​Finjan Forms Product Partnership with Security Company Avira Following $4.9M License Agreement

April 28, 2017

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).

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