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`UNITED STATES DISTRICT COURT
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`SOUTHERN DISTRICT OF CALIFORNIA
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`FINJAN, INC.,
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`v.
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`Plaintiff,
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`ESET, LLC and ESET SPOL. S.R.O.,
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`
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` Case No.: 17CV183 CAB (BGS)
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`ORDER GRANTING MOTION TO
`MODIFY STIPULATED
`PROTECTIVE ORDER
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`Defendants.
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`[ECF 146]
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`Plaintiff Finjan, Inc. moves to modify the Protective Order’s prosecution bar to
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`allow Finjan’s litigation counsel to represent Finjan in review proceedings initiated by
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`Defendants ESET, LLC and ESET SPOL, S.R.O. (“ESET”) before the United States
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`Patent and Trademark Office (“PTO”).1 (Motion to Modify the Protective Order
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`(“Motion”) [ECF No. 146].) The current prosecution bar allows Finjan’s litigation
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`counsel to handle review proceedings subject to certain limitations, but only those
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`initiated by “Non-Parties.” (Protective Order at 14 [ECF No. 115].) Finjan wants the
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`1 In the alternative, Finjan requests that specific attorneys be exempted from the
`prosecution bar. (Id. at 2, 13-14.)
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`17CV183 CAB (BGS)
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`Case 3:17-cv-00183-CAB-BGS Document 206 Filed 12/21/17 PageID.9234 Page 2 of 13
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`Protective Order modified to allow it to handle review proceedings initiated by ESET
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`because ESET has now filed for inter partes review (“IPR”) of one of the patents-in-suit,
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`U.S. Patent No. 7,975,305 (“the ’305 Patent”). (Mot. at 4-5.) ESET opposes the
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`modification. (Opposition to Mot. to Modify Protective Order (“Opposition”) [ECF No.
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`160].) For the reasons set forth below, the Court GRANTS the Motion.
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`BACKGROUND
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`The scope of the prosecution bar in this case was a disputed issue before the case
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`was transferred to this district from the Northern District of California with the issue
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`raised multiple times by the parties before the previous judge. The Court only briefly
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`addresses that history as it relates to the current Motion. In evaluating the appropriate
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`scope of the prosecution bar for the case, the court found that Finjan’s litigation counsel
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`could represent Finjan in nine ongoing IPR proceedings. And then, following additional
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`briefing, the court decided that Finjan’s litigation counsel could also represent Finjan in
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`ongoing review proceedings initiated by “third parties.” (January 9, 2017 Order [ECF
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`No. 71].) However, the parties then disagreed as to the meaning of “third party.” (Mot. at
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`3; Opp’n. at 4.) Finjan interpreted it to mean anyone other than Finjan. (Mot. at 3;
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`Opp’n at 4.) ESET interpreted it as prohibiting Finjan’s litigation counsel from handling
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`review proceedings initiated by ESET or Finjan, essentially reading the allowance to
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`participate in review proceedings initiated by “third parties” to mean non-parties to this
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`case. (Opp’n at 4.)
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`Despite the disagreement as to the meaning of “third party,” Finjan agreed to
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`ESET’s proposed language that only allowed Finjan’s litigation counsel to represent it in
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`review proceedings initiated by a “Non-Party,” with “Non-Party” defined as “any natural
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`person, partnership, corporation, association, or other legal entity not named as a Party to
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`this action.” (Mot. at 3; Protective Order at 3, 13-14.) Finjan indicates that it wanted to
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`avoid burdening the court with an issue that had not arisen at that point. ESET had not
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`initiated any review proceedings against Finjan at the time. However, Finjan indicated to
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`Case 3:17-cv-00183-CAB-BGS Document 206 Filed 12/21/17 PageID.9235 Page 3 of 13
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`ESET at the time that it would seek modification from the court if ESET initiated review
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`proceedings against Finjan’s patents. (Mot. at 4, Ex. 3.)
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`ESET has now filed an IPR petition for review of Finjan’s ’305 patent.2 Finjan
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`seeks to modify the current prosecution bar to allow its litigation counsel to represent
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`Finjan in review proceedings, i.e. “reissue protest, ex parte reexamination, inter partes
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`review or other post-grant proceedings” that are filed by “any entity other than Finjan, so
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`long as such activity is limited to defending the validity of the patent and the individual
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`has no involvement in and does not advise regarding drafting, editing, approving or
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`amending claim language.” (Mot. at 1, Ex. 1. at 15.) (emphasis added to proposed
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`modification).
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`I.
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`Legal Standard
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`DISCUSSION
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`This Court has authority to issue appropriate protective orders. Fed. R. Civ. P.
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`26(c) (“The court may, for good cause, issue an order to protect a party or person from
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`annoyance, embarrassment, oppression, or undue burden or expense.”) In seeking
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`modification of the Protective Order, the burden of showing good cause for the
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`modification rests with Finjan. (Protective Order at 19 (“The Court may modify the
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`terms and conditions of [the] Stipulated Protective Order for good cause, or in the interest
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`of justice, or on its own order at any time in these proceedings.”).)
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`Although the burden is on Finajn to show good cause for the modification, the
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`Federal Circuit’s precedent on prosecution bars still largely controls the Court’s analysis
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`of this issue. In short, if Finjan can show that a prosecution bar that allows Finjan’s
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`litigation counsel to represent it in review proceedings initiated by ESET is appropriate in
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`2 ESET also joined a pending IPR proceeding concerning another patent-in-suit, U.S.
`Patent No. 8,079,086 (“the ’086 patent”). However, this proceeding is not at issue in this
`motion. ESET agrees that Finjan’s litigation counsel can participate in that IPR
`proceeding because it was not initiated by ESET. (Opp’n at 8, n.2.)
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`17CV183 CAB (BGS)
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`Case 3:17-cv-00183-CAB-BGS Document 206 Filed 12/21/17 PageID.9236 Page 4 of 13
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`this case, that would weigh in favor of a showing of good cause to modify the protective
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`order. However, as noted below, the Court does take into consideration Finjan’s
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`agreement to the current language they now seek to modify.
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`Federal Circuit law governs whether a protective order should include a
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`prosecution bar. In re Deutsche Bank Trust Co. Americas, 605 F.3d 1373, 1377-78 (Fed.
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`Cir. 2010). A patent prosecution bar is an additional level of protection beyond the more
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`typical provisions of protective orders that limit the use of confidential information. Id.
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`at 1378. A patent prosecution bar is intended to guard against the risk of inadvertent
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`disclosure that may arise when litigation counsel with access to an opposing party’s
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`confidential information also prosecutes patents before the U.S. Patent and Trademark
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`Office (“PTO”) on behalf of the client. Id. at 1378-79.3 “‘[W]hether an unacceptable
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`opportunity for inadvertent disclosure exists . . . must be determined . . . by the facts on a
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`counsel-by-counsel basis’” and that “determination should turn on the extent to which
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`counsel is involved in ‘competitive decisionmaking’ with its client.” Id. at 1378.
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`The first step is determining whether counsel “is involved in ‘competitive
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`decisionmaking’ with its client. Id. at 1378. Simply handling patent prosecution is not
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`enough. Id. at 1379-80. “The facts, not the category must inform the result.” Id. at
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`1379. In Deutsche Bank Trust the court recognized some patent prosecution counsel
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`have little involvement in activities involving competitive decision making. Id. at 1379-
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`80. However, others pose a much greater risk, including those “obtaining disclosure
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`materials for new inventions and inventions under development, investigating prior art
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`related to these invention, making strategic decisions on the type and scope of patent
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`protection that might be available or worth pursuing for such inventions, writing,
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`3 “As aptly stated by the District of Columbia Circuit, ‘it is very difficult for the human
`mind to compartmentalize and selectively suppress information once learned, no matter
`how well-intentioned the effort may be to do so.’” Deutsche Bank Trust, 605 F.3d at
`1378 (quoting FTC v. Exxon Corp., 636 F.2d 1336, 1350 (D.C. Cir. 1980)).
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`reviewing, or approving new applications or continuations-in-part of applications to
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`cover those inventions, or strategically amending or surrendering claim scope during
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`prosecution. Id. at 1380.
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`The second step is balancing the risk of inadvertent disclosure or competitive use
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`“against the potential harm to the opposing party from restrictions imposed on that
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`party’s right to have the benefit of counsel of its choice.” Id. at 1380. Essentially, how
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`prejudicial are the restrictions. In considering the harm to a party in having their counsel
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`precluded from representing them before the PTO, “the court should consider such things
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`as the extent and duration of counsel’s past history in representing the client before the
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`PTO, the degree of the client’s reliance and dependence on that past history, and the
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`potential difficulty the client might face if forced to rely on other counsel for the pending
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`litigation or engage other counsel to represent it before the PTO. Id. at 1381 (citing U.S.
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`Steel Corp. v. United States, 730 F.2d 1465, 1468 (Fed. Cir. 1984)).
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`In general, “a party seeking imposition of a patent prosecution bar must show that
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`the information designated to trigger the bar, the scope of the activities prohibited by the
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`bar, the duration of the bar, and the subject matter covered by the bar reasonably reflect
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`the risk presented by the disclosure of proprietary competitive information.” Id. at 1381.
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`And a “party seeking exemption from a patent prosecution bar must show on a counsel-
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`by-counsel basis: (1) that counsel’s representation of the client in matters before the PTO
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`does not and is not likely to implicate competitive decisionmaking related to the subject
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`matter of the litigation so as to give rise to a risk of inadvertent use of confidential
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`information learned in the litigation, and (2) that the potential injury to the moving party
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`from restrictions imposed on its choice of litigation and prosecution counsel outweighs
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`the potential injury to the opposing party caused by such inadvertent use.” Id. at 1381.
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`Generally, like a party seeking a protective order, “a party seeking to include in a
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`protective order a provision effecting a patent prosecution bar” must “show[] good cause
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`for it issuance.” Id. at 1378. In this respect, absent the prior agreement, ESET would
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`have had to show a prosecution bar prohibiting Finjan’s litigation counsel from
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`representing it would “reasonably reflect the risk” created by access to its information.
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`Id. at 1381. However, as discussed above, because the issue is raised as a modification
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`of the existing prosecution bar, Finjan bears the burden of showing good cause to modify
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`it.
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`As explained more fully below, district courts have taken a number of approaches
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`in finding the proper balance is between risk to the defendant and harm to the patentee
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`from the restrictions.
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`II.
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`Parties’ Arguments
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`The parties have already agreed that a prosecution bar is necessary in this case.
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`The only issue now is whether the scope of the existing prosecution bar should be
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`modified.
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`The parties’ arguments focus on three main points: (1) whether the prior decision,
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`allowing Finjan’s litigation counsel to represent it in review proceedings initiated by third
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`parties, encompassed ESET as a “third party;” (2) how great the risk of misuse of ESET’s
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`confidential information is given the limits broadening claims in review proceedings and
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`in restriction already in the Protective Order; and (3) how prejudicial it is to preclude
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`Finjan’s litigation counsel from representing Finjan in review proceedings by ESET. The
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`second and third points generally align with the first and second steps explained above in
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`which the Court weighs the risk of misuse of confidential information against the harm
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`from the restrictions. The Court first summarizes the parties’ positions on these points
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`and then explains its reasoning for granting Finjan’s request to modify the prosecution
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`bar.
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`A.
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`Prior Rulings on the Scope of the Prosecution Bar
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`Both parties present arguments regarding the meaning of the prior ruling on the
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`appropriate scope of the prosecution bar. The parties continue to dispute whether the
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`allowance for Finjan’s litigation counsel to participate in newly filed review proceedings
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`initiated by “third parties” encompassed ESET.4 Essentially, they dispute whether ESET
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`is a “third party.”
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`On this issue, Finjan argues “good cause exists to modify the prosecution bar
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`because the current language of the prosecution bar is inconsistent with Judge Donato’s
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`order.” (Mot. at 8.) In brief, Finjan argues that “third party” meant anyone other than
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`Finjan and this Court should modify the current Protective Order to its interpretation of
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`that language. ESET disputes Finjan’s interpretation of third party and also argues that
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`Finjan should have made this argument to Judge Donato before the case was transferred
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`rather than now after having agreed to the current language.
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`Even if Finjan’s interpretation is correct and “third party” meant anyone other than
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`Finjan,5 that alone is not good cause to modify the current Protective Order. As ESET
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`accurately points out, Finjan has since agreed to a prosecution bar that only allowed its
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`litigation counsel to represent it in newly filed review proceedings initiated by “Non
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`Parties.” Regardless of the meaning of “third party” then, the question now is whether
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`there is good cause to change the language. The parties’ arguments about the meaning
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`of the prior order is largely beside the point. The prior proceedings in this case on this
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`issue are of consequence because the burden of showing good cause to modify the
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`Protective Order is squarely on Finjan and the parties have already determined with the
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`court that a prosecution bar is appropriate, leaving just the issue of whether a change in
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`the scope of it to be considered in this Motion. What was intended by “third party”
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`4 Neither party seeks to modify the allowance for Finjan’s litigation counsel to represent
`it in the nine IPR proceedings that were ongoing at the time of that decision.
`5 Although the court would agree that “third party” often refers to a non-party to a case as
`ESET claims, there is support for Finjan’s position that the reference to third party meant
`anyone other than Finjan. In particular, Finjan points to the PTO’s own explanation of
`IPR which describes the process as beginning “with a third party (a person who is not the
`owner of the patent) filing a petition.” (Mot., Ex. 2.)
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`before the parties stipulated to “Non-Party” is not determinative of whether the scope of
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`the prosecution bar should be modified now.
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`B. Risk of Misuse of ESET’s Confidential Information
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`Finjan argues that the limitations on all IPR proceedings, the limitations already in
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`the prosecution bar, and the more general prohibitions already in the protective order on
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`use of confidential information for any purpose other than this litigation sufficiently
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`eliminate any risk of misuse of ESET’s confidential information. Finjan claims that there
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`is no risk that ESET’s confidential information will be misused because IPR proceedings
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`do not allow any amendment of claims that would broaden the scope of the claim. In
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`short, Finjan argues it cannot use the information it gains through access to ESET’s
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`confidential information to broaden the claim to encompass ESET’s products because
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`Finjan is not allowed to broaden its claims in review proceedings. Additionally, the
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`existing limitations in the Protective Order that limit Finjan’s litigation counsel to
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`“defending the validity of the patent” and prohibit “involvement in advis[ing] regarding
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`drafting, editing, approving, or amending claim language” are additional safeguards that
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`already sufficiently prevent misuse of ESET’s confidential information. Finjan also
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`emphasizes that its litigation counsel has not been precluded from representing Finjan in
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`parallel PTO proceedings across litigation against more than ten defendants and more
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`than 50 parallel PTO proceedings.
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`ESET does not dispute that Finjan is prohibited from broadening the claim in
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`review proceedings. Rather, ESET argues Finjan could still misuse ESET confidential
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`information despite this limitation and the prohibition on “involvement [in or] advis[ing]
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`regarding drafting, editing, approving, or amending claim language.” (Mot., Ex. 1. at
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`15.) It is ESET’s position that in the process of crafting arguments or claim constructions
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`to distinguish prior art, Finjan’s litigation counsel could also design arguments or
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`constructions to attempt to encompass features revealed in ESET’s highly confidential
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`information or source code. ESET also argues it should not be subjected to potential
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`misuse of its confidential information just because other defendants have agreed to
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`Finjan’s litigation counsel’s participation in PTO proceedings subject to these limitations.
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`C.
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`Prejudice
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`On the issue of prejudice, Finjan first argues that it would be deprived of counsel
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`with vast experience handling its patents and be required to expend significant additional
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`resources preparing for the IPR proceedings. Finjan explains that its litigation counsel
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`has represented Finjan for over ten years in more than 10 litigations involving the related
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`patents as well as fifty-one IPR proceedings, forty-six of which have resolved in Finjan’s
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`favor with five still pending. Finjan also notes that its litigation counsel has successfully
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`defended it in two trials in the Northern District of California and another in the District
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`of Delaware. These cases involved patents at issue in this case and related to the ’305
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`Patent. Finjan also argues that preclusion of its litigation counsel from representing it in
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`a review proceeding initiated by ESET is particularly prejudicial because the PTO
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`proceedings initiated by ESET are raising the same validity issues raised in this litigation.
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`ESET is asserting the same prior art references in the IPR proceeding that it is asserting
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`in this litigation and ESET has the same counsel handling both. Finjan also emphasizes
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`that a policy that encourages defendants to file review proceedings that plaintiffs’
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`litigation counsel will be precluded from, when defendants will not, is dangerous.
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`ESET argues that Finjan is not prejudiced by being denied its litigation counsel
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`because it has patent prosecution counsel, the attorney that secured issuance of the ’305
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`Patent, that may represent it in IPR proceedings. ESET also argues that ESET having the
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`same counsel in this case and an IPR proceeding is not equivalent to Finjan having the
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`same counsel in both because ESET will not be in a position to modify Finjan’s claims.
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`III. Analysis
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`The district court decisions addressing this issue have generally fallen into one of
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`three categories.
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`Some courts have found a complete bar on litigation counsel participating in
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`review proceedings, similar to the one ESET seeks to maintain here, is appropriate.
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`Found. Medicine v. Guardant Health, Inc., 2:16-CV-00523-JRG-RSP, Dkt No. 98 (E.D.
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`Tex. June 5, 2017); Boston Sci Corp. v. Cook Grp. Inc., No. 15-980-LPS-CJB at ¶ 6 (D.
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`Del. Feb. 10, 2017); Versata Software, Inc. v. Callidus Software Inc., Civ. No. 12-931-
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`SLR (D. Del. March 12, 2014).
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`At the other end of the spectrum are district courts have also found that prosecution
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`bars should not be applied to review proceedings at all. These courts distinguish between
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`prosecution efforts in pursuing patent applications and review proceedings with the key
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`distinction being the prohibition on broadening the scope of the claims in review
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`proceedings. Pall Corp. v. Entegris, Inc., 655 F. Supp. 2d 169, 173 (E.D. N.Y. 2008);
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`Mirror Worlds, LLC v. Apple, Inc., 2009 WL 2461808, at *2 (E.D. Tex. 2009); Document
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`Generation Corp. v. Allscripts, LLC, 2009 WL 1766096, at *2-3 (E.D. Tex. 2009).
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`Essentially, these courts have generally found there is little potential for misuse of a
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`defendant’s confidential information to modify claims to encompass defendants’ products
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`because the claims cannot be broadened in these proceedings.
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`Other district courts have found there is some risk of misuse in review proceedings
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`even with the limits on broadening claims because claims might be restructured with the
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`benefit of access to a defendant’s confidential information. Grobler v. Apple, Inc., 2013
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`WL 3359274, at *2 (N.D. Cal. May 7, 2013); EPL Holdings, LLC v. Apple Inc., 2013 WL
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`2181584, at *3-4 (N.D. Cal. May 20, 2013); Shared Memory Graphics, LLC v. Apple,
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`2010 WL 4704420, at *3 (N.D. Cal. Nov. 12, 2010). However, these courts and others
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`have found a prohibition on litigation counsel drafting or amending claims sufficiently
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`mitigates any risk of misuse. Grobler, 2013 WL 3359274, at *1-2; EPL Holdings, 2013
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`WL 2181584, at *4; LifeScan Scotland, Ltd. v. Shasta Techs., LLC, 2013 WL 5935005, at
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`*5 (N.D. Cal. Nov. 4, 2013); Shared Memory Graphics, 2010 WL 4704420, at *3-4;
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`Crystal Image Tech., 2009 WL 1035017, at *3-4 (W.D. Penn. April 17, 2009).
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`The prosecution bar in this case with the modification Finjan seeks, falls into this
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`third category and the Court finds it appropriately mitigates the risk of inappropriate use
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`of ESET’s confidential information without imposing an undue burden on Finjan.
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`A complete bar on Finjan’s litigation counsel’s participation in review proceedings
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`would certainly provide ESET complete protection, but the purpose of the prosecution
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`bar is only to “mitigate the risk of inadvertent use of proprietary information by a
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`patentee, not to unduly burden a patentee with additional expense.” See Grobler, 2013
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`WL 3359274, at *1; LifeScan, 2013 WL 5935005 at *5; EPL Holdings, 2013 WL
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`2181584, *3 (“a total ban would burden a patentee with additional expense.”). In
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`balancing the risk against the harm, the Court must consider the harm to Finjan. Finjan’s
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`litigation counsel’s history representing it in district court and before the PTO is
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`extensive in time and breadth and it would be burdensome to switch to different counsel
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`for review proceedings ESET initiates. This history weighs heavily in favor of allowing
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`litigation counsel to represent Finjan in review proceedings.
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`As to ESET’s concerns that Finjan may strategically narrow claims or design claim
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`arguments to ESET’s disadvantage based on ESET’s confidential information, the Court
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`finds that risk is not great enough to justify completely prohibiting Finjan’s litigation
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`counsel from representing it in review proceedings initiated by ESET. The restrictions
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`already in the Protective Order, in particular the prohibition on involvement in drafting or
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`amending claims, provide sufficient protection. And, to the extent ESET is arguing that
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`Finjan might limit the scope of a claim to encompass one of ESET’s products, “it would
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`be very short sighted for a patentee to intentionally limit claim scope to specifically
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`capture one defendant’s products at the expense of excluding other would-be infringer’s
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`products.” See Mirror Worlds, LLC, 2009 WL 2461808, at *2 (discussing reexamination
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`proceedings in which claim scope may only be narrowed); see also Aylus Network, Inc. v.
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`Apple, Inc., 856 F.3d 1353, 1362 (Fed. Cir. 2017) (finding “statements made by a patent
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`owner during an IPR proceeding, . . . can be considered for claim construction.”). That
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`would seem particularly of consequence here given the breadth of litigation Finjan is
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`pursuing.
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`Additionally, if Finjan’s litigation counsel were “to craft arguments or claim
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`constructions to distinguish over cited prior art in such proceedings while specifically
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`designing such arguments or constructions to encompass ESET features revealed only in
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`ESET’s highly confidential information or source code” it would violate the Protective
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`Order’s prohibition on use of ESET’s confidential information outside this litigation.
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`Based on Finjan’s representation that there have been no such issues to date in its other
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`cases with the same restrictions in place, it would appear Finjan has not misused
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`defendants’ confidential information as ESET suggests it might. On the issue of other
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`defendants agreeing to the restrictions Finjan proposes here, the Court agrees that other
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`defendants’ agreement to these restrictions does not mean that ESET should. However,
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`as Finjan notes, it is significant that in all those litigations, there have been no issues with
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`Finjan wrongfully using defendants’ confidential information. This suggests the risk of
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`misuse under these terms, specifically as to Finjan, is not great.6
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`The Court also finds it significant that ESET is challenging one of the patents-in-
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`suit and asserting the same prior art references to challenge validity in both proceedings.
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`Courts have been less inclined to impose prohibitions on litigation counsel’s participation
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`in review proceedings when “review proceedings are really nothing more than an
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`extension of the litigation in the district court,” as opposed to two independent matters.
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`Grobler, 2013 WL 3359274, at *2; Software Rights Archive, LLC v. Facebook, Inc., 2014
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`WL 116366, at *3 (N.D. Cal. 2014); Shared Memory Graphics, 2010 WL 4704420, at
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`*3-4 (“when it is the opposing party who seeks reexamination, then the reexamination is
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`really part and parcel of the litigation at issue”); see also Crystal Image Tech., 2009 WL
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`1035017, at *3; Mirror Worlds, LLC, 2009 WL 2461808, at *2 (“the Court has serious
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`concerns about a policy that would encourage defendants to file for reexamination while
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`excluding plaintiff’s counsel from participating in the reexamination, thereby forcing a
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`plaintiff to defend a patent in two separate venues with two teams of attorneys”). “[I]f
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`6 In LifeScan Scotland v. Shasta Technologies, the court allowed a prosecution bar
`comparable in scope to what Finjan seeks here even when the patentee had previously
`violated the protective order in that case. 2013 WL 5935005, at *5-6.
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`the PTO and district courts are just two fronts in the same battle, allowing a limited role
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`for a patentee’s litigation counsel while prohibiting counsel from crafting or amending
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`claims is only reasonable.” Grobler, 2013 WL 3359274, at *2; LifeScan, 2013 WL
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`5935005, at *5 (when the same patents, same invalidity arguments, and same prior art
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`references are at issue, allowing litigation counsel to participate subject to a prohibition
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`on crafting or amending claims is reasonable).
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`Finjan has shown good cause to modify the Protective Order to substitute “any
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`entity other than Finjan” for “a Non Party” to allow Finjan’s litigation counsel to
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`represent it, subject to all the other limitations in the current Protective Order, in review
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`proceedings initiated by ESET.
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`CONCLUSION
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`The Court GRANTS Finjan’s Motion to modify the Protective Order.
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`IT IS SO ORDERED.
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`Dated: December 21, 2017
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