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`Case 5:15-cv-03295-BLF Document 299 Filed 09/21/17 Page 1 of 8
`
`
`
`STEFANI E. SHANBERG (State Bar No. 206717)
`sshanberg@mofo.com
`JENNIFER J. SCHMIDT (State Bar No. 295579)
`jschmidt@mofo.com
`NATHAN B. SABRI (State Bar No. 252216)
`nsabri@mofo.com
`ROBIN L. BREWER (State Bar No. 253686)
`rbrewer@mofo.com
`EUGENE MARDER (State Bar No. 275762)
`emarder@mofo.com
`MADELEINE E. GREENE (State Bar No. 263120)
`mgreene@mofo.com
`MICHAEL J. GUO (State Bar No. 284917)
`mguo@mofo.com
`MORRISON & FOERSTER LLP
`425 Market Street
`San Francisco, California 94105
`Telephone:
`(415) 268-7000
`Facsimile:
`(415) 268-7522
`
`DAVID A. NELSON (Pro Hac Vice)
`davenelson@quinnemanuel.com
`NATHAN A. HAMSTRA (Pro Hac Vice)
`nathanhamstra@quinnemanuel.com
`QUINN EMANUEL URQUHART & SULLIVAN LLP
`500 W. Madison Street, Suite 2450
`Chicago, Illinois 60661
`Telephone:
`(312) 705-7400
`Facsimile:
`(312) 707-7401
`
`Attorneys for Defendant
`BLUE COAT SYSTEMS LLC
`UNITED STATES DISTRICT COURT
`
`NORTHERN DISTRICT OF CALIFORNIA
`
`SAN JOSE DIVISION
`
`FINJAN, INC., a Delaware Corporation,
`
`Case No.: 15-cv-03295-BLF-SVK
`
`Plaintiff,
`
`v.
`
`BLUE COAT SYSTEMS LLC, a Delaware
`Corporation,
`
`Defendant.
`
`DEFENDANT BLUE COAT SYSTEMS
`LLC’S MOTION IN LIMINE NO. 5 TO
`EXCLUDE IRRELEVANT FINANCIAL
`INFORMATION AND CERTAIN
`DAMAGES ARGUMENTS
`
`Pretrial: October 5, 2017
`Time:
`1:30 p.m.
`Place: Courtroom 3, 5th Floor
`Judge: Honorable Beth Labson Freeman
`
`BLUE COAT’S MOTION IN LIMINE NO. 5
`15-cv-03295-BLF-SVK
`
`
`

`

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`Case 5:15-cv-03295-BLF Document 299 Filed 09/21/17 Page 2 of 8
`
`
`
`TABLE OF ABBREVIATIONS
`
`
`Plaintiff Finjan, Inc.
`Defendant Blue Coat Systems LLC
`Expert Report of Christine Meyer
`Deposition Transcript of Dr. Christine Meyer
`Declaration of Robin L. Brewer in Support of Defendant Blue Coat
`Systems LLC’s Motions in Limine
`Finjan, Inc. v. Blue Coat Systems, Inc., No. 5:13-cv-03999-BLF (N.D.
`Cal.)
`Finjan, Inc. v. Sophos, Inc., No. 14-cv-01197-WHO (N.D. Cal.)
`
`Finjan or Plaintiff
`Blue Coat or Defendant
`Ex. 1
`Ex. 2
`Brewer Decl.1
`
`Blue Coat I
`
`Sophos
`
`
`1 Unless otherwise specified, all exhibits refer to those attached to the Brewer Decl.
`
`BLUE COAT’S MOTION IN LIMINE NO. 5
`15-cv-03295-BLF-SVK
`
`
`i
`
`

`

`Case 5:15-cv-03295-BLF Document 299 Filed 09/21/17 Page 3 of 8
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`Finjan has identified approximately 1,200 trial exhibits, 8 expert witnesses, and 27 fact
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`witnesses, rendering it largely impossible for Blue Coat to know what Finjan intends to present at
`
`trial. But Finjan has developed a track record that is a harbinger of things to come, and there are
`
`indications that Finjan intends to follow its playbook here. By this motion, Blue Coat seeks to
`
`proactively address anticipated issues to avoid the presentation of improper material to the jury.
`
`Specifically, Finjan has a track record of advancing what it calls a “fact-based theory” of
`damages—which means that Finjan plans in advance to present new damages theories at trial. In
`
`each of its last two trials, Finjan has used attorney argument to introduce undisclosed damages
`
`theories. Finjan’s arguments are predicated on its misapprehension that a reasonable royalty—the
`
`measure of damages Finjan disclosed—is the “floor” or a “bare minimum” and that Finjan is
`
`entitled to more. Finjan has yet to disclose that it intends to seek more than a reasonable royalty
`in this case, but Blue Coat has every reason to believe that it is coming.2 Finjan also seeks to
`introduce highly prejudicial and irrelevant financial information, such as Blue Coat’s total
`
`revenues and the price paid by Symantec to acquire Blue Coat. Pursuant to Federal Rule of
`
`Evidence 403 and Federal Rule of Civil Procedure 37, Blue Coat moves to preclude Finjan from
`
`arguing that it is entitled to more than a reasonable royalty and from introducing prejudicial
`
`financial documents not tied to the accused products.
`
`I.
`
`LEGAL STANDARDS
`Damages arguments may be excluded. Motions in limine arise from “the district court’s
`
`inherent authority to manage the course of trials.” Luce v. U.S., 469 U.S. 38, 41 n.4 (1984).
`
`Motions in limine may be used to limit the scope of damages arguments. Kassim v. City of
`
`Schenactady, 415 F.3d 246, 250 (2nd Cir. 2005). Motions in limine may also be used as a means
`
`of excluding evidence and arguments not properly disclosed in accordance with Rule 37. Yeti by
`
`Molly, Ltd. v. Deckers Outdoor Corp., 259 F.3d 1101, 1105-06 (9th Cir. 2001).
`
`2 Both parties’ experts opined that the appropriate measure of damages is a lump sum reasonable
`royalty, but Finjan edited the jury materials to suggest that there is more than one way to calculate
`lump sum damages and the jury could apply a “price per user” calculation. Ex. 100. Finjan
`removed language from the verdict form that damages would be limited to patents found
`infringed and to the life of the patents. Ex. 101. While Blue Coat can see that new damages
`theories are coming, they have not been adequately disclosed leaving Blue Coat to speculate
`based on Finjan’s track record regarding exactly what they will be.
`
`BLUE COAT’S MOTION IN LIMINE NO. 5
`15-cv-03295-BLF-SVK
`
`
`1
`
`

`

`Case 5:15-cv-03295-BLF Document 299 Filed 09/21/17 Page 4 of 8
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`Damages theories must be disclosed. A patentee is required to disclose “a computation
`
`of each category of damages claimed.” Fed. R. Civ. P. 26(a)(1)(A)(iii). Undisclosed theories are
`
`excluded unless the failure to disclose was substantially justified or is harmless. Fed. R. Civ. P.
`
`37(c)(1). Courts preclude parties from introducing undisclosed damages theories during trial.
`
`See, e.g., MicroStrategy, Inc. v. Bus. Objects, S.A., 429 F.3d 1344, 1356 (Fed. Cir. 2010) (“The
`
`district court also acted within its discretion in excluding MicroStrategy’s non-expert damages
`
`theories”); Ex. 102, Radware, Ltd. v. F5 Networks, Inc., No. 13-cv-02024-RMW, Dkt. No. 547,
`
`slip op. at *1 (N.D. Cal. March 10, 2016) (“Radware indicated that it intends to present damages
`
`theories in its closing argument seeking more than twice the damages that its retained expert on
`
`damages computed. . . . Radware will not be allowed to do so.”); see also, Sophos, Ex. 103 at
`
`1735-37 (Following an objection during closing arguments, counsel for Finjan responded that it
`
`was allowed to develop a “fact-based theory” and that it should not be “limited to what the
`
`damages expert said” to which the Court responded: “I’m not going to allow you to do this.”).
`
`Damages arguments must be not be speculative. Evidence in support of damages
`
`“must be reliable and tangible, and not conjectural or speculative.” Garretson v. Clark, 111 U.S.
`
`120, 121 (1884); see also LaserDynamics, Inc. v. Quanta Comp., Inc., 694 F.3d 51, 67 (Fed. Cir.
`
`2012). A damages theory must be based on sound economic and factual predicates.
`
`LaserDynamics, 694 F.3d at 67; see also Oiness v. Walgreen Co., 88 F.3d 1025, 1033 (Fed. Cir.
`
`1996) (“Without credible economic testimony, this court cannot permit a jury to base its award on
`
`speculation.”). Damages must be proven with concrete and reliable evidence. Ericsson, Inc. v.
`
`D-Link Sys., Inc., 773 F.3d 1201, 1226 (Fed. Cir. 2014).
`
`A reasonable royalty is not the “floor” for Finjan. There are two types of damages—
`
`lost profits and reasonable royalties. See, e.g., Hanson v. Alpine Valley Ski Area, Inc., 718 F.2d
`
`1075, 1078 (Fed. Cir. 1983) (“There are two methods by which damages may be calculated under
`
`[§ 284]. If the record permits the determination of actual damages, namely, the profits the
`
`patentee lost from the infringement, that determination accurately measures the patentee’s loss. If
`
`actual damages cannot be ascertained, then a reasonable royalty must be determined.”). When 35
`
`U.S.C. § 284 says, upon a finding of infringement, “the court shall award the claimant damages
`
`BLUE COAT’S MOTION IN LIMINE NO. 5
`15-cv-03295-BLF-SVK
`
`
`2
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`

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`Case 5:15-cv-03295-BLF Document 299 Filed 09/21/17 Page 5 of 8
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`
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`adequate to compensate for the infringement, but in no event less than a reasonable royalty,” it
`
`means that when lost profits are unavailable or inadequate to compensate the patent owner, a
`
`reasonable royalty should be calculated either instead of lost profits or to make up the difference.
`
`See State Indus., Inc. v. Mor-Flo Indus., Inc., 883 F.2d 1573, 1577 (Fed. Cir. 1989) (“[T]he award
`
`may be split between lost profits as actual damages to the extent they are proven and a reasonable
`
`royalty for the remainder.”); Panduit Corp. v. Stahlin Bros. Fibre Works, 575 F.2d 1152, 1157
`
`(6th Cir. 1978) (“When actual damages, e.g., lost profits, cannot be proved, the patent owner is
`
`entitled to a reasonable royalty.”). Finjan did not and could not advance a lost profits theory and,
`
`as such, Finjan is limited to a reasonable royalty. See, e.g., Hanson, 718 F.2d at 1078.
`
`II.
`
`FINJAN SHOULD NOT BE PERMITTED TO ASK THE JURY FOR MORE
`THAN ITS DISCLOSED REASONABLE ROYALTY
`
`The Federal Rules prevent Finjan from using trial to advance an undisclosed damages
`
`theory. See Fed. R. Civ. P. 26(a)(1)(A)(iii); Fed. R. Civ. P. 37(c)(1). Finjan responded to an
`
`interrogatory requesting identification of Finjan’s reasonable royalty theory as follows:
`
`
`
`
`
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`Ex. 12 Response to Interrogatory No. 11 at 38-39 (emphasis added). Other approaches may have
`
`been “considered,” but the only “details of the amount and basis for such reasonable royalty …
`
`found in Finjan’s forthcoming expert report” are reasonable royalties based upon feature
`apportionment.3 Ex. 1. Finjan provided no additional detail in response to an interrogatory
`
`3 Dr. Meyer did present “a reasonableness check” based on a per user fee. Ex. 1 at ¶¶ 170-74. It
`is among the subjects of Blue Coat’s Daubert motion, in part, because it is for a single product, is
`not specific to any patent, is not the basis for a reasonable royalty calculation, has no evidentiary
`
`BLUE COAT’S MOTION IN LIMINE NO. 5
`15-cv-03295-BLF-SVK
`
`
`3
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`

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`Case 5:15-cv-03295-BLF Document 299 Filed 09/21/17 Page 6 of 8
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`requesting disclosure of any other damages theories. Ex. 12 at 43-44.
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`Finjan’s track record and edits to the jury materials in this case indicate that Finjan has no
`
`intention of sticking to its disclosed theory. Finjan will argue for more than a reasonable royalty,
`
`as it did in Blue Coat I and attempted to do in Sophos. In Blue Coat I, Finjan argued in closing:
`
`“In no event less than a reasonable royalty. That’s the floor. Based on the facts, it can be higher
`
`than that, but no less than that, that’s the floor, not the ceiling.” Ex. 10 at 2081:14-21; see also,
`
`Ex. 99 at 189:20-191:2; Ex. 103 at 1732:11-17 (referring to the reasonable royalty as the “floor”
`and a “bare minimum”).4 In Sophos, Finjan argued, “[y]ou then look at what Dr. Layne-Farrar
`talked about as the floor for reasonable royalties. . . . That’s the floor. That’s the bottom line.
`
`That’s what you say is a good deal for Sophos; not a great deal for Finjan.” Ex. 103 at 1732:11-
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`17. Sophos objected that Finjan was raising a “new theory not in the evidence.” Finjan
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`responded that it was a “fact-based theory” and that it should not be “limited to what the damages
`
`expert said, and, in fact, [Finjan] didn’t say in [its] interrogatory response that would be only
`
`based on our damages expert opinion.” The Court responded: “I’m not going to allow you to do
`
`this. I don’t think it was disclosed in a way that was fair to test an opinion.” Ex. 103 at 1735-37.
`
`Because Finjan has only adequately disclosed a reasonable royalty based on feature
`apportionment, it should not be allowed to raise other theories at trial. Disclosure in the jury
`materials of new theories is not adequate disclosure under Rule 37, and it is highly prejudicial.
`
`See, e.g., MicroStrategy, 429 F.3d at 1356 (“district court also acted within its discretion in
`
`excluding [plaintiff’s] non-expert damages theories”). Finjan has tried several cases on the
`
`asserted patents. There is no excuse for Finjan to develop an undisclosed damages theory at trial.
`
`foundation, would be confusing to a jury, and is prejudicial to Blue Coat. Dr. Meyer admits that
`she performed no analysis to verify the reasonableness of Finjan’s aspirational $8 per user fee and
`relied on Finjan’s “view of the world” as reported by its CEO. Ex. 2 at 242:8-246:3. The $8 per
`user fee does not reflect Dr. Meyer’s opinion of a reasonable royalty, but merely Finjan’s opening
`negotiating figure. Id.; see also ASK Chems., LP v. Comp. Packages, Inc., 593 Fed.Appx. 506,
`510 (6th Cir. 2014). At recent oral arguments in Blue Coat I, the Federal Circuit questioned the
`support for Finjan’s use of an $8 per user fee. Ex. 7 at 37:6-10, 38:14-39:1.
`4 Blue Coat’s counsel did not object when this argument was made, and Blue Coat’s post-trial
`challenge to it was denied. Whether the award is supported by substantial evidence is on appeal.
`Finjan does not deny that it asked the jury to disregard its expert’s apportionment, and the Federal
`Circuit questioned Finjan’s use of “a starting point for negotiations” and “a software license” as
`support for the theory Finjan introduced at trial. Ex. 7 at 40:8-21.
`
`BLUE COAT’S MOTION IN LIMINE NO. 5
`15-cv-03295-BLF-SVK
`
`
`4
`
`

`

`Case 5:15-cv-03295-BLF Document 299 Filed 09/21/17 Page 7 of 8
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`
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`Finjan knows what it is doing and has improperly planned in advance to ask the jury to award a
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`speculative sum greater than that disclosed. See e.g., Oiness, 88 F.3d at 1033 (“Without credible
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`economic testimony, this court cannot permit a jury to base its award on speculation.”).
`
`Specifically, Finjan should not be allowed to raise new damages theories at trial, invite the jury to
`
`speculate as to damages, or misrepresent the meaning of the statute by referring to the reasonable
`
`royalty its expert calculated as the “floor” or “bare minimum.”
`
`III.
`
`FINANCIAL INFORMATION NOT TIED TO THE ACCUSED PRODUCTS IS
`PREJUDICIAL AND SHOULD BE EXCLUDED.
`
`Disclosures of overall revenue “skew the damages horizon for the jury.” See, e.g., Uniloc
`
`USA, Inc. v. Microsoft Corp., 632 F.3d 1292, 1320 (Fed. Cir. 2011); LaserDynamics, 694 F.3d at
`
`68 (“Admission of such overall revenues, which have no demonstrated correlation to the value of
`
`the patented feature alone, only serve to make a patentee’s proffered damages amount appear
`
`modest by comparison, and to artificially inflate the jury’s damages calculation beyond that
`
`which is ‘adequate to compensate for the infringement.’”). Finjan should not be allowed to
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`introduce Blue Coat’s overall revenue; Finjan has accused only a subset of Blue Coat’s products.
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`In Blue Coat I, this Court found that Finjan should not be permitted to disclose Blue Coat’s total
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`revenues as they are of little probative value and likely to unfairly influence the jury. Blue Coat I,
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`Dkt. No. 367 at 7. Finjan has also identified exhibits directed to the acquisition price paid by
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`Symantec and its revenues since the acquisition. Ex. 11; Brewer Decl. at ¶ 105. None of these
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`exhibits are tied to the accused products or relevant to this case, and all should be excluded as
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`irrelevant, likely to skew the jury’s perspective on damages, and highly prejudicial.
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`IV. CONCLUSION
`Blue Coat requests the Court preclude Finjan from introducing new damages theories at
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`trial, inviting the jury to speculate as to damages, or referring to reasonable royalties as the
`
`“floor” or “bare minimum,” and to exclude certain irrelevant financial information.
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`BLUE COAT’S MOTION IN LIMINE NO. 5
`15-cv-03295-BLF-SVK
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`5
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`

`

`Case 5:15-cv-03295-BLF Document 299 Filed 09/21/17 Page 8 of 8
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`
`
`Dated: September 21, 2017
`
`
`MORRISON & FOERSTER LLP
`
`By: /s/ Stefani E. Shanberg
`Stefani E. Shanberg
`
`Attorneys for Defendant
`BLUE COAT SYSTEMS LLC
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`BLUE COAT’S MOTION IN LIMINE NO. 5
`15-cv-03295-BLF-SVK
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`6
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