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`Case 5:15-cv-03295-BLF Document 319 Filed 09/28/17 Page 1 of 10
`
`
`
`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 OPPOSITION TO PLAINTIFF
`FINJAN, INC.’S DAUBERT MOTION TO
`EXCLUDE TESTIMONY OF MR. VINCE
`THOMAS
`
`Pretrial: October 5, 2017
`Time:
`1:30 p.m.
`Place: Courtroom 3, 5th Floor
`Judge: Honorable Beth Labson Freeman
`
`BLUE COAT’S OPP. TO DAUBERT MOTION
`15-cv-03295-BLF-SVK
`
`
`
`
`

`

`Case 5:15-cv-03295-BLF Document 319 Filed 09/28/17 Page 2 of 10
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`TABLE OF ABBREVIATIONS
`
`
`Plaintiff Finjan, Inc.
`Defendant Blue Coat Systems LLC
`U.S. Patent No. 6,154,844
`U.S. Patent No. 6,965,968
`U.S. Patent No. 7,418,731
`U.S. Patent No. 8,079,086
`U.S. Patent No. 8,225,408
`U.S. Patent No. 8,677,494
`U.S. Patent No. 9,189,621
`U.S. Patent No. 9,219,755
`’844, ’968, ’731, ’086, ’408, ’494, ’621, and ’755 patents, collectively
`Malware Analysis Appliance
`Security Analytics
`Dynamic Real Time Rating
`Global Intelligence Network
`Content Analysis System
`Advanced Secure Gateway
`Web Security Service
`Malware Analysis Service
`United States Patent and Trademark Office
`Plaintiff Finjan, Inc.’s Daubert Motion to Exclude Testimony of Mr.
`Vince Thomas
`Declaration of Hannah Lee in Support of Plaintiff Finjan Inc.’s Motions
`in Limine Nos. 1-4 and Daubert Motion, Dkt. No. 304
`Declaration of Robin L. Brewer in Support of Defendant Blue Coat
`Systems LLC’s Motions in Limine, Dkt. No. 307
`Declaration of Robin L. Brewer in Support of Defendant Blue Coat
`Systems LLC’s Oppositions to 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
`’844 patent
`’968 patent
`’731 patent
`’086 patent
`’408 patent
`’494 patent
`’621 patent
`’755 patent
`asserted patents
`MAA
`SA
`DRTR
`GIN
`CAS
`ASG
`WSS
`MAS
`Patent Office
`Br.
`
`Lee Decl.
`
`Brewer Decl.1
`
`Brewer Opp. Decl. 2
`
`Blue Coat I
`
`Sophos
`
`
`1 Unless otherwise specified, all numeric exhibits refer to those attached to the Brewer Decl.
`2 Unless otherwise specified, all alphabetic exhibits refer to those attached to the Brewer Opp.
`Decl.
`
`BLUE COAT’S OPP. TO DAUBERT MOTION
`15-cv-03295-BLF-SVK
`
`
`i
`
`

`

`Case 5:15-cv-03295-BLF Document 319 Filed 09/28/17 Page 3 of 10
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`Mr. Thomas’s opinions are well-supported by facts and data and the product of well-
`
`accepted principles and methods reliably applied to the facts of this case. See Daubert v. Merrell
`
`Dow Pharms., Inc., 509 U.S. 579 (1993). Finjan’s motion should be denied, and the jury should be
`
`allowed to decide whether it agrees with Mr. Thomas’s method of grouping related patents,
`
`discounting to account for a lump sum payment, accounting for government sales, and
`
`apportioning based upon usage.
`
`I.
`
`MR. THOMAS’S GROUPING OF THE PATENTS IS RELIABLE
`Finjan asserts multiple related patents in every case. Here, Finjan is asserting eight patents,
`
`and seven are related. Grouping patents to avoid multiple recoveries for the same invention is an
`
`issue in Finjan cases. In Sophos, for example, the Court explained that “[i]f Finjan’s patented
`
`technologies are truly overlapping then it can in fact only recover damages as if one patent is in
`
`suit.” See Finjan, Inc. v. Sophos, Inc., No. 14-cv-01197-WHO, 2016 WL 4268659, at *4 (N.D.
`
`Cal. Aug. 15, 2016). In this case, Finjan recognized the need to avoid double-counting and
`
`attempted to do so by counting each alleged infringing feature only once. Ex. 1 ¶ 148; see also id.
`
`¶ 149 (“Thus, my damages analysis ensures that there is no overlap of damages for patents that
`
`were already accounted for in the first case and no double-counting.”). Finjan’s feature-based
`
`methodology is flawed for many reasons, however, including its reliance upon a single document
`
`to identify features of each product; its failure to adequately support what it means for a feature to
`
`be “related” to a patent and counted; and its arbitrary assignment of equal value to all features. Id.
`
`at ¶¶ 145-148. Dr. Meyer also fails to calculate damages on a per patent basis. Ex. L. Despite
`
`these flaws, Blue Coat did not challenge Dr. Meyer’s feature-based attempt to avoid double-
`
`counting, because the credibility of Dr. Meyer’s approach is a question for the jury.
`
`The credibility of Mr. Thomas’s grouping of the patents is also a question for the jury. Mr.
`
`Thomas relies on terminal disclaimers indicating that certain asserted patents are “not patentably
`distinct” from other asserted patents as a starting point for grouping overlapping patents.
`
`Specifically, where the claims of a Finjan patent application were found not patentably distinct
`
`from claims in another Finjan patent or patent application, Finjan filed terminal disclaimers with
`
`the Patent Office to overcome double patenting rejections. See, e.g., Ex. M (explaining “double
`
`BLUE COAT’S OPP. TO DAUBERT MOTION
`15-cv-03295-BLF-SVK
`
`
`1
`
`

`

`Case 5:15-cv-03295-BLF Document 319 Filed 09/28/17 Page 4 of 10
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`patenting rejection is based on a judicially created doctrine grounded in public policy … to prevent
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`the unjustified or improper timewise extension of the ‘right to exclude’ granted by a patent and to
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`prevent possible harassment by multiple assignees.”). Terminal disclaimers limit the term of the
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`later-filed patent to that of the earlier patent, and they also restrict patent ownership. Ex. M
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`(stating that a terminally disclaimed patent “shall be enforceable only for and during such period
`
`that it and the prior patent are commonly owned.”). The policy behind this is “preventing
`
`harassment of an alleged infringer by multiple assignees asserting essentially the same patented
`
`invention,” and it equally applies when the assignee is the same. In re Hubbell, 709 F.3d 1140,
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`1146 (Fed. Cir. 2013); see also Simple Air, Inc. v. Google Inc., 204 F. Supp. 3d 908, 914 (E.D.
`
`Tex. 2016) (recognizing that policy preventing multiple assignees from suing on same invention
`
`applies equally to successive lawsuits from same assignee). The Court also recognized this
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`principle in Sophos. See, Sophos, 2016 WL 4560071, at *4. Mr. Thomas’s use of terminal
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`disclaimers to group the patents is a reasonable and reliable starting point to avoid double-counting
`
`damages for a single invention based upon the footprint of each patent. See Ex. D ¶¶ 89, 90
`
`(explaining that “the goal is to identify the value of the patented invention” and compensate Finjan
`
`once for use of a single invention). Finjan fails to mention that Mr. Thomas did not stop there.
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`Mr. Thomas also relied upon conversations with Blue Coat’s technical expert, Dr. Nielson,
`
`to group the related patents by “related technology based upon Finjan’s infringement allegations.”
`
`Ex. D at ¶ 47. For example, the ’086, ’494, ’786, ’621, and ’755 patents have the same
`specification and are all subject to terminal disclaimers, and Mr. Thomas relied upon Dr. Neilson
`
`to determine his patent grouping was appropriate because “the accused functionality and patent
`
`claims are sufficiently similar for the ’844, ’086, and ’494 patents that it is reasonable to group
`
`these patents together for purposes of determining damages.” Id. The same is true for the ’621
`
`and ’755 patents. Id. Finjan fails to address this evidence supporting Mr. Thomas’s grouping. See
`
`Apple Inc. v. Motorola, Inc., 757 F.3d 1286, 1321 (Fed. Cir. 2014) (“Experts routinely rely upon
`
`other experts hired by the party they represent for expertise outside of their field.”).
`
`Finjan also fails to cite a single case finding use of terminal disclaimers in this manner
`
`“contrary to law.” Br. at 1-3. Finjan’s two cited cases are irrelevant. See Pharmacia Corp. v. Par
`
`BLUE COAT’S OPP. TO DAUBERT MOTION
`15-cv-03295-BLF-SVK
`
`
`2
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`

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`Case 5:15-cv-03295-BLF Document 319 Filed 09/28/17 Page 5 of 10
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`
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`Pharms., Inc., 417 F.3d 1369, 1374 (Fed. Cir. 2005); Ortho Pharms. Corp v. Smith, 959 F.2d 936,
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`941-42 (Fed. Cir. 1992). Neither has anything to do with whether terminal disclaimers indicate
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`relatedness to avoid double-counting damages for a single invention. Rather, both are directed to
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`whether invalidity or unenforceability findings tainted a related patent. Id.
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`Finjan’s argument that using “the same hypothetical negotiation date for a patent group is
`
`factually implausible” (Br. at 2) is inconsistent with
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` It
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`is not only “factually plausible” that the parties would have negotiated a license that covered
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`related unissued applications, it is highly probable,
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` Mr.
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`Thomas further explained that using the hypothetical negotiation date for the earliest of the
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`grouped patents is consistent with the goals of the hypothetical negotiation construct, which “is
`
`intended to prevent hold up due to sunk costs and/or high switching costs after substantial market
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`place adoption.” Ex. D at ¶ 95. This goal cannot be met if the patent owner is able to move the
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`hypothetical negotiation later upon issuance of related patents not patentably distinct from earlier
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`patents. Id. Mr. Thomas’s grouping of the patents reflects a realistic hypothetical negotiation
`
`between the parties.
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`Finally, unlike Dr. Meyer and contrary to Finjan’s assertions, Mr. Thomas opined on
`
`damages on a patent-by-patent basis. Mr. Thomas identifies total damages for each patent. Ex. O.
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`For grouped patents, due to their relatedness, Mr. Thomas explained that damages would be the
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`same whether one or more than one of the patents was found infringed. Ex. P at 46:16-47:5. In
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`contrast, Dr. Meyer’s damages opinion separates products, not patents, rendering a jury unable to
`
`assign damages on a per patent basis and obscuring issues of double-counting. Ex. L.
`
`Finjan does not dispute that double-counting is to be avoided. Finjan also fails to explain
`
`any actual implication of its objection to Mr. Thomas’s grouping of the patents to avoid double-
`
`counting. Mr. Thomas’s approach is credible and reliable, and Finjan’s motion should be denied.
`
`BLUE COAT’S OPP. TO DAUBERT MOTION
`15-cv-03295-BLF-SVK
`
`
`3
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`Case 5:15-cv-03295-BLF Document 319 Filed 09/28/17 Page 6 of 10
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`
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`II. MR. THOMAS’S DISCOUNTING FOR LUMP SUM DAMAGES IS PROPER
`Both experts agree that the hypothetical negotiation would have resulted in a lump sum
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`payment covering the life of the asserted patents, i.e., a single payment at the time of the
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`agreement. Ex. 1 ¶¶ 8, 151; Ex. D ¶¶ 12, n. 8, 147. Both experts also agree that a discount rate
`
`must be applied when calculating lump sum payments. See Ex. 1 ¶ 152; Ex. D ¶ 147.
`
`Dr. Meyer describes Finjan’s “general approach” to
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`D ¶¶ 110, 147.
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`discounting.
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` Ex. 1 ¶¶ 119, 135; Ex.
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` there should be no dispute as to
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`
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` Ex. 1 ¶ 152
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`(emphasis added); see also Ex. D ¶ 147 (“When converting a running royalty to a lump-sum
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`payment for the life of the patents, it is the generally accepted licensing and valuation approach to
`
`determine the projected royalties for a license through patent expiration and then to discount such
`projected amounts to the date of the hypothetical negotiation.”). Despite its general practices and
`
`its expert’s opinions, Finjan disregards the hypothetical negotiation construct and applies a running
`
`royalty on past damages and lump sum payment for future damages. That is not what the parties
`
`would have agreed to because it reflects damages in present terms rather than at the time of a
`
`hypothetical negotiation between the parties. Mr. Thomas properly applies discounting back to the
`
`date of the hypothetical negotiation. Ex. D ¶ 147.
`
`This Court’s order in Blue Coat I addressed a different issue. In Blue Coat I, the dispute
`
`decided by the Court related to whether the discount applied should be to the start of the damages
`
`period, which included past damages, or to the date of the hypothetical negotiation. Blue Coat I,
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`Dkt. No. 367 at *12-13. Because presenting both theories to the jury would have been confusing
`
`and there was little practical difference, the Court adopted discounting back to the start of the
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`damages period. Id. In this case, Finjan mischaracterizes that order and seeks to take it too far.
`Finjan does not apply a discount back to the start of the damages period; it only discounts future
`
`damages. Ex. 1 ¶ 152. This is inconsistent with the agreed-upon lump sum methodology and with
`
`BLUE COAT’S OPP. TO DAUBERT MOTION
`15-cv-03295-BLF-SVK
`
`
`4
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`

`

`Case 5:15-cv-03295-BLF Document 319 Filed 09/28/17 Page 7 of 10
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`the hypothetical negotiation. Mr. Thomas’s opinion should be allowed.
`
`III. MR. THOMAS CORRECTLY ACCOUNTED FOR GOVERNMENT SALES
`Finjan criticizes Mr. Thomas for not opining on a question of fact—whether a sale was
`
`made with express or implied consent of the Government. Br. at 4. The jury should decide this
`fact. Mr. Thomas’s testimony addresses the impact that Blue Coat’s affirmative defense, if
`
`successful, may have on damages. In assessing that impact, Mr. Thomas analyzed a detailed sales
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`spreadsheet exported from Blue Coat’s ERP system to identify Federal government entities. Ex. P
`
`at 261:4-10. The spreadsheet was obtained from a reliable source and identifies end users. That a
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`sale was made to
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`
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` is more than sufficient to support Mr. Thomas’s opinion regarding sales
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`to be excluded from damages because they are sales to the Federal government.
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`The cases cited by Finjan are again inapposite. Br. at 5. In Power Integration, the expert
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`was unable to identify the source of documents relied on and responded that he could only assume
`
`they came from the internet. Power Integrations, Inc. v. Fairchild Semiconductor Int’l, Inc., 711
`
`F.3d 1348, 1373 (Fed. Cir. 2013). MediaTek provides even less support for Finjan’s position as
`the data relied upon by the expert was found reliable and not excluded, because actual sales
`
`information was unavailable and analyst’s estimates were reliable source of data. MediaTek Inc. v.
`
`Freescale Semiconductor, Inc., No. 11-cv-5341-YGR, 2014 WL 2854590, at *5 (N.D. Cal. June
`
`20, 2014). Here, the source of data for government sales is reliable. Finjan’s primarily criticizes
`
`Mr. Thomas for not opining on fact questions beyond his expertise. Finjan’s other criticisms go to
`
`weight, not admissibility, of Mr. Thomas’s evidence. Finjan’s motion should be denied.
`
`IV. MR. THOMAS RELIABLY APPORTIONED THE ROYALTY BASE
`Finjan accuses seven product combinations of infringement: WebPulse/GIN, WSS with
`
`WebPulse/GIN, WSS with MAS, ASG with MAA, WSS with MAS, ProxySG and CAS with
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`MAA, and SA with MAA. See Dkt. No. 289 at 2-3. The primary accused functionality exists
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`within Blue Coat’s scan engines, MAA and DRTR (used with WebPulse). MAA is sold
`
`separately, and Blue Coat counted 100% of MAA revenue in its damages calculation. DRTR is
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`not sold separately, and Finjan did not object to Blue Coat’s apportionment of combinations with
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`BLUE COAT’S OPP. TO DAUBERT MOTION
`15-cv-03295-BLF-SVK
`
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`5
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`

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`Case 5:15-cv-03295-BLF Document 319 Filed 09/28/17 Page 8 of 10
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`
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`DRTR. See Ex. D ¶¶ 166-169. The other identified products (WebPulse, GIN, WSS, ASG,
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`ProxySG, and SA) often play no more than an incidental role in the alleged infringement. Finjan
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`includes these products in an attempt to drive up its alleged damages. It is critical that revenue for
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`such products is only counted when that product is used in an alleged infringing combination.
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`Usage is generally a reliable measure of the value of the invention. See Lucent Techs., Inc.
`
`v. Gateway, Inc., 580 F.3d 1301, 1325, 1327 (Fed. Cir. 2009). It is Finjan’s burden to demonstrate
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`use of the accused combinations. Id. Finjan performs no such analysis and instead addresses each
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`product separately. Cf. Ex. D ¶ 157 (commenting that “Proxy SG, CAS and ASG are sold without
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`MAA over
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` of the time.”). Mr. Thomas properly considered actual use of the accused
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`combinations and reasonably relies upon the best evidence available showing use. See also id. ¶
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`160 (explaining that Finjan accused specific combinations of products and, while traffic to some
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`products may be large, redirected traffic to the combination is significantly less, so “there is only a
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`small amount of traffic that could potentially infringe the asserted patents.”).
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`Finjan’s takes the evidence upon which Mr. Thomas relies in isolation, failing to recognize
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`correlations. Br. at 5-6. Finjan separately addresses Mr. Thomas’s identification of two instances,
`
`each demonstrating that approximately
`
` of overall traffic received by CAS is
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`sent to MAA. Ex. D ¶¶ 162-163. Finjan baselessly claims that Mr. Thomas did not explain the
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`data or how each instance is independently representative, and Finjan accuses Mr. Thomas of
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`conflating requests and objects, which he did not do. See Ex. P at 251:3-20. In the first instance,
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`
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` Ex. D ¶ 162;
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`Ex. Q. This was done in the normal course of business to confirm
`
`of CAS traffic was sent to MAA. Id. The second instance relates to data collected from
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` Ex. D ¶ 162. The test demonstrated that around
`
`
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` Id. ¶ 163; Ex. 12. Approximately
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` of CAS traffic was sent to
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`MAA in this test. Ex. D ¶ 163. These separate tests, conducted at different times, and involving
`
`different data pods, identify a close correlation with only
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` variation, which supports the
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`BLUE COAT’S OPP. TO DAUBERT MOTION
`15-cv-03295-BLF-SVK
`
`
`6
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`

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`accuracy of the information. Ex. D ¶¶ 162-163. Mr. Thomas did not stop there.
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`Mr. Thomas also spoke to Tim Larsen, a Blue Coat engineer. Id. Based on his
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`conversation with Mr. Larsen, Mr. Thomas testified that it was his understanding these tests were
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`representative of traffic flow from CAS to MAA. Ex. P at 207:4-11. Mr. Thomas further testified
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`repeatedly that the data cited was “representative of how the traffic would flow and we’ve gotten a
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`couple of statistics in that regard.” Id. at 208:8-10; see also id. at 209:2-10, 229:15-230:15. Mr.
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`Thomas further relied on Blue Coat’s interrogatory response which additionally identifies
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`information from two Blue Coat customers demonstrating traffic flows between CAS and MAA
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`over a
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`indicates that
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` Ex. Q. The customer correspondence
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` does not
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`significantly impact overall traffic flows. Id. To be conservative, Mr. Thomas used a 1%
`apportionment to represent ProxySG3 and CAS use with MAA.
`Regarding Mr. Thomas’s SA apportionment, Finjan’s dispute relates to whether the
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`information was properly disclosed, the subject of Finjan’s Motion in Limine No. 4, which must
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`fail for at least the following reasons. Mr. Thomas may properly rely on Matt Wood in support of
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`SA apportionment. See Bourns, Inc. v. Raychem Corp., No. 1999 U.S. Dist. LEXIS 23677 at *6
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`(C.D. Cal. 1999). The SA to MAA combination represents a new infringement theory for which
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`Blue Coat did not have sufficient notice to include usage information in its interrogatory responses.
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`See, e.g., Dkt. No. 277, at *7-9 (striking Finjan’s expert reports on two patents in view of new
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`infringement theories). And Finjan’s interrogatories did not request the specific usage information
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`relied upon by Mr. Thomas. Ex. 12.
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`Mr. Thomas reasonably relied upon usage statistics, Mr. Larsen’s representations regarding
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`the accuracy of such statistics, and information provided in Blue Coat’s interrogatory response
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`relating to customer tests. All data was consistent showing
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` of traffic sent to MAA, yet
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`Mr. Thomas took a conservative approach applying a 1% apportionment to the products accused in
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`combination with MAA. Finjan’s criticism is directed to the weight to be given this information,
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`not its admissibility, and Finjan’s motion should be denied.
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`3 This apportionment is even more conservative with respect to ProxySG, as usage information
`indicates about
` of total ProxySG traffic is sent to MAA. Ex. D ¶ 163.
`BLUE COAT’S OPP. TO DAUBERT MOTION
`15-cv-03295-BLF-SVK
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`Case 5:15-cv-03295-BLF Document 319 Filed 09/28/17 Page 10 of 10
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`Dated: September 28, 2017
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`MORRISON & FOERSTER LLP
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`By:
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`/s/ Stefani E. Shanberg
`Stefani E. Shanberg
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`Attorneys for Defendant
`BLUE COAT SYSTEMS LLC
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`BLUE COAT’S OPP. TO DAUBERT MOTION
`15-cv-03295-BLF-SVK
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