Case 3:17-cv-05659-WHA Document 303 Filed 12/07/18 Page 1 of 7
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`PAUL ANDRE (State Bar No. 196585)
`pandre@kramerlevin.com
`LISA KOBIALKA (State Bar No. 191404)
`lkobialka@kramerlevin.com
`JAMES HANNAH (State Bar No. 237978)
`jhannah@kramerlevin.com
`KRISTOPHER KASTENS (State Bar No. 254797)
`kkastens@kramerlevin.com
`KRAMER LEVIN NAFTALIS & FRANKEL LLP
`990 Marsh Road
`Menlo Park, CA 94025
`Telephone: (650) 752-1700
`Facsimile: (650) 752-1800
`
`Attorneys for Plaintiff
`FINJAN, INC.
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`IN THE UNITED STATES DISTRICT COURT
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`FOR THE NORTHERN DISTRICT OF CALIFORNIA
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`FINJAN, INC., a Delaware Corporation,
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`Plaintiff,
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`v.
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`SAN FRANCISCO DIVISION
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`Case No.: 3:17-cv-05659-WHA
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`PLAINTIFF FINJAN, INC.’S
`OFFER OF PROOF
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`JUNIPER NETWORKS, INC., a Delaware
`Corporation,
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`Defendant.
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`REDACTED VERSION OF DOCUMENT SOUGHT TO BE SEALED
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`FINJAN, INC.’S OFFER OF PROOF
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`CASE NO.: 3:17-cv-05659-WHA
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`Case 3:17-cv-05659-WHA Document 303 Filed 12/07/18 Page 2 of 7
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`Finjan Inc. (“Finjan”) submits the following offer of proof in support of its damages claim
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`against Juniper Networks, Inc. (“Juniper”) pursuant to the Court’s Final Pretrial Order, Dkt. No. 301, ¶
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`10. Juniper is steadfast that Finjan cannot present a damages case without a paid expert witness –
`Juniper is wrong. Finjan has an abundance of factual evidence, demonstrating its entitlement to
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`“damages adequate to compensate for the infringement, but in no event less than a reasonable royalty
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`for the user of the invention by the infringer . . .”. 35 U.S.C. § 284. Under 35 U.S.C. § 284, a finding
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`of infringement “establishes the fact of damage because the patentee’s right to exclude has been
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`violated.” Lindemann Maschinenfabrik GmbH v. Am. Hoist & Derrick Co., 895 F.2d 1403, 1406 (Fed.
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`Cir. 1990). “The statute is unequivocal that the district court must award damages in an amount no
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`less than a reasonable royalty” when infringement is found. Dow Chem. Co. v. Mee Indus., Inc., 341
`F.3d 1370, 1381 (Fed. Cir. 2003). 1
`Finjan will offer at trial extensive evidence for the jury to consider and to support Finjan’s
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`reasonable royalty damages as a result of Juniper’s infringement of Finjan’s U.S. Patent No. 8,677,494
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`(the “’494 Patent”). This evidence includes the testimony of Finjan and Juniper’s witnesses, Finjan
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`and Juniper documents, and the opinions of Finjan’s technical experts.
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`Not insignificantly, since the Daubert hearing on November 29, 2018, evidence has been
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`discovered that Juniper has misrepresented the relevant revenues (or royalty base at issue). Based on
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`the deposition of Ms. Gupta on December 7, 2018, which the Court ordered at the December 4, 2018
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`Pretrial Conference regarding the 17,000 page excel spreadsheets that were untimely produced, Finjan
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`1 See also, Interwoven, Inc. v. Vertical Computer Sys., No. CV 10-04645 RS, 2014 WL 490996, at *5
`(N.D. Cal. Feb. 4, 2014)(“‘The statute is unequivocal that the district court must award damages in an
`amount no less than a reasonable royalty,’ even in the absence of expert testimony.”) (citing Dow
`Chem. Co. v. Mee Indus., Inc., 341 F.3d 1370, 1381–82 (Fed. Cir. 2003)); SiOnyx, LLC v. Hamamatsu
`Photonics K.K., 330 F. Supp. 3d 574, 598 (D. Mass. 2018) (“[E]ven if there were no expert testimony
`on damages, the court would still be obligated to evaluate what evidence there was to come up with a
`reasonable royalty.”); Apple Inc. v. Motorola, Inc., 757 F.3d 1286, 1327 (Fed. Cir. 2014), overruled
`on other grounds by Williamson v. Citrix Online, LLC, 792 F.3d 1339 (Fed. Cir. 2015)(“Because no
`less than a reasonable royalty is required, the fact finder must determine what royalty is supported by
`the record.”); Deckers Outdoor Corp. v. Romeo & Juliette, Inc., No. 215CV02812ODWPLA, 2017
`WL 5634993, at *7-8 (C.D. Cal. Oct. 6, 2017)(denying a motion in limine to preclude reasonable
`royalty testimony from any witness at trial because expert testimony is not required and the record
`contained ample evidence to support a reasonable royalty award through the Georgia-Pacific factors.).
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`FINJAN, INC.’S OFFER OF PROOF
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`Case 3:17-cv-05659-WHA Document 303 Filed 12/07/18 Page 3 of 7
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`learned the following:
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`(1) between January 2016 and January 2017, Juniper’s customers in the Americas with the
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`“freemium” Sky ATP service purchased at least
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` devices. The revenues associated with
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`these
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` was approximately
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`(2) Juniper’s calculation of
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`;2
` in revenues for the accused products does not account
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`for any revenues for Juniper’s infringement in 2015; and
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`(3) Juniper’s belated production did not summarize the specific customers who purchased
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`specific SRX devices with a Sky ATP premium service, such that Juniper never meaningfully
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`disclosed the total revenues of the SRX devices sold to a customer that purchased the premium Sky
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`ATP service.
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`Factual Background Related to the Hypothetical Negotiation
`A.
`Finjan will present evidence regarding its approach to licensing that will support its entitlement
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`to a reasonable royalty. This evidence will include testimony and other evidence from Finjan’s fact
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`witnesses, including Philip Hartstein and John Garland, regarding Finjan’s licensing practices and
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`approaches to licensing, including the factors Finjan considers when licensing the Patents-in-Suit (i.e.,
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`scope of use, how the patented technology is being used, potential future use, and benefits derived
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`from the use of the claimed invention), the information Finjan had regarding Juniper when it
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`approached Juniper for a license, and how these factors applied to Juniper.
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`Finjan will also provide witness testimony and evidence that when approaching a licensing
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`negotiation to the Asserted Patent, Finjan has used a royalty rate of 8 percent on hardware and a
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`royalty rate of 16 percent on software in the past on the products’ total gross revenues or the gross
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`revenues of a company’s relevant division, i.e., security division, as well as other approaches Finjan
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`has used in licensing negotiations based on utilization a $8 per user rate and 32 cents per scan rate.
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`Finjan will also present testimony and other evidence, including comparable licensing
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`information and data points, which supports Finjan’s approaches to licensing to identify a potential
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`licensee’s realized value for use of Finjan’s patented technology. Finjan will present testimony
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`2 Juniper only counted
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` devices for its deflated
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` revenue figure.
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`FINJAN, INC.’S OFFER OF PROOF
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`Case 3:17-cv-05659-WHA Document 303 Filed 12/07/18 Page 4 of 7
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`regarding its extensive licensing history, as well as its current product business, to support the
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`significance and value of the ‘494 Patent. Finjan will also present testimony and other evidence of
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`Finjan’s efforts to license the ‘494 Patent to Juniper. Trial Exhibits 256, 257, 342.
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`Technical Advantages
`B.
`In addition, Finjan will present testimony and other evidence that establishes the significant
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`technical benefits that the ‘494 Patent provides, such as by increasing the speed and efficiency of
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`Juniper’s infringing systems. More specifically, the ‘494 Patent allows for the reuse and subsequent
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`analysis of downloadable security profile data, and the proactive blocking of security threats. Finjan
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`will present evidence, including the expert opinion of Dr. Cole, as well as the testimony of Juniper’s
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`witnesses and other evidence. See e.g. Cole Rpt. at ¶¶ 26-37. Finjan will present evidence of the value
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`of the patented invention to Juniper from its use of the patented technology and ability to offer for sale
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`such patented technology, which Juniper has represented publicly. Trial Exhibits 91, 382, Deposition
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`of Juniper’s Senior Director of Intellectual Property Litigation and Strategy; Deposition of Juniper’s
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`Senior Director in Juniper’s Security Business Group.
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`Juniper’s Infringement Based on Use and Offer for Sale
`C.
`Finjan will present factual evidence regarding Juniper’s extensive use3 of its patented
`technology, including: 1) the number of users of the accused products; 2) the volume of data processed
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`by the accused products; 3) the volume of data processed for the average user of the accused products;
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`4) the number of scans performed by the accused products; 5) the nature and amount of costs (e.g.,
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`data processing costs, cloud costs, energy costs, hardware costs, engineering costs, coding costs)
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`incurred by Juniper in connection with scans performed by the accused products; 6) Juniper’s cost per
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`scan for the accused products; 7) Juniper’s cost per user for the accused products; 8) the volume of
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`data that would be processed by Juniper under a non-infringing alternative design; 9) the nature and
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`amount of costs (e.g., data processing costs, cloud costs, energy costs, hardware costs, engineering
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`3 Finjan is entitled to a reasonable royalty on for Juniper’s “use” of the accused products if those
`products are found to infringe Claim 10 of the ‘494 Patent. 35 U.S.C. § 271 (“whoever without
`authority makes, uses, offers to sell, or sells any patent invention within the United States … any
`patented invention during the term of the patent therefor, infringe the patent.”) (underlining added).
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`FINJAN, INC.’S OFFER OF PROOF
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`Case 3:17-cv-05659-WHA Document 303 Filed 12/07/18 Page 5 of 7
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`costs, coding costs) that would be incurred by Juniper under a non-infringing alternative design, such
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`as the cost of developing non-infringing software code and expanding its use of servers (e.g., Amazon
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`Web Services); 10) Juniper’s cost per scan for its non-infringing alternative design; 11) Juniper’s cost
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`per user for its non-infringing alternative design; 12) the number of samples Juniper has in each of its
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`databases; 13) the number of databases Juniper has; and 14) the type and number of servers (e.g.,
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`Amazon Web Services) that Juniper employs for the accused products. Juniper’s cost savings may be
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`expressed in a variety of forms, such as on a per-user, per-scan, or lump-sum basis. Finjan will
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`provide evidence regarding how Juniper markets its ability to offer zero-day threat protection from the
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`cloud, highlighting the tremendous value Juniper reaps as a result from its infringement and ability to
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`offer Sky ATP for sale, the commercial value it adds to Juniper’s SRX devices, and how it benefits
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`Juniper itself. Trial Exhibit 91.
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`Finjan will present evidence that Juniper uses Claim 10 of the ‘494 Patent every time that its
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`Sky ATP system, which is used by Juniper, analyzes a file in its malware analysis pipeline using static
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`and/or dynamic analysis components, and then stores the results in its Results DB database. Dkt. No.
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`189 at 3 (“Finjan now moves for summary judgment of direct infringement of Claims 10 based on (1)
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`Juniper’s SRX Gateway used in combination with Sky ATP; and (2) Sky ATP alone []”), at 14
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`(“Finjan argues that Juniper’s SRX Gateways with Sky ATP, and Sky ATP alone — which includes
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`the Malware Analysis Pipeline involving both static and dynamic analyzers — constitute a
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`Downloadable “scanner” (Dkt. No. 98 at 20). The evidence shows that the Malware Analysis Pipeline
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`indeed generates a threat level ‘verdict’ by searching a received Downloadable’s code to identify
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`suspicious operations or patterns (Cole Decl. ¶ 35; Dkt. No. 154, Exh. 5 at 121:11-22)”). Finjan is
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`entitled to a reasonable royalty based on this extensive use. Finjan will present evidence including the
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`testimony of its expert, Dr. Cole, as outlined in his expert report at Pars. 38-106, as well as the
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`testimony of Juniper’s engineers and witnesses, including Chandra Nagarajan and Raju Manthena and
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`other evidence such as Trial Exhibits 1, 15, 52, 53, 57, 65, 73, 74, 75, 76, 78, 79, 80, 81, 82, 83, 84, 87,
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`88, 89, 90, 91, 92, 93, 94, 95, 96, 97, 98, 99, 382, 399, 430, 431, and 438.
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`Finjan will present evidence related to Juniper’s use of Claim 10 of the ‘494 Patent by Sky
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`ATP by itself, and Sky ATP with SRX in the form of documents and deposition testimony, including
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`FINJAN, INC.’S OFFER OF PROOF
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`Case 3:17-cv-05659-WHA Document 303 Filed 12/07/18 Page 6 of 7
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`evidence support that:
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`• Juniper uses Sky ATP in the U.S. to analyze millions of files a month in Juniper Malware
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`Analysis Pipeline using either static or dynamic analysis, and then stores the results of this
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`analysis in its ResultsDB;
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`• Juniper uses Sky ATP to protect millions of its users inside the U.S.
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`Finjan will also present Juniper’s sworn discovery responses regarding the number of files
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`scanned and threats detected, and associated pricing options, including the number of files uploaded to
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`Sky ATP. See Juniper’s Response to Interrogatory No. 5. Finjan will also present evidence, including
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`documents, testimony and Juniper’s interrogatory responses, regarding the servers and databases used
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`by the accused products. See e.g. Juniper Response to Interrogatory Nos. 10 and 11 (Servers).
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`Juniper’s Infringement Based on Sales
`D.
`Finjan will present evidence regarding Juniper’s revenues associated with its infringing
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`products. This evidence includes Juniper’s financial and sales data regarding the accused products, the
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`testimony of its witnesses (including Ms. Gupta), and Juniper’s sworn discovery responses. See e.g.
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`JNPR-FNJN_ 29028_00472484; JNPR-FNJN_29028_00472485; JNPR-FNJN_29034_00959902;
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`JNPRFNJN_29028_01012873; JNPR-FNJN_29028_01012874; Juniper Response to Interrogatory No.
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`4. Finjan will present evidence identifying the portion of Juniper’s revenues that are attributable to the
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`‘494 Patent based on documents and testimony from Juniper’s witnesses.
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`At a minimum, Finjan will present evidence that revenues associated with the accused SRX
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`Gateways with Sky ATP exceed the
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` dollars that Juniper has represented. Trial Exhibits
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`254 and 255. Finjan will present evidence challenging this computation, including the December (cid:26),
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`2018 testimony of Ms. Gupta and Juniper’s documents confirming that no license is required Juniper’s
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`free version of Sky ATP, whereas a subscription is required for its “premium version”. See e.g., Trial
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`Exhibit 91, Trial Exhibit 88 at JPNR-FNJN_29008_00514123.
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`CONCLUSION
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`Finjan has a multitude of ways to prove a reasonable royalty based on the factual evidence.
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`The various grounds for a reasonable royalty will necessarily depend on how this factual evidence will
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`come in at trial.
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`FINJAN, INC.’S OFFER OF PROOF
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`Case 3:17-cv-05659-WHA Document 303 Filed 12/07/18 Page 7 of 7
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`DATED: December 7, 2018
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`Respectfully submitted,
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`By: /s/ Paul J. Andre
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`Paul J. Andre (State Bar No. 196585)
`Lisa Kobialka (State Bar No. 191404)
`James Hannah (State Bar No. 237978)
`Kristopher Kastens (State Bar No. 254797)
`KRAMER LEVIN NAFTALIS
` & FRANKEL LLP
`990 Marsh Road
`Menlo Park, CA 94025
`Telephone: (650) 752-1700
`pandre@kramerlevin.com
`lkobialka@kramerlevin.com
`jhannah@kramerlevin.com
`kkastens@kramerlevin.com
`
`Attorneys for Plaintiff
`FINJAN, INC.
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`FINJAN, INC.’S OFFER OF PROOF
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