`
`IN THE UNITED STATES DISTRICT COURT
`
`FOR THE NORTHERN DISTRICT OF CALIFORNIA
`
`FINJAN, INC.,
`Plaintiff,
`
` v.
` JUNIPER NETWORK, INC.,
`Defendant.
` /
`
`No. C 17-05659 WHA
`
`ORDER GRANTING IN PART AND
`DENYING IN PART MOTION TO
`DISMISS COUNTERCLAIMS AND
`STRIKE AFFIRMATIVE DEFENSES
`
`INTRODUCTION
`In this patent infringement case, plaintiff moves to dismiss several of defendant’s
`counterclaims and strike several affirmative defenses. For the reasons stated below, the motion
`to dismiss and strike is GRANTED IN PART and DENIED IN PART.
`STATEMENT
`Plaintiff Finjan, Inc., accuses defendant Juniper Networks, Inc., of infringing patents
`pertaining to malware-detection technology. Finjan’s allegations have been summarized in a
`prior order dated February 14, which dismissed Finjan’s claims of willfulness and induced
`infringement but allowed Finjan to move for leave to amend by February 22 (Dkt. No. 30 at 8).
`On February 28, Juniper filed an answer and counterclaims (Dkt. No. 42). On March 21, Finjan
`filed its answer to Juniper’s counterclaims (Dkt. No. 45). An order dated May 11 granted in
`part Finjan’s motion for leave to amend its complaint (Dkt. No. 85), and Finjan filed its
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`For the Northern District of California
`
`United States District Court
`
`
`
`Case 3:17-cv-05659-WHA Document 190 Filed 08/31/18 Page 2 of 12
`
`amended complaint on May 18 (Dkt. No. 88). On June 1, Juniper filed its answer to the
`amended complaint and reasserted the same counterclaims (Dkt. No. 92).
`Finjan now moves to dismiss various counterclaims and strike related affirmative
`defenses, which are based on prosecution laches, inequitable conduct, and unclean hands.
`Finjan also moves to strike Juniper’s affirmative defense for ensnarement (Dkt. No. 110 at 1).
`This order follows full briefing and oral argument.
`ANALYSIS
`
`LEGAL STANDARD.
`1.
`To survive a motion to dismiss, a complaint must plead “enough facts to state a claim to
`relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A
`claim has facial plausibility when its factual allegations, rather than mere conclusory
`statements, create the reasonable inference that defendant is liable for the misconduct alleged.
`Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Where a court dismisses for failure to state a claim
`pursuant to FRCP 12(b)(6), it should normally grant leave to amend unless it determines that
`the pleading could not possibly be cured by the allegation of other facts. Cook, Perkiss & Liehe
`v. N. Cal. Collection Serv., 911 F.2d 242, 247 (9th Cir. 1990).
`“If, on a motion under Rule 12(b)(6) or 12(c), matters outside the pleadings are
`presented to and not excluded by the court, the motion must be treated as one for summary
`judgment under Rule 56.” FRCP 12(d). A court, however, may “consider certain
`materials—documents attached to the complaint, documents incorporated by reference in the
`complaint, or matters of judicial notice—without converting the motion to dismiss into a motion
`for summary judgment.” United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003).
`A court “may strike from a pleading an insufficient defense or any redundant,
`immaterial, impertinent, or scandalous matter.” FRCP 12(f). Our court of appeals has not yet
`addressed whether the Iqbal and Twombly standard applies to affirmative defenses. “Within
`this district, however, there is widespread agreement that they do.” PageMelding, Inc. v. ESPN,
`Inc., No. C 11–06263 WHA, 2012 WL 3877686, at *1 (N.D. Cal. Sept. 6, 2012) (collecting
`cases). Therefore, after applying the same Iqbal and Twombly standard to affirmative defenses,
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`2
`
`For the Northern District of California
`
`United States District Court
`
`
`
`Case 3:17-cv-05659-WHA Document 190 Filed 08/31/18 Page 3 of 12
`
`if a defendant pleaded “affirmative defenses [which] include only conclusory allegations,
`without providing any information about the grounds upon which the defenses rest, it has
`insufficiently [pleaded] these defenses.” Powertech Tech., Inc. v. Tessara, Inc., No. C 10–0945
`CW, 2012 WL 1746848, at *5 (N.D. Cal. May 16, 2012) (Judge Claudia Wilken).
`2.
`TIMELINESS OF FINJAN’S MOTION TO DISMISS.
`As a threshold matter, Juniper argues that the instant motion to dismiss is untimely
`because it is directed to counterclaims to which Finjan has already answered in its initial answer
`to Juniper’s counterclaims (see Dkt. No. 45). Finjan does not dispute that Juniper’s filing of a
`second answer (along with the same counterclaims) to Finjan’s amended complaint fails to
`revive Finjan’s ability to move to dismiss. Because a Rule 12(b)(6) motion must be made
`before the responsive pleading, Finjan’s instant motion to dismiss is untimely.
`Our court of appeals, however, “allows an untimely motion to dismiss to be treated as a
`motion for judgment on the pleadings.” Washoe-Mill Apartments v. U.S. Bank Nat. Ass’n,
`639 F. App’x 485, 487 (9th Cir. 2016) (citing Elvig v. Calvin Presbyterian Church, 375 F.3d
`951, 954 (9th Cir.2004)). “The principal difference between motions filed pursuant to
`Rule 12(b) and Rule 12(c) is the time of filing. Because the motions are functionally identical,
`the same standard of review applicable to a Rule 12(b) motion applies to its Rule 12(c) analog.”
`Dworkin v. Hustler Magazine Inc., 867 F.2d 1188, 1192 (9th Cir. 1989). This order accordingly
`treats Finjan’s untimely motion as a motion for judgment on the pleadings.
`ENSNAREMENT (TWELFTH AFFIRMATIVE DEFENSE).
`3.
`Finjan moves to strike Juniper’s affirmative defense alleging that Finjan’s claims of
`infringement under the doctrine of equivalents are barred due to ensnarement. Finjan argues
`that Juniper’s pleading lacks fair notice.
`Here, Juniper’s one-sentence allegation amounts to the mere conclusion that
`ensnarement applies and thus Finjan is barred from using the doctrine of equivalents
`“that encompasses, or ‘ensnares,’ the prior art” (Dkt. No. 92 ¶ 136). No facts are alleged.
`Juniper’s argument that its “detailed invalidity contentions” — which are not incorporated by
`reference — served pursuant to Patent Local Rules, is irrelevant for the purposes of dismissing
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`3
`
`For the Northern District of California
`
`United States District Court
`
`
`
`Case 3:17-cv-05659-WHA Document 190 Filed 08/31/18 Page 4 of 12
`
`a claim based on the face of the complaint. Moreover, its citation to ASUSTeK Comput. Inc. v.
`AFTG-TG LLC, No. C 11–00192 EJD, 2011 WL 6845791, at *13 (N.D. Cal. Dec. 29, 2011), for
`the proposition that courts have allowed “allegations that merely list the statutory provisions of
`invalidity to survive motion to dismiss given [the] procedure of providing invalidity contentions
`under Local Patent Rules” is unavailing (Dkt. No. 134 at 11). Even if this were the law, the
`cited authority does not suggest that it applies to an ensnarement defense. Finjan’s motion to
`strike Juniper’s twelfth affirmative defense is therefore GRANTED.
`4.
`PROSECUTION LACHES (THIRD COUNTERCLAIM
`AND ELEVENTH AFFIRMATIVE DEFENSE).
`Finjan moves to dismiss Juniper’s counterclaim for declaratory judgment of
`unenforceability of the United States Patent No. 7,613,926 (“the ’926 patent”), United States
`Patent No. 7,647,633 (“the ’633 patent”), United States Patent No. 8,141,154 (“the ’154
`patent”), and United States Patent No. 8,677,494 (“the ’494 patent”) due to prosecution laches.
`“The doctrine [of prosecution laches] ‘may render a patent unenforceable when it has
`issued only after an unreasonable and unexplained delay in prosecution’ that constitutes an
`egregious misuse of the statutory patent system under the totality of the circumstances.”
`Cancer Research Tech. Ltd. v. Barr Labs., Inc., 625 F.3d 724, 728 (Fed. Cir. 2010) (quoting
`Symbol Techs., Inc. v. Lemelson Med., Educ. & Research Found., 422 F.3d 1378, 1385–86
`(Fed. Cir. 2005)). It also requires a showing of prejudice, which in turn requires “evidence of
`intervening rights, i.e., that either the accused infringer or others invested in, worked on, or used
`the claimed technology during the period of delay.” Id. at 729.
`Here, Juniper has failed to plead adequate facts to show unreasonable and unexplained
`delay in prosecution. Juniper’s third counterclaim amounts to mere recitation of the number of
`years that lapsed between the time Finjan filed its application for the parent patent and the
`applications for the four patents at issue here, rounded out with the conclusory statement that
`“Finjan unreasonably and unduly delayed in prosecuting each of” the four patents and that
`“[d]uring the delay, Juniper was prejudiced because it spent considerable resources marketing,
`selling, and importing updated versions of the accused products” (see Dkt. No. 92 ¶¶ 170–78).
`“[A]llegations of a bare lapse in time between patent applications, without other factual
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`4
`
`For the Northern District of California
`
`United States District Court
`
`
`
`Case 3:17-cv-05659-WHA Document 190 Filed 08/31/18 Page 5 of 12
`
`allegations of unreasonable or unexplained delay, are insufficient to plausibly state a claim of
`prosecution laches.” Finjan, Inc. v. ESET, LLC, No. C 17–00183 CAB (BGS), 2017 WL
`3149642, at *3 (S.D. Cal. July 24, 2017) (Judge Cathy Ann Bencivengo).
`At oral argument, Juniper explained that the timeline offered in this counterclaim
`and affirmative defense demonstrates a systematic strategy of delayed prosecution. While this
`after-the-fact explanation might (or might not) be sufficient to survive Twombly, the explanation
`itself was not actually alleged in the pleading itself. Finjan’s motion to dismiss Juniper’s third
`counterclaim and strike Juniper’s eleventh affirmative defense is therefore GRANTED.
`5.
`INEQUITABLE CONDUCT (FOURTH AND FIFTH COUNTERCLAIMS
`AND FOURTEENTH AFFIRMATIVE DEFENSE).
`Juniper raises allegations of inequitable conduct regarding the ’494 and ’154 patents
`both as an affirmative defense and as separate counterclaims (Dkt. No. 92 ¶¶ 138, 179–213).
`Finjan moves to dismiss and strike these counterclaims and affirmative defense (which
`incorporates the allegations made within both counterclaims), arguing that Juniper failed to
`adequately plead material misrepresentation and specific intent to deceive the PTO under
`FRCP 9(b). To the extent set forth below, this order agrees.
`To state a claim for inequitable conduct, a party must allege that “(1) an individual
`associated with the filing and prosecution of a patent application made an affirmative
`misrepresentation of a material fact, failed to disclose material information, or submitted false
`material information; and (2) the individual did so with a specific intent to deceive the PTO.”
`Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312, 1327 n.3 (Fed. Cir. 2009).
`“Inequitable conduct . . . must be pled with particularity under Rule 9(b).” Id. at 1326
`(quotations and alterations omitted). This requires identification of “the specific who, what,
`when, where, and how of the material misrepresentation or omission committed before the
`PTO.” Id. at 1328. “Although knowledge and intent may be alleged more generally, a party
`must still allege sufficient facts to justify an inference that a specific individual had knowledge
`of the material information withheld or the falsity of the material misrepresentation and
`withheld or misrepresented that information with the intent to deceive.” Oracle Corp. v.
`DrugLogic, Inc., 807 F. Supp. 2d 885, 896–97 (N.D. Cal. 2011) (citing Exergen, 575 F.3d at
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`5
`
`For the Northern District of California
`
`United States District Court
`
`
`
`Case 3:17-cv-05659-WHA Document 190 Filed 08/31/18 Page 6 of 12
`
`1328–29) (Judge Joseph Spero). “A reasonable inference is one that is plausible and that flows
`logically from the facts alleged, including any objective indications of candor and good faith.”
`Exergen, 575 F.3d at 1329 n.5. “Pleading on ‘information and belief’ is permitted under
`Rule 9(b) when essential information lies uniquely within another party’s control, but only if
`the pleading sets forth the specific facts upon which the belief is reasonably based.” Id. at 1330.
`With these standards in mind, we now turn to the allegations at issue.
`A.
`Fourth Counterclaim (’494 Patent).
`Juniper’s fourth counterclaim alleges that Finjan made false statements to the PTO
`regarding how the ’494 patent was conceived and invented. Specifically, the original
`application for the ’494 patent listed four co-inventors and claimed a priority date of November
`6, 1997, based on an earlier patent (Dkt. No. 92 ¶¶ 184–85).1 The PTO then issued a non-final
`rejection of all claims as anticipated by the Ji patent, which was filed on September 10, 1997,
`and thus served as prior art (id. ¶¶ 184–85). Finjan’s patent attorney Dawn-Marie Bey then
`filed an “Amendment And Response To Office Action Under 37 C.F.R. § 1.114” along with a
`declaration by Shlomo Touboul in which he testified that he had actually been the “sole”
`inventor of claims 1, 3–6, 9, 10, 12–15, and 18 (in the pending patent application) and that those
`claims had been conceived solely by him no later than November 18, 1996.
`The Fourth Counterclaim alleges that Touboul “falsely represented that he was the sole
`inventor of certain claims in order to avoid the constraint that the other inventors listed in the
`’494 Patent application had not even started working for Finjan until years after the claimed
`date of conception” (id. ¶ 194). The PTO then issued a notice of allowance, finding that the Ji
`reference was no longer prior art based on the declaration (id. ¶ 189–90). Attorney Bey’s claim
`of “unintentional” delay and Touboul’s declaration backdating his invention to swear behind the
`Ji patent, according to Juniper, amounted to intentional misrepresentation (id. ¶ 189). And,
`because the patent would have been anticipated by the Ji reference (but for Touboul’s
`declaration), the misrepresentation was material (id. ¶ 193).
`
`1 The four named co-inventors are Yigal Mordechai Edery, Nimrod Itzhak Vered, David R. Kroll, and
`Shlomo Touboul (Dkt. No. 92 ¶ 183).
`
`6
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`For the Northern District of California
`
`United States District Court
`
`
`
`Case 3:17-cv-05659-WHA Document 190 Filed 08/31/18 Page 7 of 12
`
`As the main factual support for its allegation of Touboul’s false representation, Juniper
`
`points to Finjan’s interrogatory responses in Finjan, Inc. v. Symantec Corp., No. C 14–02997
`HSG (N.D. Cal.), where Finjan stated that “Yigal Edery, Nimrod Vered, David Kroll, and
`Shlomo Touboul were involved with, and may have knowledge related to the conception and
`reduction to practice of the ‘494 [sic] Patent.” The asserted claims at the time of Finjan’s
`interrogatory response were claims 10, 14, and 15 (id. ¶ 191). This, Juniper asserts, constituted
`an admission “that all four of the originally named inventors had, in fact, contributed to the
`conception of those claims” (ibid.).
`In response, Finjan argues that Juniper presents mere snippets from Finjan’s discovery
`responses in the Symantec litigation and thus Juniper fails to adequately plead
`misrepresentation.2 Finjan explains that in responding to Symantec’s interrogatory related to
`the conception and reduction to practice of the ’494 patent’s claims, it simply (and broadly)
`indicated that the three other co-inventors (who began contributing to other claims of the ’494
`patent in May 2000) would have “knowledge related to the conception and reduction to practice
`of the ‘494 [sic] Patent” (Dkt. No. 110 at 4–5).
`Juniper adequately pled the “who, what, when, where, and why” of Touboul’s alleged
`misrepresentation. A review of the judicially noticeable interrogatory responses, however,
`reveals that Finjan’s responses do not adequately support the alleged “how.” When the
`interrogatory response is read in light of the full record as currently submitted, it is ambiguous
`whether Finjan admitted that all four of the originally named inventors had contributed to the
`conception of claims 10, 14, and 15. A plausible reading of the record is that Finjan admitted
`
`2 Finjan requests judicial notice of sixteen exhibits, which include various United States patents,
`portions of the ’494 patent file history, Finjan’s disclosures and responses to Symantec Corp.’s interrogatories in
`Finjan, Inc. v. Symantec Corp., Case No. 14-cv-02998-HSG (N.D. Cal.), and documents from IPR2016–00151
`and IPR2016–00159 (Dkt. No. 111). A court may judicially notice a fact that is not subject to reasonable
`dispute because it “can be accurately and readily determined from sources whose accuracy cannot reasonably be
`questioned.” FRE 201(b). Juniper does not oppose the documents’ authenticity. It does, however, argue that
`judicially noticed documents may not be used to take notice of disputed facts contained therein, which is
`prohibited under FRE 210 (Dkt. No. 134 at 5). Courts “may not, on the basis of evidence outside of the
`Complaint, take judicial notice of facts favorable to [d]efendants that could reasonably be disputed.” United
`States v. Corinthian Colleges, 655 F.3d 984, 999 (9th Cir. 2011). Here, however, this order takes judicial notice
`of facts that could not be reasonably disputed based on the record as currently submitted. Accordingly, Finjan’s
`request for judicial notice is GRANTED.
`
`7
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`For the Northern District of California
`
`United States District Court
`
`
`
`Case 3:17-cv-05659-WHA Document 190 Filed 08/31/18 Page 8 of 12
`
`that Touboul alone invented claims 10, 14, and 15 of the ’494 patent, whereas the other
`co-inventors (who arrived at Finjan after November 1996) contributed to other claims in the
`’494 patent.
`This order therefore holds that Juniper has failed to adequately allege misrepresentation
`under FRCP 9(b). This order does not reach Finjan’s further arguments that Juniper has failed
`to adequately plead material misrepresentation and intent to deceive. Finjan’s motion to
`dismiss Juniper’s fourth counterclaim and strike the fourteenth affirmative defense is therefore
`GRANTED.
`
`Fifth Counterclaim (’154 Patent).
`B.
`Juniper’s fifth counterclaim alleges that Attorney Bey delayed in claiming priority in the
`’154 patent “in order to defer the patent’s expiration date” and “belatedly attempted to correct
`priority” once the ’154 patent “was asserted in multiple litigations and subject to substantial
`invalidity challenges,” including the Ross reference (Dkt. No. 92 ¶ 211). Juniper further alleges
`that Attorney Bey falsely asserted that the delay in claim of priority was “unintentional” in
`order to backdate the ’154 patent behind Ross, which Palo Alto Networks, Inc., a defendant in
`another lawsuit, used as a primary reference in a petition for IPR (id. ¶¶ 207, 211). The Ross
`patent was filed approximately one month before the alleged parent of the ’154 patent to which
`Attorney Bey “belatedly claimed priority.” Finjan’s counsel James Hannah then asserted in the
`IPR proceeding that conception occurred about half a month before the Ross reference was filed
`(id. ¶ 207–08).
`This purported scheme by Finjan to “maximize the value” of the ’154 patent “during
`pre-suit licensing negotiations” and correct the claim of priority “once it became clear” that the
`’154 patent would be subject to serious invalidity attacks in litigation” adequately pleads the
`“who, what, when, where, why, and how” of Finjan’s alleged misrepresentation (see id. ¶ 206).
`For factual support, Juniper points to Bey’s petition to the PTO “to accept a significantly
`delayed claim of priority,” which “conspicuously coincided with a new campaign by Finjan to
`assert the ‘154 [sic] Patent,” including alleged attempts to antedate the Ross reference (see id.
`¶ 204, 211). As alleged, these facts are sufficient to support a reasonable inference that
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`8
`
`For the Northern District of California
`
`United States District Court
`
`
`
`Case 3:17-cv-05659-WHA Document 190 Filed 08/31/18 Page 9 of 12
`
`Attorney Bey falsely represented that the delay in claiming priority was “unintentional” under
`the heightened pleading standard.
`As Finjan points out, however, an IPR did issue on the ’154 patent based on the Ross
`reference (and the ’154 patent survived) (id. ¶ 209). Ross was not successfully antedated and
`thus not circumvented as prior art (id. ¶ 209). In other words, Attorney Bey’s alleged
`misrepresentations regarding the ’154 patent’s priority date had no bearing on Ross’s status as
`prior art and thus Juniper has not sufficiently pled but-for materiality, irrespective of whether
`Ross was allegedly invalidating prior art.
`This order therefore holds that Juniper failed to allege the but-for materiality of Bey’s
`alleged misrepresentation. Therasense, Inc. v. Becton, Dickinson and Co., 649 F.3d 1276, 1291
`(Fed. Cir. 2011) (requiring “but-for” materiality to establish inequitable conduct). It does not
`reach Finjan’s further argument that Juniper failed to adequately plead intent to deceive.
`Accordingly, Finjan’s motion to dismiss Juniper’s fifth counterclaim and strike the fourteenth
`affirmative defense is GRANTED.
`6.
`UNCLEAN HANDS (SIXTH COUNTERCLAIM
`AND TENTH AFFIRMATIVE DEFENSE).
`Finjan moves to dismiss and strike Juniper’s allegations of unclean hands with respect to
`the patents in Juniper’s sixth counterclaim and tenth affirmative defense. Specifically, Juniper
`alleges that the ’926, ’633, ’154, and ’494 patents are unenforceable due to unclean hands
`(Dkt. No. 92 ¶¶ 216).
`“The defense of unclean hands is essentially a cousin to inequitable conduct that lowers
`the materiality threshold on a showing of ‘egregious misconduct’ like perjury or the suppression
`of evidence.” Nomadix, Inc. v. Hosp. Core Servs. LLC, No. C 14–08256 DDP (VBKX), 2015
`WL 3948804, at *12 (C.D. Cal. June 29, 2015) (Judge Dean D. Pregerson).
`“[A] determination of unclean hands may be reached when ‘misconduct’ of a party
`seeking relief ‘has immediate and necessary relation to the equity that he seeks in respect of the
`matter in litigation,’ i.e., ‘for such violations of conscience as in some measure affect the
`equitable relations between the parties in respect of something brought before the court.’”
`Gilead Scis., Inc. v. Merck & Co., 888 F.3d 1231, 1239 (Fed. Cir. 2018) (quoting Keystone
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`9
`
`For the Northern District of California
`
`United States District Court
`
`
`
`Case 3:17-cv-05659-WHA Document 190 Filed 08/31/18 Page 10 of 12
`
`Driller Co. v. General Excavator Co., 290 U.S. 240, 245 (1933)). The unclean hands doctrine
`“necessarily gives wide range to the equity court’s use of discretion in refusing to aid the
`unclean litigant.” Precision Instrument Manufacturing Co. v. Automotive Maintenance
`Machinery Co., 324 U.S. 806, 815 (1945).
`Here, Juniper’s tenth affirmative defense and sixth counterclaim based on unclean hands
`allegations are based on similar conduct underlying its inequitable conduct allegations (see Dkt.
`No. 92 ¶¶ 217–40). Juniper, however, further fleshes out Finjan’s alleged scheme of “wait[ing]
`to see if a patent would be granted or validated with a later priority date in order to benefit from
`a later expiration date,” and, only when clearly challenged by potentially invalidating prior art,
`“seeking” to “ ‘correct’ its ‘unintentionally’ delayed priority claim in order to try to moot the
`asserted prior art” (id. ¶ 217). The allegations illustrate Finjan’s “unusually abundant history of
`petitioning for allegedly ‘unintentionally’ delayed claims of priority.” The factual allegations,
`Juniper asserts, when accepted as true, sufficiently plead how Finjan made misrepresentations
`of material facts and violated its duty of candor before the PTO. This order agrees.
`For example, in addition to the ’494 and ’154 patents as discussed above, Juniper points
`to Finjan’s conduct with respect to the ’633 and ’926 patents. With respect to the ’633 patent,
`Finjan originally asserted an earliest claim to priority based on a non-provisional application to
`United States Patent No. 6,804,780 (“the ’780 patent”) filed on March 30, 2000. In January
`2010, the PTO issued the ’633 patent with the claimed chain of priority still extending no earlier
`than the ’780 patent. In October 2013, however, in an ex parte reexamination against the ’633
`patent, the PTO rejected certain claims as obvious over a combination of Ji and the Liu patent,
`which had been filed on May 22, 1998. In February 2014, Attorney Bey again relied on the
`same “unintentional delay” narrative to file a “Petition to Accept Unintentionally Delayed
`Priority Claim Under 37 C.F.R. § 1.78” in an attempt to invoke priority dates of two other
`Finjan patents potentially antedating the relevant references. The PTO accepted Finjan’s
`renewed petition. The PTO, however, issued a final rejection, finding that the claims were not
`adequately supported by the disclosure of the patents on which Finjan based its new claim of
`priority (id. ¶¶ 219–30).
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`10
`
`For the Northern District of California
`
`United States District Court
`
`
`
`Case 3:17-cv-05659-WHA Document 190 Filed 08/31/18 Page 11 of 12
`
`The same tactic was employed regarding the United States Patent No. 7,058,822 (“the
`’822 patent”), Juniper alleges, on which the ’494 and ’926 patents asserted in the instant action
`claim priority. In May 2001, Finjan filed the patent application, which claimed priority based
`on a provisional application filed on May 17, 2000, and as a continuation-in-part to two prior
`applications filed on March 30, 2000, and April 18, 2000. In June 2006, the ’822 patent issued
`based on that claim of priority. In December 2013, the PTO instituted an ex parte
`reexamination and rejected certain claims of the ’822 patent over the Liu and Golan patents,
`filed May 22, 1998, and March 27, 1997, respectively. In March 2014 — eight years after the
`patent issued and almost thirteen years after the application was filed — Attorney Bey filed
`another “Petition to Accept Unintentionally Delayed Priority Claim Under 37 C.F.R. § 1.78”
`to include claimed priority based on patents potentially antedating prior art. Again, the PTO
`indulged the petition but ultimately issued a final rejection, finding that the patents on which
`Attorney Bey attempted to based priority did not sufficiently describe the ’822 patent’s claims
`(id. ¶¶ 231–36).
`That each step individually was permitted by the PTO’s procedures, as Finjan argues in
`defense of its conduct, does not address the bigger question: How many times does it take to
`“unintentionally” delay claim to priority before one can reasonably infer an intentional pattern?
`This order finds the overarching pattern as alleged by Juniper, when accepted as true,
`sufficiently pleads “egregious misconduct.” Such a tactic, as alleged, goes beyond mere “hands
`[that] are not as ‘clean as snow,’” Jarrow Formulas, Inc. v. Nutrition Now, Inc., 304 F.3d 829,
`842 (9th Cir. 2002), which would not by itself meet the unclean hands standard.
`The totality of Juniper’s allegations presents a troubling scheme. Looking at the forest
`instead of the trees, we see a pattern and practice of bringing to the attention to the PTO critical
`information only after the PTO examiner or industry itself has exposed the original priority date
`as ineffective to support a valid invention. In light of this practice, it then becomes all the more
`suspicious that Attorney Bey, time and again, would — only after potentially invalidating prior
`art is interposed — give the same story of “unintentional delay” in petitioning for a priority date
`conveniently predating prior art. Then Finjan tries to stretch the earlier disclosure to read on an
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`11
`
`For the Northern District of California
`
`United States District Court
`
`
`
`Case 3:17-cv-05659-WHA Document 190 Filed 08/31/18 Page 12 of 12
`
`accused product, using abstract concepts as needed to connect the dots between the earlier
`disclosure and the accused product. The alleged delay tactics, if accepted as true, would be
`an abuse of the prosecution system, which this order finds would amount to “egregious
`misconduct.” Accordingly, Finjan’s motion to dismiss Juniper’s sixth counterclaim and motion
`to strike Juniper’s tenth affirmative defense are DENIED.
`CONCLUSION
`For the foregoing reasons, Finjan’s motion to dismiss (converted to judgment on the
`pleadings) and to strike are GRANTED IN PART and DENIED IN PART.
`Finjan may seek leave to amend and will have 21 CALENDAR DAYS from the date of
`this order to file a motion, noticed on the normal 35-day track, for leave to file an amended
`responsive pleading to the extent disputed in this instant motion. The motion must include a
`proposed amended responsive pleading (and a redlined copy) and must explain why the new
`pleading overcomes all deficiencies, including those this order need not reach. Meanwhile,
`discovery may proceed on the affirmative defenses and counterclaims still in play.
`
`IT IS SO ORDERED.
`
`Dated: August 31, 2018.
`
`
`WILLIAM ALSUP
`UNITED STATES DISTRICT JUDGE
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`For the Northern District of California
`
`United States District Court
`
`12
`
`