Case 3:17-cv-05659-WHA Document 669 Filed 07/26/21 Page 1 of 9
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`UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF CALIFORNIA
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`FINJAN, INC.,
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`Plaintiff,
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`v.
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`JUNIPER NETWORKS, INC.,
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`Defendant.
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`No. C 17-05659 WHA
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`ORDER ADOPTING SPECIAL
`MASTER’S REPORT AND
`RECOMMENDATION FOR
`ATTORNEY’S FEES
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`INTRODUCTION
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`Both parties in this patent infringement action object to the special master’s report and
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`recommendation regarding attorney’s fees and costs. Because the objections concern only the
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`scope of the fees, which was previously determined by the district court, this order ADOPTS the
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`special master’s report and recommendation in its entirety. Defendant’s motion for sanctions
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`is DENIED.
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`STATEMENT
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`A prior order details the facts of this suit (Fees Order, Dkt. No. 648). Patent owner,
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`Finjan, Inc., asserted two patents, among others, against Juniper Networks, Inc.: United States
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`Patent Nos. 6,804,780 (“the ’780 patent”) and 8,677,494 (“the ’494 patent”). In June 2018,
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`pursuant to a patent showdown procedure, the parties filed dueling summary judgment motions
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`Case 3:17-cv-05659-WHA Document 669 Filed 07/26/21 Page 2 of 9
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`for an early inquiry into the merits. Each party chose its strongest patent claim, Finjan its best
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`case for infringement and Juniper its best case for noninfringement or invalidity. Juniper
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`prevailed on its noninfringement motion for claim 1 of the ’780 patent. Finjan’s motion for
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`summary judgement of claim 1 of the ’494 patent was denied in part, so the claim went to trial;
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`the jury returned a verdict of noninfringement, and Juniper was awarded judgment as a matter
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`of law as to damages.
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`After the first patent showdown, Juniper filed a motion for sanctions, claiming that
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`Finjan acted improperly in its assertion of the ’494 and ’780 patents (Dkt. No. 409 at 1–2).
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`Since the case had not yet concluded, a May 2019 order held the sanctions motion in abeyance
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`(Dkt. No. 486 at 7–8). The parties briefed a second patent showdown on another set of claims,
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`where Juniper once again prevailed, leading Finjan to stipulate to dismissal with prejudice of
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`all its remaining patent claims (Dkt. No. 601).
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`As the prevailing party, Juniper moved for attorney’s fees pursuant to 35 U.S.C. § 285.
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`In its motion, Juniper requested that the Court rule on its previous motion for sanctions (Dkt.
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`No. 634 at 5). In response to the motion, a January 2021 order (“the Fees Order”) found the
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`assertions of the ’494 and ’780 patents exceptional and agreed that attorney’s fees should be
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`awarded for all work relating to the two patents. Finding that Juniper’s submitted billing
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`records did not distinguish between work eligible and ineligible for reimbursement, two
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`subsequent orders appointed attorney Matthew Borden as special master and required the
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`parties to submit their billing requests to him (Dkt. Nos. 648, 649, 654). Special Master
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`Borden agreed to take the assignment on for a much-reduced hourly fee. The order appointing
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`the special master asked that he “identify each item requested that bears little or no relation to
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`the conduct found exceptional herein, that being the assertion of the ’494 and ’780 patents”
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`(Dkt. No. 649 at 4 (italics added)).
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`The special master conducted several conferences and hearings with the parties. On
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`February 25, the special master held a status conference establishing procedures and setting a
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`briefing schedule. After, the parties briefed and conducted oral arguments on whether all work
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`related to the ’494 and ’780 patents was recoverable. On April 15 and again on April 21, the
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`special master addressed the parties’ dispute over Finjan’s billing rates. Nine contested
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`projects were then evaluated at a hearing on April 23, and a further five disputed projects were
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`discussed on April 30. On May 14, the special master convened a final hearing on all
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`remaining issues. The special master recommended that Juniper be awarded $5,914,156 in
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`attorney’s fees and costs, but the special master declined to calculate sanctions as the Fees
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`Order did not make an express finding of bad faith (Dkt. No. 658 at 1–2, 20).
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`ANALYSIS
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`A district court “must decide de novo” all objections to findings of fact and conclusions
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`of law made or recommended by a special master. FRCP 53(f)(3)–(4). As a practicing
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`attorney, the special master’s findings of fact regarding reasonable attorney staffing, billing
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`practices, discovery, case scope, and similar issues are entitled to a degree of deference. Those
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`findings will not be altered absent the showing of a specific failure of reasoning or other error.
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`1.
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`THE PARTIES DID NOT OBJECT TO THE SPECIAL MASTER’S
`METHOD OF CALCULATION.
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`Neither Finjan nor Juniper take issue with the manner in which the special master
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`identified which of Juniper’s fees were related to the ’494 and ’780 patents or whether the fees
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`were reasonable. Juniper stated that “[a]lthough Special Master Borden reduced some of
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`[Juniper]’s submitted attorneys’ fees, Juniper does not object to that reduction” (Dkt. No. 661
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`at 1). Finjan makes no mention of the methodology the special master used for identifying
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`relevant fees and costs (Dkt. No. 659). This order finds that the special master went to great
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`lengths to accurately identify the fees and costs exclusively associated with the assertion of the
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`’494 and ’780 patents. Numerous hearings and conferences were held to discuss disputes over
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`billing rates and time allocation.
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`Rather than object to the identification of the fees, both parties take issue with the scope
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`of the fees awarded. Finjan believes the special master should not have awarded fees for the
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`entirety of the assertions of the ’494 and ’780 patents. Juniper contends that the special master
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`incorrectly abstained from calculating expert witness fees and travel expenses Juniper claims it
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`is owed as sanctions. Each of these objections will be addressed in turn. However, because
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`the special master carefully identified only the fees related to the two patent assertions and
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`neither party objects to the method of calculation, the special master’s recommendation will be
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`adopted to the extent that this order accepts the scope of the award. As stated below, this order
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`approves of the scope of the award delineated by the special master.
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`2.
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`PLAINTIFF’S OBJECTIONS.
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`A.
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`THE SCOPE OF FEES FOR THE ’494 PATENT.
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`Finjan believes the special master should have calculated fees only for work on damages
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`issues related to the ’494 patent that occurred after the Daubert order excluding Finjan’s
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`damages expert on December 3, 2018 (Dkt. No. 659 at 5, 7–9). According to Finjan, it is after
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`that point, and only in relation to damages, that Finjan’s assertion of the patent was found to be
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`exceptional (ibid). This order disagrees.
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`Finjan’s theory is in direct conflict with the Fees Order. Finjan acknowledges that 35
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`U.S.C. § 285 “permits recovery of only those fees related to the conduct held to have been
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`exceptional” (Dkt. No. 659 at 1). The Fees Order indisputably held that “[t]he entire assertion
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`of the ’494 patent thus stood out as exceptional” (Fees Order 3 (emphasis added)). The Fees
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`Order specifically stated that the discussion of the ’494 patent damages “fiasco” was not the
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`starting point of exceptional conduct but merely “one example” of the exceptional conduct in
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`the case (Fees Order 2). Finjan’s conduct concerning damages thus did not mark the start of
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`exceptionalism, it was instead explicitly discussed in the Fees Order as a noteworthy example
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`of Finjan’s unreasonable litigating that supported a broader finding of exceptionalism for the
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`assertion of the ’494 patent, generally.
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`Special Master Borden applied the correct scope for the award of fees for the ’494 patent.
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`The special master’s recommendation, citing to the Court’s holding in the Fees Order, stated
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`that the entirety of Finjan’s assertion of the ’494 patent was exceptional (Dkt. No. 658 at 3).
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`Finjan thus takes issue with the Court’s previous ruling, not the special master’s
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`recommendation, despite “acknowledge[ing] that the § 285 Order is binding” (Dkt. No. 659 at
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`5 ftn. 1). Because the Court, and not the special master, defined the scope of fees, Finjan’s
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`objections to the special master’s report and recommendation are inapposite. Finjan
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`effectively requests reconsideration of the Fees Order, but this order declines to revise the
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`finding of exceptionalism, which was well within the Court’s power to make. See Goodyear
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`Tire & Rubber Co. v. Haeger, 137 S. Ct. 1178, 1187 (2017). Since Finjan’s objections do not
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`concern findings of fact or conclusions of law made by the special master, Finjan’s objection
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`concerning the ’494 patent is OVERRULED.
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`B.
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`THE SCOPE OF FEES FOR THE ’780 PATENT.
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`Finjan also argues that the fees award for the ’780 patent should be limited to costs
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`incurred for work following the first patent showdown and summary judgment order in August
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`2018 on the grounds that the Fees Order stated Finjan should have dropped the ’780 patent
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`issue after that point (Dkt. No. 659 at 6; Fees Order 3). This objection suffers the same issues
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`as Finjan’s objection to the fees awarded for the ’494 patent. The Fees Order held that
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`“Finjan’s assertion of the ’780 patent stands out as exceptional as well,” which indicates that
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`the entirety of Finjan’s ’780 patent infringement claim was exceptional (Fees Order 4). Just
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`like for the ’494 patent, the Fees Order stated that Finjan should have dropped the ’780 after
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`the first patent showdown to illustrate how Finjan continued to engage in exceptional conduct.
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`The events the Fees Order outlines were not the beginnings of exceptionality, but examples of
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`some of the worst behavior at the end of an exceptional patent assertion.
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`The special master accordingly followed the Court’s instructions by calculating all fees
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`and costs associated with the ’780 patent. The special master did not misconstrue the ruling
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`made on exceptionality in the Fees Order. Finjan’s objections do not concern findings of fact
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`or conclusions of law made by the special master, thus Finjan’s objection regarding the ’780
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`patent is OVERRULED.
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`3.
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`DEFENDANT’S OBJECTIONS.
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`After the first patent showdown, Juniper filed a motion requesting sanctions on Finjan
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`based on its conduct litigating the ’494 and ’780 patents, but, as the case was ongoing, the
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`motion was held in abeyance (Dkt. Nos. 409, 486). In its motion for attorney’s fees, Juniper
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`renewed its request for a ruling on its motion for sanctions (Dkt. No. 634 at 5). Following the
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`special master’s report and recommendation, Juniper asserts that the special master should
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`have calculated expert witness fees and travel expenses so that the Court could decide to award
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`them as sanctions for Finjan’s alleged bad faith conduct. Juniper asks for a finding of bad faith
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`and sanctions pursuant to 28 U.S.C. § 1927 or the Court’s inherent powers and proposes a
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`penalty of $1,425,659.24 in addition to the special master’s award of $5,914,156 for attorney’s
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`fees (Dkt. No. 661 at 1, 9–11).
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`Section 285 allows a district court to award attorney’s fees for exceptional conduct, but
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`the statute has been read to exclude expert witness fees. See Amsted Indus., Inc. v. Buckeye
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`Steel Castings Co., 23 F.3d 374, 377 (Fed. Cir. 1994). The special master found in his report,
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`and both Finjan and Juniper agreed, that Section 285 precludes a recovery of expert fees and
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`travel expenses; Juniper has not refuted this finding in its objections (Dkt. No. 658 at 20).
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`Expert fees, however, can be awarded as sanctions pursuant to Section 1927 or a court’s
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`inherent powers. Not every case qualifying as exceptional under Section 285 will also qualify
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`for sanctions pursuant to Section 1927 or the court’s inherent power. See Amsted, 23 F.3d at
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`378; Octane Fitness, LLC v. Icon Health & Fitness, Inc., 572 U.S. 545, 555 (2014). For a case
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`to be considered exceptional under Section 285, it must be “simply one that stands out from
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`others with respect to the substantive strength of a party’s litigating position (considering both
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`the governing law and the facts of the case) or the unreasonable manner in which the case was
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`litigated.” Octane Fitness, 572 U.S. at 554. To justify an award of sanctions, a district court
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`must assess whether a particular case goes sufficiently beyond exceptional within the meaning
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`of Section 285.
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`Section 1927 provides that “who so multiplies the proceedings in any case unreasonably
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`and vexatiously may be required by the court to satisfy personally the excess costs, expenses,
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`and attorneys’ fees reasonably incurred because of such conduct.” The Supreme Court has
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`explained that Section 1927 “is concerned only with limiting the abuse of court processes.”
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`Roadway Express, Inc. v. Piper, 447 U.S. 752, 762 (1980). Our court of appeals has
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`recognized that its “cases have been less than a model of clarity regarding whether a finding of
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`mere recklessness alone may suffice to impose sanction[s] . . . under § 1927, or whether there
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`must be a finding of subjective bad faith.” In re Girardi, 611 F.3d 1027, 1061 (9th Cir. 2010)
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`(cleaned up, quoting B.K.B. v. Maui Police Dep’t, 276 F.3d 1091, 1107 (9th Cir. 2002)). Our
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`court of appeals has most recently advised that sanctions pursuant to Section 1927 must be
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`supported by a finding of subjective bad faith, and that, without more, reckless but
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`nonfrivolous conduct may not be sanctioned. Stone Creek, Inc. v. Omnia Italian Design, Inc.,
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`875 F.3d 426, 442 (9th Cir. 2017); Blixseth v. Yellowstone Mountain Club, LLC, 796 F.3d
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`1004, 1007 (9th Cir. 2015). “Bad faith is present when an attorney knowingly or recklessly
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`raises a frivolous argument or argues a meritorious claim for the purpose of harassing an
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`opponent.” Blixseth, 796 F.3d at 1007.
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`Under its inherent powers, on the other hand, a district court may levy fee-based
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`sanctions when a party has acted in bad faith, vexatiously, wantonly, or for oppressive reasons,
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`delaying or disrupting litigation, or has litigated for an improper purpose. Roadway Express,
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`447 U.S. at 766; Fink v. Gomez, 239 F.3d 989, 992 (9th Cir. 2001). “[S]anctions are available
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`if the court specifically finds bad faith or conduct tantamount to bad faith.” Fink, 239 F.3d at
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`994. For example, our court of appeals recently upheld a sanction award where the plaintiffs
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`“had submitted multiple misleading and false declarations and fraudulent documents in bad
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`faith in order to create a sham plaintiff, and appellants failed to offer any credible explanation
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`to the contrary.” Indiezone, Inc. v. Rooke, 720 Fed. App’x 333, 337 (9th Cir. 2017).
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`Juniper lists several instances where Finjan’s conduct allegedly satisfied the threshold
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`required for sanctions: (1) Finjan changed its infringement theory when its original theory led
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`to a low damages number, and it presented the new theory in its damages expert’s report; (2)
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`Finjan presented its facts-only damages theory to the jury after its damages expert was
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`excluded; (3) Finjan said Juniper was given actual notice of infringement during a phone call,
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`but the assertion was disproved when Juniper produced a recording of the call; (4) Finjan
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`misrepresented a district court decision to the Court; and other, similar, actions (Dkt. No. 661
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`at 4–8).
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`This order, considering these events and giving them all due consideration, holds Finjan’s
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`actions do not reach the requisite standard for awarding sanctions under either Section 1927 or
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`the Court’s inherent powers. Vociferous and belligerent ligating may transgress into conduct
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`warranting sanctions, and the Fees Order did point out improper conduct by Finjan and its
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`counsel. And while the change in damages theory was a blatant instance of “shifting sands,” it
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`was not comparable to the act of submitting fraudulent documents like in Indiezone. The
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`affidavit stating actual notice had been given proved untrue, but Juniper has not demonstrated
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`it was willfully false. Finjan’s misrepresentation of a district court decision was “reckless”
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`(Fees Order 4), but, even if a finding of recklessness alone satisfies the Section 1927 standard,
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`this order finds that act, by itself, would not warrant sanctions. See Fink, 239 F.3d at 993.
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`In no way does this order vindicate Attorneys James R. Hannah, Lisa Kobialka, and Paul
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`J. Andre. Their conduct was improper and frustrated the fairness of the proceedings. Judges in
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`the future should take this into account when dealing with them in future cases. In light of the
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`fact, however, that the Fees Order found Finjan’s assertion of the ’494 and ’780 patents
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`exceptional, resulting in an award of $5.9 million to Juniper, Finjan’s conduct has been
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`properly addressed.
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`The Fees Order requested that Juniper provide its expert witness fees and travel expenses
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`to the special master for the sake of completeness given that the issues of Finjan’s conduct had
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`yet to be revisited. This order fully addresses Finjan’s conduct in this action. Since this order
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`declines to make an express finding that sanctions are warranted, it is irrelevant whether the
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`special master should have calculated potential expert fees and travel expenses. Thus,
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`Juniper’s objection to the special master’s report is OVERRULED. Juniper’s motion for
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`sanctions is DENIED.
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`CONCLUSION
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`This order ADOPTS the special master’s recommended award. Given that its prosecution
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`of the ’494 and ’780 patents was found to be exceptional, FINJAN, INC. SHALL PAY JUNIPER
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`NETWORKS, INC. $5,914,156. The Court awaits the parties’ joint status updates at 28 DAY
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`intervals until they certify all fees have been paid.
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`The Court thanks the special master for his 53.2 hours of work performed (as a service to
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`the Court) at the reduced rate of $300 per hour, coming to $15,960. Within 14 DAYS of this
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`order, FINJAN, INC. SHALL PAY $7,980 and JUNIPER NETWORKS, INC. SHALL PAY $7,980 to:
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`Case 3:17-cv-05659-WHA Document 669 Filed 07/26/21 Page 9 of 9
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`Matthew Borden
`BraunHagey & Borden LLP
`351 California Street, Suite 10
`San Francisco, CA 94104
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`The Court awaits the parties’ joint status updates at 28 DAY intervals until they certify the
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`special master has been reimbursed in full for his time. The Court retains jurisdiction to
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`enforce both orders.
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`IT IS SO ORDERED.
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`Dated: July 26, 2021
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`WILLIAM ALSUP
`UNITED STATES DISTRICT JUDGE
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