismiss the case against it on April 26, alleging pleading deficiencies.

In addition, cases remain active against Symantec (3:14-cv-02998) and subsidiary Blue Coat Systems (5:15-cv-03295), as well as suits against FireEye (4:13-cv-03133) and Palo Alto Networks (4:14-cv-04908). The Palo Alto Networks action has been stayed since May 2016 pending the outcome of multiple inter partes reviews (IPRs) against the patents-in-suit. Between mid-March and early April, the Patent Trial and Appeal Board issued final decisions in eleven of those IPRs, cancelling claims from a single Finjan patent (8,677,494) in an IPR filed by Symantec (IPR2015-01892, joined with another filed by Blue Coat, IPR2016-00890) and another filed by Palo Alto Networks (IPR2016-00159, joined with another Blue Coat IPR, IPR2016-01174) but declining to cancel any claims from three of the other challenged patents (7,647,633; 8,141,154; 8,225,408). Additionally, the FireEye case was stayed in June 2014 pending the re-examination of two of the patents-in-suit (the 7,058,822 and ‘633 patents). Meanwhile, a claim construction order was issued in early February in the Symantec case, while a Markman hearing scheduled for February 10 in the Blue Coat action was cancelled after the parties resolved their outstanding disputes regarding claim construction.

For more information about recent developments in the Finjan campaign, as well as a history of earlier litigation, see “California Judge Declines to Grant Retrial in Finjan Suit Against Sophos” (March 2017).