Case 5:17-cv-04467-BLF Document 481 Filed 07/22/21 Page 1 of 7
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`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,
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`Plaintiff,
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`v.
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`SONICWALL, INC.,
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`Defendant.
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`Case No. 17-cv-04467-BLF
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`ORDER GRANTING MOTION FOR
`JUDGMENT OF INVALIDITY BASED
`ON COLLATERAL ESTOPPEL
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`[Re: ECF 479]
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`Before the Court is the motion of Defendant SonicWall, Inc. (“SonicWall”) for a judgment
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`of invalidity of U.S. Patents 6,154,844 (the “’844 Patent”), 6,804,780 (the “ʼ780 Patent”), and
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`8,677,494 (the “’494 Patent”) based on collateral estoppel. Mot., ECF 479, Exh. A; see also Reply,
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`ECF 479, Exh. C. Plaintiff Finjan LLC (“Finjan”) opposes. Opp., ECF 479, Exh. B.
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` I.
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`BACKGROUND
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`On August 4, 2017, Finjan filed suit against SonicWall for the infringement of ten patents.
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`Since then, the parties have engaged in extensive litigation, see Order on Motion for Summary
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`Judgment, ECF 381; Order on Motion to Strike, ECF 413; Order on Motions in Limine, ECF 470,
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`with trial set for early 2022, see ECF 463. On March 23, 2021, Judge Bencivengo issued a summary
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`judgment order invalidating the ’844 and ’780 Patents, along with U.S. Patents 8,079,086 (the “’086
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`Patent”), 9,189,621 (the “’621 Patent”), and 9,219,755 (the “’755 Patent”) (collectively, the
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`“Invalidated Patents”), as indefinite based on the term “Downloadable.” Finjan, Inc. v. ESET, LLC,
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`Case No. 3:17-cv-0183-CAB-BGS, ECF 869 (“ESET Order”) at 8.
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`The ESET Court based its decision on its construction of “Downloadable” as “a small
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`executable or interpretable application program which is downloaded from a source computer and
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`run on a destination computer,” which is the express definition set forth in U.S. Patents 6,167,520
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`Case 5:17-cv-04467-BLF Document 481 Filed 07/22/21 Page 2 of 7
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`(“’520 Patent”) and 6,480,962 (“’962 Patent”) that the Invalidated Patents incorporate by reference.
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`ESET Order at 2-5. The court then considered “whether a skilled artisan in 1997 would have
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`understood with reasonable certainty based on the specification and prosecution history what the
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`inventor meant by a ‘small’ application program and therefore understood what comes within the
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`scope of the claims.” Id. at 6. The court answered this query in the negative, explaining that Finjan’s
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`proffered explanation—that “‘small’ depends not on size but on the function” and that a small
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`executable does not require installation—was without “support from the specification, the
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`prosecution history, or from any extrinsic sources in the relevant time period.” ESET Order at 7-8.
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`It concluded
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`Finjan never offered evidence of a reasonable range for the size of a
`small executable or interpretable application program as understood
`by a skilled artisan in 1997 based on examples provided in the patent
`specification. Instead, Finjan elected at trial to offer a new
`understanding without reference to the size of the application as the
`objective boundary of a “small” application. Finjan’s new definition
`is not supported by the specification or prosecution history. It may
`be convenient to support Finjan’s infringement contentions against
`ESET’s accused devices, but Finjan’s new explanation does provide
`clear notice of what constitutes a “small executable or interpretable
`application program.”
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`ESET Order at 8. The court denied Finjan’s motion for reconsideration on May 19, 2021. Finjan,
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`Inc. v. ESET, LLC, Case No. 3:17-cv-0183-CAB-BGS, ECF 874 (“Reconsideration Order”). The
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`court entered Judgment on the Invalidated Patents on May 20, 2021. Id., ECF 875.
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`SonicWall now “seeks judgment that the ’844 and ’780 Patents are invalid based on the
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`ESET Order and that the ’494 Patent is invalid based on the same “issue” resolved against Finjan in
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`the ESET Order.” Mot. at 1.
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` II. LEGAL STANDARD
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`The doctrine of collateral estoppel, also known as issue preclusion, conserves judicial
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`resources by precluding relitigation of issues that have already been decided in a prior proceeding.
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`See Allen v. McCurry, 449 U.S. 90, 94 (1980), Molinaro v. Fannon/Courier Corp., 745 F.2d 651
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`(Fed.Cir.1984), A.B. Dick Co. v. Burroughs Corp., 713 F.2d 700 (Fed.Cir.1983). When applying
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`Case 5:17-cv-04467-BLF Document 481 Filed 07/22/21 Page 3 of 7
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`collateral estoppel law in a patent infringement case, the law of the circuit in which the district court
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`sits controls. Aspex Eyewear, Inc. v. Zenni Optical Inc., 713 F.3d 1377, 1380 (Fed. Cir. 2013).
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`“However, for any aspects that may have special or unique application to patent cases, Federal
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`Circuit precedent is applicable.” Id. (citations omitted). Defensive collateral estoppel, also known
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`as issue preclusion, prevents a party from relitigating an issue of claim construction where: “(1) the
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`issue necessarily decided at the previous proceeding is identical to the one which is sought to be
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`relitigated; (2) the first proceeding ended with a final judgment on the merits; and (3) the party
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`against whom collateral estoppel is asserted was a party or in privity with a party at the first
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`proceeding.” Hydranautics v. FilmTec Corp., 204 F.3d 880, 885 (9th Cir. 2000).1
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` III. DISCUSSION
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`A. The ‘844 and ’780 Patents
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`SonicWall’s argument is straightforward: “The ESET Order satisfies [all] elements for
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`collateral estoppel for the ’844 and ’780 Patents and already qualifies as a ‘final judgment’ for
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`purposes of collateral estoppel. This Court therefore should enter judgment of invalidity.” Mot. at 2
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`(internal citations omitted). Finjan objects, arguing that the ESET Order is not sufficiently firm.
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`Opp. at 3-4. In other words, the parties quibble only as to whether the first proceeding ended with a
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`final judgment on the merits. See Reply at 1.
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`It is well settled that “[t]o be ‘final’ for collateral estoppel purposes, a decision need not
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`possess ‘finality’ in the sense of 28 U.S.C. § 1291.” Luben Industries, Inc. v. United States, 707
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`1 SonicWall applies the four-element collateral estoppel standard detailed in Oyeniran v. Holder.
`672 F.3d 800, 806 (9th Cir. 2012) as amended (May 3, 2012). Under this standard, to foreclose
`relitigation of an issue under collateral estoppel, four conditions must be met: “(1) the issue at stake
`was identical in both proceedings; (2) the issue was actually litigated and decided in the prior
`proceedings; (3) there was a full and fair opportunity to litigate the issue; and (4) the issue was
`necessary to decide the merits.” Id. (citing Montana v. United States, 440 U.S. 147, 153–54 (1979)).
`For claim construction, however, district courts in this circuit have consistently applied the standard
`articulated more recently in Hydranautics. See, e.g., e.Digital Corp. v. Futurewei Techs., Inc., 772
`F.3d 723, 726 (Fed. Cir. 2014) (affirming a California district court decision that applied the
`Hydranautics standard); Droplets, Inc. v. Yahoo! Inc., No. 12-CV-03733-JST, 2019 WL 5781915,
`at *2 (N.D. Cal. Oct. 15, 2019) (applying Hydranautics standard); UCP Int'l Co. Ltd. v. Balsam
`Brands, Inc., No. 16-cv-07255-WHO, 2017 WL 5068568, at *3 (N.D. Cal. Nov. 3, 2017) (same);
`West v. Quality Gold, Inc., No. 5:10-cv-03124-JF (HRL), 2011 WL 6055424, at *2 (N.D. Cal. Sept.
`16, 2011) (same); Elan Microelectronics Corp. v. Apple, Inc., No. C 09-01531 RS, 2010 WL
`4510909, at *3 (N.D. Cal. Nov. 1, 2010) (same); Abbott Diabetes Care Inc. v. Roche Diagnostics
`Corp., No. C04-02123MJJ, 2007 WL 1239220, at *11 (N.D. Cal. Apr. 27, 2007) (same).
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`Case 5:17-cv-04467-BLF Document 481 Filed 07/22/21 Page 4 of 7
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`F.2d 1037, 1040 (9th Cir. 1983). Rather, “[a] ‘final judgment’ for purposes of collateral estoppel
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`can be any prior adjudication of an issue in another action that is determined to be ‘sufficiently firm’
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`to be accorded conclusive effect.” Id. (citations omitted); see also In re Lockard, 884 F.2d 1171,
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`1175 (9th Cir.1995). The Ninth Circuit has set forth several factors that should be considered when
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`determining whether an order is sufficiently firm: “(1) whether the decision was not avowedly
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`tentative; (2) whether the parties were fully heard; (3) whether the court supported its decision with
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`a reasoned opinion; and (4) whether the decision was subject to an appeal. Luben Industries, 707
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`F.2d at 1040. “Finality will be lacking if an issue of law or fact essential to the adjudication of the
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`claim has been reserved for future determination, or if the court has decided that the plaintiff should
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`have relief against the defendant of the claim but the amount of the damages, or the form or scope
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`of other relief, remains to be determined.” Restatement (Second) of Judgments § 13 (1982).
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`After considering the authorities and facts cited by the parties, the Court concludes that these
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`factors counsel in favor of conferring preclusive effect to the ESET Order. There can be no dispute
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`that the ESET Order was a well-reasoned opinion. See generally ESET Order. Nor can there be
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`dispute that it was not avowedly tentative. Id. The ESET Order is also subject to appeal and, indeed,
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`is currently on appeal to the Federal Circuit. Finjan, Inc. v. ESET, LLC, Case No. 3:17-cv-0183-
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`CAB-BGS, ECF 878 (“Notice of Appeal”); see In re Lockard, 884 F.2d at 1175 (“that the decision
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`was subject to appeal or was in fact reviewed on appeal [is a] factor[] supporting the conclusion that
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`the decision should be given preclusive effect.”). These factors clearly tilt in favor of applying
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`collateral estoppel.
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`The remaining factor to consider is whether the parties were sufficiently heard. More
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`concretely, the question before the Court is whether Finjan was sufficiently heard when the ESET
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`Court determined Patents ’844 and ’780 were indefinite. The Court finds that it was. In its
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`indefiniteness ruling, the ESET Court considered both ESET’s motion for summary judgment and
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`Finjan’s motion for reconsideration. ESET Order; Reconsideration Order. While Finjan suggests
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`that the ESET Order is “based on an incomplete presentation of the evidence,” a review of both
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`orders and the supporting papers suggests otherwise. Indeed, the ESET Court explicitly rejected
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`Finjan’s argument that the “finding of indefiniteness is based on an incomplete presentation of the
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`Case 5:17-cv-04467-BLF Document 481 Filed 07/22/21 Page 5 of 7
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`evidence because the Court evaluated only the testimony of Dr. Eric Cole, Finjan’s expert on
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`infringement on one of the five Asserted Patents (the ’844 Patent).” Finjan, Inc. v. ESET, LLC, Case
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`No. 3:17-cv-0183-CAB-BGS, ECF 872 at 4 (“Motion for Reconsideration”). The court explained:
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`The Court did not shift the burden of proving validity to Finjan, but
`rather concluded that ESET demonstrated by clear and convincing
`evidence that Finjan’s inconsistent interpretations of a claim term
`employed in its infringement analyses established that the term was
`indefinite. Finjan’s proffer that it could offer still further testimony
`to explain the lack of consensus among its own experts in
`construing the term only serves to underscore the lack of certainty
`among those of skill in the art, making the term indefinite and the
`Court’s entry of summary judgment correct.
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`Reconsideration Order at 3. In other words, the ESET Court was motivated by inconsistent
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`interpretations of a claim term. Additional expert testimony, the court explained, would not rectify
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`this flaw. See id.
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`The Court thus enters a judgment of invalidity as to the ’844 and ’780 Patents.
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`B. The ’494 Patent
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`The remaining question before the Court is whether the ESET Order’s preclusive reach
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`extends to the ’494 Patent. SonicWall argues that the ESET Order satisfies the collateral estoppel
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`elements for the ’494 Patent. Mot. at 3. To this end, it highlights that “the ’494 Patent has the same
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`intrinsic record on which the ESET Order relied” and that its stipulation as to a different construction
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`of the term ‘Downloadable’ is irrelevant. Id. at 3-5. Finjan responds that “[t]he Court has discretion
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`to decline to apply collateral estoppel, even if it finds the Ninth Circuit factors are satisfied. Here,
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`considerations of fairness and uniformity counsel against applying the collateral estoppel bar to the
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`’494 Patent.” Opp. at 4. Finjan further argues that “this Court has construed the term
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`‘Downloadable’ in the claims of the ’494 Patent the same way seven of the eight courts have
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`construed that term, i.e., one that does not include the term ‘small.’” Id. It also argues that SonicWall
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`“has consistently advocated for the construction of ‘Downloadable’ that this Court adopted, even
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`after the ESET Court entered its outlier construction.” Id. at 5.
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`As an initial matter, the Court finds that the Ninth Circuit elements are satisfied as to the
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`’494 Patent. The ESET Order, as explained above, is sufficiently firm to be considered a final
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`judgment on the merits. Hydranautics, 204 F.3d at 885. (requiring that “the first proceeding ended
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`with a final judgment on the merits”). And Finjan, the party against whom collateral estoppel is
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`asserted, was a party in the ESET case. Id. (requiring that “the party against whom collateral estoppel
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`is asserted was a party or in privity with a party at the first proceeding”). The Court also finds that
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`“the issue necessarily decided at the previous proceeding is identical to the one which is sought to
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`be relitigated” Id. A ruling on an issue in a prior judgment can have preclusive effect even if the
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`issue is raised in a later case involving different patents and different claims. See Ohio Willow Wood
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`Co. v. Alps S., LLC, 735 F.3d 1333, 1342 (Fed. Cir. 2013). The patent claims need not be identical,
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`but “substantially related” so that the issues of validity are materially the same. Id. “If the differences
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`between the unadjudicated patent claims and adjudicated patent claims do not materially alter the
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`question of invalidity, collateral estoppel applies.” Id. The ESET Court invalidated Patents ’844,
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`’780, ’086, ’621, and ’755 because the claim language of those patents incorporated the ‘520 Patent
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`definition of “Downloadable,” which was limited in scope to “small executable or interpretable
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`application programs.” ESET Order at 4. The ESET Court emphasized that Patents ’844, ’780, ’086,
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`’621, and ’755 were invalid because “[i]nconsistent language used later cannot support a broad claim
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`construction”—i.e., one that did not limit an executable by size—“when the explicit definition is
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`incorporated from earlier patents in the family tree.” Id. There is no dispute that the ’494 Patent is
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`part of this same family tree of patents incorporating the ‘520 Patent definition of “Downloadable.”
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`See generally Opp. This Court finds that the ESET Court spoke directly to the question before the
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`Court now: whether the ’494 Patent is invalid arising from the indefiniteness of the term
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`“Downloadable.” See Ohio Willow, 735 F.3d at 1342 (“Our precedent does not limit collateral
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`estoppel to patent claims that are identical. Rather, it is the identity of the issues that were litigated
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`that determines whether collateral estoppel should apply.”); see also Mot. at 3 (“To bring this issue
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`into clear focus, if Finjan had asserted the ’494 Patent in the ESET case, the ESET Order already
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`would have held the ’494 Patent invalid.”).
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`This conclusion is unchanged by Finjan’s invitation to the Court to decline to apply collateral
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`estoppel. Finjan contends that “considerations of fairness and uniformity counsel against applying
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`Case 5:17-cv-04467-BLF Document 481 Filed 07/22/21 Page 7 of 7
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`the collateral estoppel bar to the ’494 Patent.” Opp. at 4. The Court recognizes that the parties here
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`stipulated to a claims construction that did not implicate the ‘520 Patent definition of
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`“Downloadable,” but the Federal Circuit has made clear that “the defense of collateral estoppel
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`based on a final judgment of patent invalidity in another suit can ‘be timely made at any stage of the
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`affected proceedings.’” Mendenhall v. Barber-Greene Co., 26 F.3d 1573, 1579-80 (Fed. Cir. 1994),
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`as corrected on reh'g (Sept. 14, 1994) (internal citations omitted). And Finjan does not cite any case
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`where a district court declined to apply collateral estoppel to the invalidation of a patent even where
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`the prior ruling satisfied all elements of collateral estoppel. See, e.g., Opp. at 5 (providing examples
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`of where courts chose to apply collateral estoppel). The Court thus enters a judgment of invalidity
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`as to the ’494 Patent.
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` IV. ORDER
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`For the foregoing reasons, the Court finds that the ESET Order has a preclusive effect as to
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`the indefiniteness of the term “Downloadable” in the ’844, ʼ780, and’494 Patents. The Court
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`GRANTS SonicWall’s motion for judgment of invalidity and enters judgment that the ’844, ’780,
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`and ’494 Patents are invalid.
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`Dated: July 22, 2021
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`______________________________________
`BETH LABSON FREEMAN
`United States District Judge
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