Case 4:18-cv-07229-YGR Document 79 Filed 07/22/20 Page 1 of 6
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`July 22, 2020
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`VIA ELECTRONIC FILING
`
`Honorable Yvonne Gonzalez Rogers
`U.S. District Court, Northern District of California
`Oakland Courthouse
`Courtroom 1 – 4th Floor
`1301 Clay Street
`Oakland, CA 94612
`
`Re:
`
`
`
`Joint Discovery Statement
`Finjan, Inc. v. Qualys Inc., Case No. 4:18-cv-07229-YGR
`
`
`Dear Judge Gonzalez Rogers:
`
`
`Pursuant to your Standing Order in Civil Cases, the parties submit the following joint
`statement regarding Plaintiff Finjan, Inc.’s (“Finjan”) motion to compel Defendant Qualys Inc.
`(“Qualys”) to provide worldwide damages discovery and supplement various interrogatory
`responses. The parties attest that they met and conferred on these issues by video teleconference
`on March 18, 2020, and further conferred by telephone and email on multiple occasions to
`attempt to narrow and resolve these disputes.1
`
`Respectfully submitted,
`
`/s/ Kristopher Kastens
`Kristopher Kastens (State Bar No. 254797)
`KRAMER LEVIN NAFTALIS & FRANKEL LLP
`
`Attorneys for Plaintiff
`Finjan, Inc.
`
`
`/s/ Talin Gordnia
`Talin Gordnia (State Bar No. 274213)
`WILSON SONSINI GOODRICH & ROSATI
`
`Attorneys for Defendant
`Qualys Inc.
`
`
`1 Due to the circumstances surrounding the COVID-19 pandemic, the parties met and conferred
`by video conference in order to satisfy the in person meet and confer requirement for discovery
`dispute resolution under the Court’s Standing Order.
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`Case 4:18-cv-07229-YGR Document 79 Filed 07/22/20 Page 2 of 6
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`Finjan’s Position
`I. Discovery of Qualys’ Foreign Sales Data and Revenue
`Finjan seeks discovery into worldwide sales of U.S. made accused products, which
`Qualys refuses to provide. Ex. 1, (Finjan Requests for Production Nos. 23, 24, 30), Ex. 2,
`(Qualys’ Response and Objections to Request for Production Nos. 23, 24, 30); Ex. 3, (Qualys’
`Response and Objections to Interrogatory Nos. 3, 6); Ex. 4, (improperly limiting damages-related
`30(b)(6) testimony to U.S. financials). Worldwide sales are discoverable on multiple grounds
`and Finjan is entitled to an accurate accounting of infringing sales and revenues.
`FRCP 26(b)(1) provides, among things, that parties may obtain non-privileged discovery
`that is “relevant”, “proportional to the needs of the case, considering the … importance of the
`discovery in resolving the issues, and whether the burden or expense of the proposed discovery
`outweighs its likely benefit.” Further, FRCP 26(b)(1) provides that the “[i]nformation within this
`scope need not be admissible in evidence to be discoverable.” Finjan’s request is proportional
`under Rule 26(b)(1) because Finjan only seeks discovery for the products accused in this case,
`and requests that this information be produced in the same manner that Qualys keeps it in the
`ordinary course of business. Additionally, only Qualys has access to its worldwide sales. Qualys
`has not identified any burden in providing this information or explained why it is not
`proportional. See Fed. R. Civ. P. 26 advisory committee’s note (2015 amendment) (explaining
`that restoring the proportionality calculation to Rule 26(b)(1) was not intended to permit a party
`to withhold discovery based on boilerplate objections). As the party opposing relevant
`discovery, Qualys has the burden of showing why discovery should not be allowed and
`“clarifying, explaining, and supporting its objections with competent evidence.” See Lofton v.
`Verizon Wireless (VAW) LLC, 308 F.R.D. 276, 281 (N.D. Cal. 2015). Qualys refuses to produce
`the requested information and has yet to demonstrate why discovery of worldwide sales of its
`U.S.-made and globally sold accused products is improper or overly burdensome.
`It is undisputed that Qualys is a U.S. company and its headquarters and base of research
`are in Foster City, California. Ex. 5, (https://www.qualys.com/company/). As Qualys makes and
`uses its accused software in the U.S., worldwide sales are part of the relevant royalty base
`because they infringe under the “making” prong of 35 U.S.C. 271(a). However, the Court need
`not decide if these foreign sales infringe to compel this discovery. Worldwide sales are relevant
`to the reasonable royalty inquiry even if they are not made in the U.S. See MLC Intellectual
`Prop., LLC v. Micron Tech., Inc., No. 14-CV-03657-SI, 2018 WL 6175982, at *2 (N.D. Cal.
`Nov. 26, 2018) (compelling discovery of foreign sales as potentially relevant to reasonable
`royalty analysis and noting trend in other courts confirming its relevance); Polaris Innovations
`Ltd. v. Kingston Tech. Co., Inc., Case No. CV 16-00300 CJC (RAOx), 2017 WL 3275615, at *5
`(C.D. Cal. Feb. 14, 2017) (worldwide sales are relevant to inducement, reasonable royalty
`calculations, and commercial success); see also Power Integrations, Inc. v. Fairchild
`Semiconductor Int'l, Inc., No. CV 04-1371 LPS, 2018 WL 4804685, at *1-2 (D. Del. Oct. 4,
`2018) (applying the Supreme Court's analysis in WesternGeco LLC v. ION Geophysical Corp.,
`138 S. Ct. 2129, 2137-38 (2018), to claims of direct infringement under section 271(a) and
`holding that the plaintiff was entitled to seek damages based on worldwide sales). In addition,
`under Polaris Innovations Ltd., Qualys’ foreign sales are relevant to other issues in this case,
`including Finjan’s claims for induced infringement under 35 U.S.C. § 271(b). As such, Finjan is
`entitled to obtain this information. See Fed. R. Civ. P. 26(b)(1) (admissibility irrelevant to
`discoverability); see MLC Intellectual Prop., 2018 WL 6175982 at *2 (allowing discovery into
`foreign sales and determining to “reserve for another day” how it supports claim for reasonable
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`Case 4:18-cv-07229-YGR Document 79 Filed 07/22/20 Page 3 of 6
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`royalties) (emphasis added). Thus, the Court should compel Qualys to provide this discovery.  
`Qualys’ analysis of the cases cited by Finjan is flawed. That the Court in MLC Intellectual Prop.
`excluded evidence of foreign sales at a later stage of the case is irrelevant to its discoverability.
`
`
`II. Qualys Must Respond to Finjan’s Interrogatories
`When Finjan first provided its half of this discovery letter in June, Qualys unjustifiably
`refused to respond to Finjan’s Interrogatory Nos. 9-11, incorrectly alleging that Finjan had
`already exceeded the 25 interrogatories limit with its first 8 interrogatories. Ex. 6, (Qualys
`Objections to Interrogatories). After receiving this letter, Qualys tried to moot the issue by
`saying it would serve supplemental responses to Interrogatory Nos. 9-11. Ex. 7, (Qualys Supp.
`Resp. Interrogatories). However, these supplements still lack any substantive response, and
`remain deficient for the same reasons already discussed by the parties at the meet and confer.
`Additionally, Qualys now refuses to provide responses to Finjan’s Interrogatory Nos. 12-19
`based on the same objections, thus, necessitating that Finjan raise this issue with the Court. Ex.
`8, (Qualys Responses to Interrogatories). As such, Qualys has failed to provide any substantive
`response to half of Finjan’s interrogatories. Qualys’ is engaging in pure gamesmanship to shirk
`its discovery responsibilities, because Finjan has not exceeded the 25 interrogatory limit, as each
`of Finjan’s interrogatories count as a single interrogatory and each relate to a single primary
`question. See Synopsys, Inc. v. ATopTech, Inc., 319 F.R.D. 293, 299 (N.D. Cal. 2016) (granting
`motion to compel responses to Interrogatory Nos. 6-25 because Interrogatory Nos. 1-5, including
`their subparts, each counted as a single interrogatory and did not exceed 25).
`By way of example, Finjan’s Interrogatory No. 1 is a single interrogatory, not four as
`Qualys contends, because it asks Qualys to describe the circumstances surrounding Qualys’ first
`awareness of the Asserted Patents. Ex. 3, (Finjan Interrogatories). This is a single topic in
`which Finjan simply adds clarity of what it seeks through Interrogatory No. 1, namely, the
`actions taken by Qualys when it obtained such knowledge, the people involved in those actions,
`and identification of related documents. These are not “subparts” of separate interrogatories,
`because they are aimed at the details of the single issue of Qualys’ first awareness of the
`Asserted Patents. Finjan’s other interrogatories are similarly aimed at a single discrete question,
`with all requested information being logically and factually subsumed in that topic. The case
`cited by Qualys adopted this approach. See Erfindergemeinschaft Uropep GbR v. Eli Lilly & Co.,
`315 F.R.D. 191, 197 (E.D. Tex. 2016) (adopting the “related question” approach, where
`“subparts that are logically or factually subsumed within and necessarily related to the primary
`question should not be treated as separate interrogatories.”).
`
`III. Expert Reports Related to Infringing Third Party Products are Irrelevant
`Expert infringement reports from other Finjan cases are not relevant and overly
`burdensome to produce because they cite to third party products not at issue in this case. Qualys
`does not explain how they relate to Qualys’s claims or defenses on completely different
`products. This discovery is also unnecessary, as Qualys already understands how third party
`products read on the Asserted Patents, as Finjan has already produced numerous infringement
`contentions from prior litigations. Finally, these reports include highly confidential information
`and source code from third parties, including extensive discussions of source code, design
`specification, and other information that they consider highly confidential. As this information is
`confidential to third parties, Finjan cannot waive the claim of confidentiality that was made by
`these third parties under protective orders in other litigations.
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`Case 4:18-cv-07229-YGR Document 79 Filed 07/22/20 Page 4 of 6
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`Qualys’s Position
`I. Qualys’s Foreign Sales Data Is Irrelevant and Not Discoverable
`Finjan has no right to seek discovery of Qualys’s foreign sales. “Our patent system makes
`no claim to extraterritorial effect; these acts of Congress do not, and were not intended to, operate
`beyond the limits of the United States[.]” Microsoft Corp. v. AT & T Corp., 550 U.S. 437, 444
`(2007) (citation omitted). As the Federal Circuit has stated, “our patent laws allow specifically
`damages adequate to compensate for the infringement. They do not thereby provide compensation
`for a defendant’s foreign exploitation of a patented invention, which is not infringement at all.”
`Power Integrations, Inc. v. Fairchild Semiconductor Int’l, Inc., 711 F.3d 1348, 1371 (Fed. Cir.
`2013), cert. denied, 571 U.S. 1125 (internal citations omitted).
`Finjan is wrong that its infringement claims under 35 U.S.C. §§ 271(a) and 271(b) entitle
`it to discovery of foreign sales. For foreign sales to apply under § 271(a), what must be made and
`exported is the patented invention as a whole, not just a component thereof (i.e. Qualys’s
`software). See Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518, 518 (1972) (“The word
`‘makes’ as used in § 271(a) does not extend to the manufacture of the constituent parts of a
`combination machine, and the unassembled export of the elements of an invention does not
`infringe the patent.”); Microsoft, 550 U.S. at 442-444. Congress enacted an exception to this rule:
`a plaintiff may bring an infringement claim under 35 U.S.C. § 271(f) by alleging that a defendant
`domestically manufactured a component of a patented invention which it subsequently exported
`for assembly abroad. See Microsoft, 550 U.S. at 442-45. Here, Finjan brought no claims under §
`271(f), and its infringement contentions offer no theory under § 271(f). See generally D.I. 1;
`Qualys Ex. E. This is fatal to its argument. See Mediatek, Inc. v. Freescale Semiconductor, Inc.,
`No. 11-5341-YGR(JSC), 2013 WL 588760, at *2 (N.D. Cal. Feb. 13, 2013); Kelora Sys., LLC v.
`Target Corp., No. C 11-01548-CW(LB), 2011 WL 5444419, at *2 (N.D. Cal. Nov. 9, 2011).
`Finjan’s cited authority does not alter this result. In WesternGeco LLC v. ION Geophysical
`Corp., 138 S. Ct. 2129, 2133 (2018), the patentee brought a § 271(f) claim not present here. In
`Power Integrations, Inc. v. Fairchild Semiconductor Int'l, Inc., No. 04-1371-LPS, 2018 WL
`4804685, at *1-2 (D. Del. Oct. 4, 2018) while the court summarily held that WesternGeco could
`apply to § 271(a) claims, it also immediately certified an interlocutory appeal, stating that “[t]here
`are substantial grounds on which the Federal Circuit could well disagree with this Court’s
`assessment” (that appeal settled before reaching an appellate opinion). Id. at *2. In MLC
`Intellectual Prop., LLC v. Micron Tech., Inc., the court initially permitted discovery into foreign
`sales, but later revised its position and struck the patentee’s foreign sales theory from the case
`entirely as being legally flawed. See No. 14-CV-03657-SI, 2019 WL 2437073, at *3 (N.D. Cal.
`June 11, 2019). Finally, the magistrate judge’s decision in Polaris Innovations Ltd. v. Kingston
`Tech. Co., Inc., No. CV 16-00300 CJC (RAOx), 2017 WL 3275615, at *5 (C.D. Cal. Feb. 14,
`2017), completely ignored binding precedent from the Supreme Court and Federal Circuit binding
`jurisprudence. Moreover, the magistrate’s decision was not followed by district courts within that
`district. See Kajeet, Inc. v. Qustodio, LLC, Civ. No. SA CV 18-1519-JAK(PLAx), 2019 WL
`8060078, at *13 (C.D. Cal. Oct. 22, 2019) (denying motion seeking production of foreign sales).
`Finjan finally claims that it needs Qualys’s foreign sales data for commercial success
`purposes. But, Qualys has already produced its SEC filings that identify its worldwide revenue
`for the accused products. Finjan has failed to show it is entitled to anything more.
`
`
`II. Finjan Has Exceeded the Maximum Limit of 25 Interrogatories
`Where a question can be “answered fully and completely without answering the second
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`Case 4:18-cv-07229-YGR Document 79 Filed 07/22/20 Page 5 of 6
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`question” the subparts should each count as separately. Erfindergemeinschaft Uropep GbR v. Eli
`Lilly and Co., 315 F.R.D. 191, 196 (E.D. Tex. 2016). Finjan has served several interrogatories
`with discrete sub-parts that, in combination, exceed 25 in number. For several requests, Finjan
`identifies an overarching issue but proceeds to include multiple sub-parts each covering a distinct
`factual inquiry. For example, Rog 1 purports to cover “pre-suit awareness” but inquires into
`design-around attempts, non-infringement, and invalidity analyses. Qualys Ex. F at 5-6. Rog 4
`purports to cover “source code,” but inquires into location of various documents along with prior
`art contentions. Id. at 6. Rog 6 purports to cover sales, forecasts, locations of documents, and
`identification of individuals. See id. at 7. Rog 11 purports to cover “damages,” but inquires into
`royalty bases and rates, licensing details, apportionment, and technological nexus with patented
`features. Ex. 6 at 8-9. Rog 11 seeks facts pertaining to the fifteen-factor Georgia Pacific test. Id.
`Qualys tried compromising in good faith by withdrawing its numerosity objections for
`Rogs 9-11 and serving supplemental responses on July 20. Now, Finjan complains about the
`substance of those responses and about Qualys’s numerosity objections in response to Finjan’s
`latest set of interrogatories (12-19), which continues Finjan’s practice of heavy subpart use. Such
`complaints are premature, as the parties have not met and conferred on these issues.
`
`III. Finjan Should Produce All Expert Reports from Prior and Pending Suits
`Finjan has filed a total of two dozen patent litigations in district courts throughout the
`country involving one or more of the patents-in-suit in this case. Yet, it refuses to produce any of
`its technical expert reports other than those limited to invalidity issues and “tutorials,” citing “lack
`of relevance”, “burden”, and “third-party confidentiality issues”. See Qualys Ex. A at 1. Finjan
`refers to the withheld reports as “infringement reports,” but such reports frequently include
`opinions on a host of issues beyond infringement, such as how the experts interpret the scope of
`the patents and claims, definitions of a person of ordinary skill in the art, and many other issues
`not strictly limited to infringement. As such, courts in this district have held that “when other
`litigation shares a technological nexus with the patents in the case, a presumption of relevance for
`all documents in that case arises.” Apple, Inc. v. Samsung Elecs., Co., No. 12-CV-0630-
`LHK(PSG), 2013 WL 3246094, at *20 (N.D. Cal. June 26, 2013); see also Vasudevan Software,
`Inc. v. MicroStrategy Inc., No. 11-CV-06637-RS-PSG, 2013 WL 597655, at *3 (N.D. Cal. Feb.
`15, 2013). Here, such technical reports are additionally relevant because both parties have retained
`experts who rendered technical opinions in previous suits involving these patents. For example,
`due to protective order restrictions in those cases, Qualys’s technical expert Dr. Rubin did not
`retain copies of his prior reports, although they remain in Finjan’s possession. Both parties should
`have equal access to prior technical expert reports about the patents-in-suit. Indeed, Finjan has
`been repeatedly ordered by other courts to produce these reports. See, e.g., Finjan, Inc. v. Blue
`Coat Sys., Inc., No. 5:13-CV-03999-BLF, Dkt. No. 121 at 1 (N.D. Cal. Oct. 29, 2014) (Qualys Ex.
`C); Dkt. No. 108 at 8 (N.D. Cal. Oct. 9, 2014) (Qualys Ex. D); Finjan, Inc. v. ESET, LLC, No. 17-
`CV-183-CAB(BGS), 2018 WL 5263243, at *5-6 (S.D. Cal. Oct. 23, 2018).
`There is also no burden or risk of third-party confidentiality issues. Qualys’s request is
`narrowly tailored to seek only those reports from cases involving one or more of the patents-in-
`suit or related patents. Moreover, Finjan has never articulated how or why producing such reports
`would be unduly burdensome. Critically, despite Finjan’s “confidentiality” objections, most third
`parties have expressly consented to their production and none have yet objected. See, e.g., Qualys
`Ex. B. In any event, the protective order in this case should be sufficient to satisfy any concerns.
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`Case 4:18-cv-07229-YGR Document 79 Filed 07/22/20 Page 6 of 6
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`ATTESTATION
`In accordance with Civil Local Rule 5-1(i)(3), I attest that concurrence in the filing of this
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`document has been obtained from any other signatory to this document.
`
`
`/s/ Kristopher Kastens
`Kristopher Kastens
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