Case 1:18-cv-01519-MN Document 173 Filed 08/07/20 Page 1 of 7 PageID #: 6557
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF DELAWARE
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`Plaintiff,
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`v.
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`C.A. No. 18-1519-MN
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`FINJAN, INC.,
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`RAPID7, INC., et al.,
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`MEMORANDUM OPINION AND SPECIAL MASTER ORDER #2
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`Defendants Rapid7, Inc. and Rapid7 LLC (Rapid7) move to compel Plaintiff Finjan, Inc.
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`Defendants.
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`(Finjan) to produce documents “regarding the relationship and patent acquisition and development
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`agreement between Finjan’s wholly owned subsidiary, Finjan Blue, Inc., and IBM (‘IBM
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`Documents’).” D.I. 170 at 1. Using Judge Noreika’s discovery dispute procedure, the parties filed
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`letter briefing on this motion. D.I. 160 and 163. On July 8, 2020, the Court appointed this Special
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`Master. D.I. 167; see also D.I. 164. The Special Master requested a letter brief from non-party
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`IBM because IBM had asserted confidentiality objections to Finjan’s production of the IBM
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`Documents. D.I. 169. The Special Master also allowed Rapid7 to file a two-page reply. After
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`receiving those letter briefs, the Special Master held a hearing on July 27, 2020 via WebEx
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`videoconference, with a court reporter present.
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`For the reasons explained below, the Special Master grants Rapid7’s motion to compel
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`production of the IBM Documents from Finjan.
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`BACKGROUND
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`In August 2017, Finjan’s subsidiary, Finjan Blue, Inc., announced a patent acquisition and
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`development agreement with IBM. D.I. 161 at Ex. B. Finjan has introduced its relationship with
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`Case 1:18-cv-01519-MN Document 173 Filed 08/07/20 Page 2 of 7 PageID #: 6558
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`IBM and the Finjan Blue-IBM agreement at trials in prior lawsuits.1 Transcript at 20-21.
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`According to Finjan, the relationship typically comes up at trial when Finjan lists licensees to
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`Finjan’s patents.2 Id.
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` Finjan produced to Rapid7 the final written agreement between Finjan Blue and IBM.
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`But Rapid7 wanted more information about the agreement and the Finjan-IBM relationship to
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`rebut any representations Finjan might make at trial about its relationship with IBM—
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`representations that Finjan has made in past trials and apparently intends to make here. Indeed,
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`Finjan confirmed at the hearing that it will not agree to refrain from mentioning IBM at trial.
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`Transcript at 21.
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`To get the documents it wanted, Rapid7 issued ESI requests to Finjan in January 2020.
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`D.I. 160 at Ex. J. Rapid7 and Finjan agreed on search terms that aim to return emails related to
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`the Finjan-IBM relationship and the Finjan Blue-IBM agreement. Transcript at 6-7. Finjan ran
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`these terms and has assembled the resulting documents for production. The parties refer to these
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`as the “IBM Documents.” Finjan does not object to producing the IBM Documents based on
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`relevancy, burden, or any other basis. D.I. 163 at 1. In fact, Finjan at one point stated that it
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`“intends to produce the IBM Documents, and has started the process to do so.” D.I. 160 at Ex. K.
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`Before producing the IBM Documents, however, Finjan needed IBM’s permission or a
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`court order. D.I. 163 at 1. Finjan sent a copy of all the IBM Documents to IBM in April 2020 and
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`requested IBM’s consent to produce them. Transcript at 22-23. IBM admits that it has had a copy
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`of the IBM Documents since April, but IBM has not reviewed the documents in detail. Transcript
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`1 Neither side was able to point the Special Master to the earlier trials where Finjan mentioned its
`relationship with IBM. Presumably, these earlier trials involved allegations of patent infringement.
`2 While none of the patents asserted in this case were acquired by Finjan from IBM, IBM has a
`license from Finjan for some of the asserted patents. Transcript at 15-16. Neither side noted which
`of the asserted patents have been licensed to IBM.
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`2
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`at 24-25. Based on its limited review, IBM believes that the requested documents “reflect IBM’s
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`negotiations with Finjan leading up to execution of the Patent Assignment and Support
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`Agreement…and, as such, contain IBM information that is commercially sensitive and
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`confidential to IBM.” IBM’s July 20, 2020 Letter Brief at 2. According to IBM, this information
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`is “very sensitive to IBM’s business of selling and assigning its patents and disclosure of this type
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`of information to other entities risks irreparable harm to non-party IBM’s ability to negotiate
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`similar patent assignment transactions with others on fair and un-tainted terms.” Id. IBM also
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`argues that the discovery Rapid7 requested from Finjan is overbroad. IBM seeks to limit the
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`production to documents dated after the execution of the Finjan Blue-IBM agreement. Id. at 3.
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`Further, IBM asserts that the IBM documents are “ancillary and not important to resolving the
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`issues in this case.” Id.
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`Based on its objections, IBM instructed Finjan not to produce the IBM Documents.
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`Transcript at 27-28. Finjan’s only reason for not producing the IBM Documents is IBM’s
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`instruction not to produce them. Transcript at 18.
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`In two prior patent litigations, other defendants have requested the same or similar
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`documents as Rapid7 seeks here. In Finjan, Inc. v. Cisco Systems, Inc., C.A. No. 5:17-cv-72-BLF-
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`SVK (N.D. Cal.), the court ordered Finjan to either produce the IBM Documents or refrain from
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`referencing IBM at trial. D.I. 161 at Ex. D. Finjan elected to refrain from referencing IBM. D.I.
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`161 at Ex. E. In Finjan v. SonicWall, Inc., C.A. No. 5:17-cv-4467-BLF-VDK (N.D. Cal.), the
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`parties, along with IBM, negotiated a compromise whereby IBM would allow a focused deposition
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`and declaration from IBM in lieu of Finjan’s production of the IBM documents. IBM and Rapid7
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`3
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`Case 1:18-cv-01519-MN Document 173 Filed 08/07/20 Page 4 of 7 PageID #: 6560
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`agreed to the same compromise here, but Finjan objected because the fact discovery deadline had
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`expired on March 13, 2020 (D.I. 112).3
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`DISCUSSION
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`Pursuant to Rule 26 of the Federal Rules of Civil Procedure, “[p]arties may obtain
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`discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense and
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`proportional to the needs of the case, considering the importance of the issues at stake in the action,
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`the amount in controversy, the parties’ relative access to relevant information, the parties’
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`resources, the importance of the discovery in resolving the issues, and whether the burden or
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`expense of
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`the proposed discovery outweighs
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`its
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`likely benefit. Information within
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`this scope of discovery need not be admissible in evidence to be discoverable.” Fed. R. Civ. P.
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`26(b)(1). Relevance is liberally construed to “encompass any matter that bears on, or that
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`reasonably could lead to other matter[s] that could bear on, any issue that is or may be in the
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`case.” Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 (1978).
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`IBM asserts that the IBM Documents are not relevant. As an initial matter, IBM’s standing
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`to make this objection is unclear. IBM has not cited any authority for the proposition that IBM
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`has such standing, particularly where, as here, the parties to the action do not dispute that the
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`requests seek relevant information and are not overbroad.
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`3 At the hearing and in its letter brief, IBM stated its willingness to proceed with this negotiated
`compromise. Rapid7 also indicated it was willing to proceed with this compromise. Rapid7 filed
`a Proposed Order (D.I. 170-1), however, that did not mention this form of relief and requested
`only production of the IBM Documents or an order that Finjan was forbidden from referencing its
`relationship with IBM at trial. Further, Rapid7 has not served a deposition subpoena on IBM.
`Therefore, the Special Master is not in a position to order the parties to proceed with a deposition
`of IBM at this time.
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`4
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`But even if IBM had standing, the arguments made in IBM’s letter brief would not carry
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`the day. Finjan has agreed not to assert the patents-in-suit against IBM.4 D.I. 160 at Ex. C, Section
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`3.0. Finjan plans to introduce this fact and its relationship with IBM at trial in this matter. The
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`Court here could allow Finjan to introduce this relationship at trial in this case.5 At least two courts
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`let it in at past trials involving Finjan. Under these specific facts, the IBM documents, whether or
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`not they are “ancillary,” are within the liberal scope of discovery allowed by Rule 26.
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`As to commercially sensitive information allegedly in the IBM Documents, the case
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`Protective Order fully addresses IBM’s concerns. That Protective Order provides for the
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`production of documents on an outside counsel eyes’ only basis. D.I. 33 at ¶ 4. Rapid7 has agreed
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`that Finjan can mark the IBM Documents “Confidential—Outside Counsel Only.” Rapid7’s July
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`23, 2020 Letter Brief at 2. When asked at the hearing, IBM’s counsel essentially agreed that
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`producing the IBM Documents “Confidential—Outside Counsel Only” would address IBM’s
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`concerns. Transcript at 32-33. The fact that Rapid7 does not appear to be a direct competitor of
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`IBM further reduces any potential for harm to IBM.
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`IBM also argues that production of the IBM Documents in this case could result in
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`production of these same documents in future litigations, which would let “the horse out of the
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`barn so to speak.” Transcript at 33. But no one knows what future actions may be brought, whether
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`Finjan will inject its relationship with IBM into those actions, or whether defendants in those
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`actions will seek the IBM Documents produced here. So IBM’s concern seems somewhat
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`4 During the hearing, Rapid7’s counsel referred to this arrangement as a “cross license.” Transcript
`at 15. Rapid7’s letter brief labelled it a “covenant.” D.I. 160 at 1.
`5 This is a decision on a motion to compel and not a decision on a motion in limine or an objection
`made at trial. The Special Master takes no position on whether statements made by Finjan about
`its relationship with IBM would be admissible or proper at trial.
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`5
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`speculative. And, even if IBM’s concern comes to pass, Finjan has committed to seeking IBM’s
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`permission before producing the IBM Documents in any future litigation. Transcript at 34.
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`In any event, IBM should have foreseen when it entered into a patent acquisition and
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`license agreement with Finjan that documents concerning that agreement and IBM’s relationship
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`with Finjan could be requested and produced in future patent litigations, especially a litigation
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`such as this one involving the very patents that are a subject of the agreement. That is, IBM never
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`should have expected this horse to stay in the barn.
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`Finally, complaints by either Finjan or IBM about the timing of Rapid7’s requests are not
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`compelling given the progress of this case to date. Rapid7 served its ESI requests on January 23,
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`2020, before the fact discovery deadline. Finjan initially agreed to produce the IBM Documents.
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`Finjan does not object to producing the IBM Documents, even now. Finjan produced other emails
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`and documents in response to Rapid7’s ESI requests on May 13, 2020, well after the March 13,
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`2020 fact discovery deadline. Transcript at 23. Under these facts, Rapid7’s requests were timely.
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`Consistent with the Memorandum Opinion above, the Special Master orders as follows:
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`(1)
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`Rapid7’s motion to compel is GRANTED insofar as it requests that Finjan produce
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`the IBM Documents, and is otherwise DENIED WITHOUT PREJUDICE;
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`(2)
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`Finjan shall produce the IBM Documents to Rapid7 on or before 6 p.m. Eastern on
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`August 13, 2020; and
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`(3)
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`To the extent Finjan withholds any of the IBM Documents on the basis of the
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`attorney-client privilege, attorney work product, or any other privilege or protection, Finjan shall
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`produce a log of the withheld documents, consistent with the requirements of Rule 26, on or before
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`August 18, 2020.
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`6
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`IT IS SO ORDERED.
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`Dated: August 6, 2020
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`Special Master Chad S.C. Stover
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`7
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