Case 3:17-cv-00183-CAB-BGS Document 430 Filed 01/18/19 PageID.14901 Page 1 of 5
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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. SR.O.,
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` Case No.: 17CV183 CAB (BGS)
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`ORDER ON CMPS DISCOVERY
`DISPUTE
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`Defendant.
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`[ECF 428]
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`The parties have filed a Joint Statement addressing a dispute that has arisen as to
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`compliance with the Court’s prior Orders on the parties’ dispute regarding Eset’s Cloud
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`Malware Protection System (“CMPS”). (ECF 428)
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`I.
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`Sandboxing(CMPS): Clarification of November 28, 2018 Order (ECF 398)
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`In the Court’s November 8, 2018 Order, the Court ordered Finjan to provide its
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`good faith basis premised on a reasonable inquiry to support its contention “that Eset’s
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`cloud-based sandboxing is put into service in the U.S. where the system is exercised and
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`beneficial use of the system obtained.” (ECF 383 at 6 (emphasis added).) Finjan, in
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`support of its good faith basis that ESET uses the CMPS (sandboxing) system in the
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`United States, provided a declaration of Michael Lee with supporting exhibits. (ECF
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`388). In his declaration, and as part of his proffer that CMPS was exercised in the U.S.
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`and its beneficial use was obtained in the U.S., Mr. Lee declared that “Eset strategically
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`17CV183 CAB (BGS)
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`Case 3:17-cv-00183-CAB-BGS Document 430 Filed 01/18/19 PageID.14902 Page 2 of 5
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`placed these servers
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`, in part, because that location makes it easier to provide
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`the accused CMPS services to U.S. and foreign customers, including those in North
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`America and Asia.” (Id. at 2). Based on Mr. Lee’s declaration and exhibits, the Court
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`found that Finjan had established a good faith basis that the LiveGrid Reputation System
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`servers
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` may be used to provide Eset’s customers with automated detections
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`derived from the CMPS system. (ECF 398 at 3). The Court now clarifies that Order to
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`include only Eset’s customers who are in the United States, which was its original intent
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`based on the proffer of Mr. Lee quoted above.
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`As the Court stressed in its November 28, 2018 Order, the only issue raised by the
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`parties in this discovery dispute was whether Finjan had a good faith basis to believe the
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`CMPS system satisfied the jurisdictional requirements of 35 U.S.C. § 271(a). (ECF 398
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`at 3.) It was for this reason the Court required Finjan to put forth how CMPS is exercised
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`in the U.S. and how the beneficial use of that system is obtained in the U.S.
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`The territorial reach of § 271(a) is limited. Section 271(a) is only actionable
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`against patent infringement that occurs within the United States. NTP, Inc. v. Research in
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`Motion, Ltd., 418 F.3d 1282, 1313 (Fed. Cir. 2005) abrogated on other grounds by Zoltek
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`Corp. v. United States, 672 F.3d 1309, 1323 (Fed. Cir. 2012). Pursuant to § 271(a),
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`“whoever without authority makes, uses, offers to sell, or sells any patented invention,
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`within the United States . . . infringes the patent.” In terms of the infringing act of “use,”
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`it is to be construed broadly. NTP, 418 F.3d at 1316-1317. The use of a claimed system
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`under § 271(a) is the place at which the system as a whole is put into service, i.e., the
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`place where control of the system is exercised and beneficial use of the system obtained.
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`Id. at 1317.
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`In the present case, the Court, based on Finjan’s proffer, found that the results of
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`the CMPS system may be passed to customers via the LiveGrid Reputation System
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`servers
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`. The Court now clarifies that only the U.S. customers that
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`receive these results from those
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` servers are included in its Order. For
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`purposes of obtaining discovery only, the CMPS system results to Eset’s U.S. customers
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`17CV183 CAB (BGS)
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`Case 3:17-cv-00183-CAB-BGS Document 430 Filed 01/18/19 PageID.14903 Page 3 of 5
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`would satisfy the “use” test under § 271(a), i.e., the place where control of the system is
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`exercised and beneficial use of the system obtained.
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`In conclusion, the Court’s November 28, 2018 Order, (ECF 398), is clarified as
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`follows. To the extent that the LiveGrid Reputation system servers
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` are used
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`to provide Eset’s U.S. customers the results of the CMPS system, Finjan is entitled to the
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`discovery requested in its RFPs.
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`II.
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`Present Dispute
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`The parties’ current dispute arises from apparent confusion by what the Court
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`meant in its November 28, 2018 Order, which stated that “[t]he Court finds that Finjan
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`has established a good faith basis to believe that the LiveGrid Reputation servers
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` may be used to provide ESET’s customers with automated detections derived from
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`the CMPS system. Therefore, to the extent that the LiveGrid Reputation servers
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` are used to perform this service, Finjan is entitled to the discovery as related to that
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`use.”1 (ECF 398.)
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`The Court will not summarize the parties’ arguments for purposes of expediency.
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`Their Joint Statement recites their respective interpretations of this language. (See ECF
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`428.) To understand what the Court meant by its ruling, the parties need only to revisit
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`the source of this discovery dispute. The only dispute raised by Eset was whether the
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`discovery requested by Finjan in its RFPs was irrelevant under § 271(a) because the
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`alleged infringement took place outside the U.S. (ECF 383 at 2.) The parties did not raise
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`any dispute regarding what documents are being sought or parsing of the language of the
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`RFPs regarding CMPS. And to the extent there is any dispute as to the language or scope
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`of the RFPs, it is waived because it was not raised in the briefing. (ECF 383 at 6, n 7.)
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`1 This holding is now clarified to apply only to Eset’s U.S. customers as explained in
`Section I. of this order.
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`Case 3:17-cv-00183-CAB-BGS Document 430 Filed 01/18/19 PageID.14904 Page 4 of 5
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`As such, interpreted in view of the only issue raised, the Court found in its
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`November 28, 2018 Order that for the purposes of discovery only, Finjan had established
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`a sufficient good faith basis that the “use” element of § 271(a) was met. (ECF 398.) This
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`in turn meant that the discovery requested was relevant, but only to the extent Eset’s U.S.
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`customers received the CMPS results via its
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`. The Court’s November
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`28, 2018 Order did not narrow the scope of the actual RFPs, since Eset did not raise any
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`such issues. (ECF 398.) The narrowing of the scope was only to the use concerns of
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`§ 271(a), namely to Eset’s U.S. customers who received the beneficial use of the CMPS
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`system by receiving the results of that system via Eset’s
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` servers. In all other
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`respects, Eset was to respond to Finjan’s RFPs.
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`Therefore, if Eset does not provide its U.S. customers with CMPS results via the
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` servers, then the dispute is moot since there will be no required disclosure of
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`discovery. If this is the case, Eset must provide a declaration from an appropriate
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`representative so stating.
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`However, if Eset does provide the above, then Eset will be required to respond to
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`the RFPs as they regard those U.S. customers. To be clear, if Eset’s U.S. customers
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`receive the results of the CMPS system via the LiveGrid Reputation system servers in the
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`U.S. Eset has to respond to the RFPs as they relate to Eset’s U.S. customers. This Order
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`is subject to Section III.
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`III. Federal Rule of Civil Procedure 26(b)(2)(C)(i)-(iii)
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`Pursuant to the above cited section, the Court has a duty sua sponte to limit
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`discovery as detailed in these subsections. In the Court’s November 8, 2018 Order, (ECF
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`383), the Court considered these sections, but determined at that time that ESET was not
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`arguing the discovery was cumulative or over burdensome. (ECF 383 at 7.) However, in
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`the Joint Statement filed for this present dispute, ESET details the extensive discovery
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`concerning CMPS provided to Finjan, including the source code used in that service, as
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`well as the countless hours of individual and corporate testimony regarding that
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`documentation and source code. (ECF 428 at 6-7.) Eset further proffers that on
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`17CV183 CAB (BGS)
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`Case 3:17-cv-00183-CAB-BGS Document 430 Filed 01/18/19 PageID.14905 Page 5 of 5
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`November 30, 2018 Finjan served three expert reports totaling more than 3,000 pages in
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`which it laid out its position regarding the operation of CMPS as a basis for its
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`infringement claims. (Id. at 7). Eset also lays out the burden and expense it would incur
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`by responding to Finjan’s RFPs. (Id.)
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`Given the limits imposed by Rule 26(b)(1) and this Court’s duty to limit discovery
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`that fits within Rule 26(b)(2)(C)(i)-(iii), the Court orders the parties to meet and confer to
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`limit the scope of the discovery requested in Finjan’s RFPs to comply with the rule
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`26(b)(2(C) limits. The parties are to accomplish this by January 23, 2019. If they cannot
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`reach an agreement as to what discovery remains outstanding that is not cumulative, is
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`relevant to important issues at stake, and not over burdensome to Eset, then they must
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`contact the Court by January 25, 2018.2
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`IT IS SO ORDERED.
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`Dated: January 18, 2019
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`2 Of course this meet and confer is not required if ESET does not provide the CMPS
`results to U.S. customers via its
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`17CV183 CAB (BGS)
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