Case 5:17-cv-04467-BLF Document 398 Filed 03/11/21 Page 1 of 9
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`Juanita R. Brooks (CA SBN 75934) brooks@fr.com
`Roger A. Denning (CA SBN 228998) denning@fr.com
`Jason W. Wolff (CA SBN 215819) wolff@fr.com
`John-Paul Fryckman (CA 317591) fryckman@fr.com
`K. Nicole Williams (CA291900) nwilliams@fr.com
`FISH & RICHARDSON P.C.
`12860 El Camino Real, Ste. 400
`San Diego, CA 92130
`Telephone: (858) 678-5070 / Fax: (858) 678-5099
`
`Proshanto Mukherji (Pro Hac Vice) mukherji@fr.com
`FISH & RICHARDSON P.C.
`One Marina Park Drive
`Boston, MA 02210
`Phone: (617) 542-5070/ Fax: (617) 542-5906
`
`Robert Courtney (CA SBN 248392) courtney@fr.com
`FISH & RICHARDSON P.C.
`3200 RBC Plaza
`60 South Sixth Street
`Minneapolis, MN 55402
`Phone: (612) 335-5070 / Fax: (612) 288-9696
`
`Attorneys for Plaintiff
`FINJAN LLC
`
`UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF CALIFORNIA
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`(SAN JOSE DIVISION)
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`FINJAN LLC., a Delaware Limited Liability
`Company,
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`Case No. 5:17-cv-04467-BLF (VKD)
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` Plaintiff,
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`v.
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`SONICWALL, INC., a Delaware Corporation,
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` Defendant.
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`PLAINTIFF FINJAN LLC’S OPPOSITION
`TO DEFENDANT SONICWALL INC.’S
`MOTIONS TO EXCLUDE EXPERT
`TESTIMONY AND TO EXCLUDE
`BACKGROUND OPINIONS
`(MOTION IN LIMINE NO. 1) [DKT. 360]
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`Date: March 18, 2021
`Time: 1:30 PM
`Hon. Beth Labson Freeman
`Ctrm: 3, 5th Floor
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`REDACTED VERSION OF DOCUMENT SOUGHT TO BE SEALED
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`Case No. 17-cv-04467-BLF (VKD)
` FINJAN’S OPPOSITION TO MOTION IN LIMINE NO. 1
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`Case 5:17-cv-04467-BLF Document 398 Filed 03/11/21 Page 2 of 9
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`TABLE OF REFERENCED EXHIBITS1
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`Description
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`Exhibit
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`Expert Report of DeForest McDuff, Ph.D. dated September 4, 2020
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`Expert Report of Dr. Eric Cole Regarding Technology Tutorial and Infringement
`by SonicWall, Inc. of Patent Nos. 6,154,844; 7,058,822; 7,647,633 and 8,677,494
`dated September 3, 2020
`Expert Report of Dr. Nenad Medvidovic Regarding Infringement by SonicWall,
`Inc. of Patent Nos. 8,225,408; 7,975,305 and 8,141,154 dated September 3, 2020
`Expert Report of Dr. Aaron Striegel dated September 3, 2020
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`A
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`B
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`D
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`F
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`1 All exhibits are attached to the Omnibus Declaration of Robert Courtney.
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`Case 5:17-cv-04467-BLF Document 398 Filed 03/11/21 Page 3 of 9
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`I.
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`INTRODUCTION
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`Due to errors both economic and legal, the Court should deny SonicWall’s motion for a
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`windfall as to past damages through misapplication of discounting. SonicWall’s second motion
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`(seeking preclusion of relevant testimony on SonicWall’s state of mind pre-suit) has no cognizable
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`relationship to the first, and is a separate motion in limine exceeding the Court’s limit of five
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`motions. The Court should deny it on that basis or, should it reach them, deny it on the merits.
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`II.
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`BACKGROUND (FIRST MOTION)
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`Economist DeForest McDuff, Ph.D. modeled damages across the entire period of accused
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`infringement, extending back to the date of pre-suit notice and forward to the latest date of
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`infringement in the future. As part of his model, Dr. McDuff computed how much SonicWall
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`would owe (again, assuming infringement) if value were assessed on the date Dr. McDuff served
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`his report, Sept. 4, 2020. See Exh. A. This included both “past” (pre-Sept. 2020) damages based
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`on SonicWall’s actual financial data, and “future” (post-Sept. 2020) damages projected from
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`available information.
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`Because his model hypothesized SonicWall paying in mid-2020 for infringement months
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`or years hence, Dr. McDuff’s model acknowledged that a typical economic actor requires a
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`“discount” when paying for future acts, due to general uncertainty about the future and the time
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`value of money—not the uncertainty of infringement (which was hypothesized), but uncertainty
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`about other market conditions that might affect the “present value” of future liabilities. E.g., Exh.
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`A at ¶¶ 114–15. Dr. McDuff estimated an appropriate discount for an actor in SonicWall’s
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`position, and applied it so as to accurately compute the net present value (to an actor in
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`SonicWall’s position, as of mid-2020) of the stream of future liability.
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`As to past liability (i.e., liability before the date of the report), Dr. McDuff explained that
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`no discounting was appropriate. Id. & n.312. This was because the parties at the hypothetical
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`negotiation would agree to look at actual infringement, and to determine the lump sum amount
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`Case 5:17-cv-04467-BLF Document 398 Filed 03/11/21 Page 4 of 9
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`based on that infringement, as Finjan has done in its actual license agreements. Dr. McDuff noted
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`there is no uncertainty as to past infringement at the time of SonicWall’s payment to Finjan, and
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`thus concluded that, as an economic matter, no discounting was required. Put differently, Dr.
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`McDuff reasoned that while it was economically reasonable to consider SonicWall seeking and
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`receiving a discount for projected liabilities, it does not have leverage to require the same for
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`liabilities where the record is fixed and certain. Further confirming his approach, Dr. McDuff
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`noted numerous documents from Finjan’s archives showing that it did not offer accused infringers
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`time-value of money discounts for past infringement.
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`From an abundance of caution, Dr. McDuff also supplied an alternate computation.
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`Instead of computing the economic value of damages as of his report (Sept. 2020), he also
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`modeled value on the first day of the damages period (June 10, 2014). In this model, because
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`value was assessed in 2014 entirely for liabilities that accruing in the future when (under the
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`model’s limited view) market conditions would be uncertain, the model gave SonicWall a
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`discount rate for the entire stream of payments. But in this version, SonicWall took a windfall. It
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`benefited from the assumption that the conditions surrounding its infringement from 2014–2020
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`were uncertain, when in fact there is no uncertainty at all. Still further, the discounting of past
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`infringement was inconsistent with Finjan’s licensing policies in other contexts. For this reason
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`Dr. McDuff viewed the alternate, excessively discounted model as “conservative” and disfavored.
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`III. ARGUMENT (FIRST MOTION)
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`The central allegation in SonicWall’s motion is that Dr. McDuff’s decision not to discount
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`past infringement was “based primarily on Finjan’s willfulness allegations.” (Mot. 1) That
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`allegation is demonstrably incorrect. Nowhere did Dr. McDuff state that his decision was based
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`on SonicWall’s state of mind, or bad faith, or other willfulness-type considerations. To the
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`contrary, Dr. McDuff’s report explained that the decision to discount future liabilities was based
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`on “the uncertainty of negotiating a license [in Sept. 2020] in advance of sales that have not yet
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`occurred.” Exh. A at ¶ 114. Dr. McDuff’s report also explained that the decision not to discount
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`past liability was because “the past infringement has already occurred with certainty and an exact
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`value based on sales data.” Id. SonicWall’s motion neither cites nor discusses these. Further
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`confirming the reasonableness of his approach, Dr. McDuff provided eight independent economic
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`bases for his discounting structure. Id.
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`The sole citation SonicWall offers to suggest that Dr. McDuff’s decision was based on
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`willfulness considerations was his statement that his model as a whole “reflects that SonicWall has
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`earned revenue and profits through ongoing infringement over time via Finjan’s technology
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`without compensating Finjan.” Mot. 2 (quoting Exh. A at ¶ 114). This is not, as SonicWall
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`inaccurately styles it, a willfulness basis. It is a description that (at least according to Finjan’s
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`allegations, which Dr. McDuff assumes are correct) SonicWall’s infringement was consistent and
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`ongoing, without any meaningful intercessions or pauses. There is no reference to any aspect of
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`SonicWall’s mental state, nor anything else cognizable as willfulness. See generally Halo Elecs.,
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`Inc. v. Pulse Elecs., Inc., 136 S. Ct. 1923, 1933 (2016) (willfulness connotes action while
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`“knowing or having reason to know of facts which would lead a reasonable man to realize his
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`actions are unreasonably risky”).
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`As to legal authority, SonicWall’s sole material citation is to this Court’s order in Finjan,
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`Inc. v. Cisco Systems, Inc., No. 17-cv-00072-BLF, slip op. (N.D. Cal. Apr. 17, 2020), D.I. 555, but
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`Cisco’s rationale has no application here. As SonicWall concedes, in Cisco the struck model
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`based its discounting approach “solely on the assumption that Cisco willfully infringed.” Slip op.
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`at 10. Not so here. None of Dr. McDuff’s stated bases relate to willfulness in any sense, and
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`SonicWall has pointed to nothing suggesting otherwise. Further, in Cisco the struck model
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`applied no discounting at all, not even for liabilities accruing after the modeled date. Id. at 11
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`(noting expert’s conclusion “that time value of money discount would not have been applied”).
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`Again, not the case here, where Dr. McDuff properly discounted where appropriate, and described
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`in detail his basis for doing so. SonicWall’s statement that Dr. McDuff’s report is “just like
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`Finjan’s damages report from Dr. Layne-Farrar in Cisco” (Mot. 1) is simply not true.
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`Finally, as to SonicWall’s contention that Dr. McDuff erred as a matter of law by utilizing
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`a date of Sept. 9, 2020 as the modeled date, rather than a date years before the start of damages
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`(Mot. 2), SonicWall is plainly incorrect. That the hypothetical negotiation guides the
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`establishment of the royalty rate and base says nothing about the appropriate discounting once
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`those have been set. Indeed, this Court has recognized that excessive discounting can be
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`distorting. E.g., Finjan, Inc. v. Blue Coat Sys., Inc., No. 13-cv-03999-BLF, 2015 WL 4272870, at
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`*7 (N.D. Cal. July 14, 2015) (precluding accused infringer’s attempt to discount back to
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`hypothetical negotiation). And though the experts in Blue Coat used fully-discounted models,
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`here Dr. McDuff described in detail how his limited-discounting approach is the more accurate,
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`more “economically reasonable” estimation for this case. Exh. A at ¶¶ 114, 116.
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`SonicWall here estimates the value of its “discounting” windfall at
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`. Mot. 3.
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`Dr. McDuff’s report explains why that is not justified economically. If SonicWall thinks Dr.
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`McDuff’s opinions are not the best fit for this case, SonicWall must cross-examine at trial because
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`it has failed to establish unreliability or conjecture in Dr. McDuff’s report on a Daubert- or MIL-
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`type standard. The Court should deny SonicWall’s discounting motion.
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`IV.
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`BACKGROUND (SECOND MOTION)
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`The expert reports of Michael Mitzenmacher, Ph.D.; Eric Cole, Ph.D.; Nenad Medvidovic,
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`Ph.D.; and Aaron Striegel, Ph.D. (together, “the Technical Experts”) each contain a review, from
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`the perspective of a skilled technologist, of pre-suit correspondence between Finjan and Dell,
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`SonicWall’s predecessor-in-interest. Exh. B at ¶¶ 112–14; Exh. C at 70–71; Exh. D at ¶¶ 62–63;
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`Exh. F at ¶ 85. They also describe correspondence between Finjan and SonicWall (after Dell
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`stopped being SonicWall’s owner). These interactions were technical, both because they involve
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`detailed discussion and technology, and because they involve interpretation of patent claims that
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`Case 5:17-cv-04467-BLF Document 398 Filed 03/11/21 Page 7 of 9
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`(as the Court knows) must be interpreted from the perspective of one of ordinary skill in the art.
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`The history discussed provides context for each expert’s analysis on principal issues.
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`V.
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`ARGUMENT (SECOND MOTION)
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`SonicWall’s case for preclusion has no basis. The Technical Experts’ opinions concerning
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`the history of the SonicWall-Finjan relationship is relevant not only to SonicWall’s willfulness
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`(which is assessed not only with reference to SonicWall’s mental state, but also with reference to
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`the reasonableness of SonicWall’s decision to continue infringing rather than take a license), but it
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`is also relevant to actual notice under § 287—an issue where the Court has already identified the
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`presence of material fact disputes. Additionally, SonicWall’s claim to prejudice (Mot. 4–5) is
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`wholly conjectural and unsupported by the evidence. Other than generally declaiming about the
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`entire topic, SonicWall identifies no statement by any of the Technical Experts that SonicWall
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`views as inaccurate, prejudicial, or pejorative. As with most of SonicWall’s other motions in
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`limine, disputes over the history of SonicWall’s interactions with Finjan are properly handled via
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`cross-examination, and not preclusion.
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`Further, as noted above SonicWall’s attempt to preclude these statements has no colorable
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`relationship to its attempt to preclude one of Dr. McDuff’s damages models. The only
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`conceivable link between them is SonicWall’s attempt to position both as relating to “willfulness.”
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`That is not enough to justify SonicWall’s treatment of two entirely separate issues—one
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`addressing economic considerations in discounting, the other on the details of notice—as a single
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`motion under the Court’s standing order. And even if the “willfulness” tag, without more, were
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`enough to group these as a single motion, as already discussed the issues SonicWall raises as to
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`Dr. McDuff do not relate to willfulness at all, and SonicWall errs in alleging otherwise. Whether
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`on the substance or as an attempt to evade the Court’s limitation on motions in limine, the Court
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`should deny SonicWall’s motion as to the Technical Experts’ statements about the history of the
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`parties’ interactions.
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`Respectfully Submitted,
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`By: /s/ Robert Courtney
`Juanita R. Brooks (CA SBN 75934)
`brooks@fr.com
`Roger A. Denning (CA SBN 228998)
`denning@fr.com
`Jason W. Wolff (CA SBN 215819)
`wolff@fr.com
`John-Paul Fryckman (CA 317591)
`fryckman@fr.com
`K. Nicole Williams (CA 291900)
`nwilliams@fr.com
`FISH & RICHARDSON P.C.
`12860 El Camino Real, Ste. 400
`San Diego, CA 92130
`Phone: (858) 678-5070 / Fax: (858) 678-5099
`
`Proshanto Mukherji (Pro Hac Vice)
`mukherji@fr.com
`FISH & RICHARDSON P.C.
`One Marina Park Drive
`Boston, MA 02210
`Phone: (617) 542-5070/ Fax: (617) 542-5906
`
`Robert Courtney (CA SBN 248392)
`courtney@fr.com
`FISH & RICHARDSON P.C.
`3200 RBC Plaza
`60 South Sixth Street
`Minneapolis, MN 55402
`Phone: (612) 335-5070 / Fax: (612) 288-9696
`
`Attorneys for Plaintiff
`FINJAN LLC
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`Dated: March 11, 2021
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`Case 5:17-cv-04467-BLF Document 398 Filed 03/11/21 Page 9 of 9
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`CERTIFICATE OF SERVICE
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`The undersigned hereby certifies that a true and correct copy of the above and foregoing
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`document has been served on March 11, 2021 to all counsel of record who are deemed to have
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`consented to electronic service via the Court’s CM/ECF system. Any other counsel of record will
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`be served by electronic mail and regular mail.
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`/s/ Robert Courtney
`Robert Courtney
`courtney@fr.com
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