Case 1:18-cv-01519-MN Document 246 Filed 12/22/20 Page 1 of 4 PageID #: 8987
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`Fish & Richardson P.C.
`222 Delaware Avenue
`17th Floor
`P.O. Box 1114
`Wilmington, DE 19899-1114
`302 652 5070 main
`302 652 0607 fax
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`Susan E. Morrison
`Principal
`morrison@fr.com
`302 778 8434 direct
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`VIA ECF
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`December 22, 2020
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`The Honorable Maryellen Noreika
`U.S. District Court
`844 King Street
`Wilmington, DE 19801
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`Re: Finjan LLC v. Rapid7, Inc. and Rapid7 LLC,
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`D. Del., C.A. No. 18-1519-MN
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`Dear Judge Noreika:
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`Collateral estoppel does not apply to the construction of the term “content processor” in the ’154
`patent in Finjan, Inc. v. Juniper Networks, Inc., Appeal No. 19-2405 (Fed. Cir. 2020), because it
`is ambiguous whether that construction was necessary to the Federal Circuit’s Rule 36
`affirmance. In Juniper, the parties briefed five separate issues, including damages issues that
`applied to all patents that were subject to the appeal in that matter. (See, e.g., D.I. 245, Ex. 1 at
`66-67.) Either the liability or the damages arguments may have independently led to the Federal
`Circuit’s affirmance. As a result, the application of collateral estoppel to those issues is
`inappropriate.
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`I.
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`The application of collateral estoppel requires a clear finding that the “previous determination
`was necessary to the decision.” See, e.g., United Access Techs., LLC v. Centurytel Broadband
`Servs., LLC, No. CV 11-339-LPS, 2016 WL 5745085, at *2 (D. Del. Sept. 30, 2016) (“In the
`Third Circuit, collateral estoppel applies where: ‘(1) the previous determination was necessary to
`the decision . . .’”); see also Leyse v. Bank of Am., Nat. Ass’n, 538 F. App’x 156, 160 (3d Cir.
`2013) (stating that summary affirmance does not have preclusive effect unless the basis for
`affirmance is clear).
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`Legal Standards
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` A
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` Rule 36 judgment does not endorse the reasoning in the trial court’s underlying opinion. See
`Rates Tech., Inc. v. Mediatrix Telecom, Inc., 688 F.3d 742, 750 (Fed. Cir. 2012) (“Since there is
`no opinion, a Rule 36 judgment simply confirms that the trial court entered the correct judgment.
`It does not endorse or reject any specific part of the trial court’s reasoning.”). Thus, in instances
`where multiple, independent determinations could lead to the correct judgment, no single
`determination is necessary to the judgment. See TecSec, Inc. v. Int’l Bus. Machines Corp., 731
`F.3d 1336, 1343 (Fed. Cir. 2013) (“[W]here the court in the prior suit has determined two issues,
`either of which could independently support the result, then neither determination is considered
`essential to the judgment.”) (citations omitted). This rationale extends to appellate arguments
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`Argument
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`presented by counsel. See United Access Techs., No. CV 11-339-LPS, at *5 (finding collateral
`estoppel does not apply “under the specific circumstances . . . where there is ‘some ambiguity’ as
`to whether an issue was ‘necessarily decided’ in a prior case, and that ambiguity arises from a
`party’s express appellate argument for affirmance on alternative, independent grounds . . .”)
`(citations omitted).
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`Rapid7’s argument, made without citation, that collateral estoppel does not attach to a judgment
`only where there are independent bases for affirmance of a particular issue or finding (see D.I.
`245 at 1), is not the law. As the Federal Circuit has made clear, a Rule 36 judgment confirms
`only that the underlying judgment of the district court was correct. Rates Tech., Inc., 688 F.3d at
`750. And where there are multiple potential bases supporting the district court’s judgment, none
`of those underlying bases can be considered “necessary to the judgment” where a Rule 36 is
`entered. Id.; TecSec, 731 F.3d at 1343.
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`Finjan is not arguing, contrary to Rapid7’s suggestion (D.I. 245 at 3) that a Rule 36 summary
`affirmance can never be the basis for collateral estoppel. Instead, Finjan’s position is that, as this
`District articulated in United Access, “where there is some ambiguity as to whether an issue was
`necessarily decided in a prior case,” application of collateral estoppel is inappropriate. United
`Access, 2016 WL 5745085, at *5.
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`II.
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`Rapid7’s letter brief misstates Finjan’s position on collateral estoppel. As discussed more fully
`below, the record in Juniper shows that Finjan argued to the Federal Circuit that the damages
`issues raised specifically regarding one patent applied to all of the patents involved in the appeal,
`and that an affirmance on those damages issues would result in no damages across all three
`patents, even if the liability issues were resolved in Finjan’s favor. As a result, an affirmance on
`damages would have resolved the entire matter adversely to Finjan, even if the Federal Circuit
`never reached the liability issues.
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`A.
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`Finjan’s Brief to the Federal Circuit Argued that the Damages Issues
`Applied to All Patents on Appeal
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`Finjan appealed five separate issues in Juniper: (1) a claim construction issue regarding the
`proper construction of the term “content processor” in the ’154 patent; (2) a claim construction
`issue related to the ’780 patent regarding the term “Downloadable ID”; (3) whether it was error
`to submit a claim construction issue on the ’494 patent to the jury; (4) whether the district court
`erred in excluding Finjan’s damages’ expert’s calculation of damages; and (5) whether the
`district court erred in its findings related to notice of infringement. (See, e.g., D.I. 245, Ex. 1 at
`3.)
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`As to the fourth issue, the exclusion of Finjan’s damages expert, Finjan’s brief in Juniper made
`clear that the damages issues raised cut across all three patents in the appeal. Contrary to
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`Rapid7’s statement that the “record does not show” that Finjan’s brief made this argument,
`Finjan’s brief expressly argued that if the Federal Circuit did not resolve the damages issues, it
`would be left with no remedy on the ’154 patent. (D.I. 245, Ex. 1 at 66-67.) Specifically, Finjan
`argued that the damages issues raised with respect to the ’494 patent equally applied to the
`damages on the ’154 patent:
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`This Court should address the errors regarding the district court’s treatment of the
`damages for the ’494 patent regardless of whether this Court remands it for a
`retrial on liability. Absent appellate review, the district court’s flawed approach
`to ’494 damages will be “law of the case” for any remand.
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`(Id. at 66.) Finjan went on to provide more detail on the impact that would have on any retrial
`related to the ’154 patent, explaining that even if the liability issues on the ’154 were resolved in
`Finjan’s favor, the damages issues would leave it without any remedy:
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`Here, judicial efficiency warrants this Court taking up the ’494 damages “law of
`the case” if there is any remand, even if it is not on the ’494 Patent. The same
`issues regarding combined infringement by end user hardware and “cloud”
`services are present for both the ’154 and ’780 Patents. Remand without
`substantive review of these issues would promote a pointless trial and new
`judgment, then a new appeal on this same issue. Finjan respectfully proposes that
`the more efficient course would be to address damages now. Finjan respectfully
`asks that this Court exercise discretion to resolve the damages base issue above as
`part of any remand.
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`(Id. at 66-67, citations omitted.) Said another way, resolution of the damages issues adverse to
`Finjan would sufficiently resolve the entire matter in Juniper’s favor, and it would be
`unnecessary for the Court to reach the liability issues with respect to the ’154 and ’780 patents.
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`B.
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`Finjan’s Oral Argument Further Clarified that the Damages Issues Applied
`to the ’154 Patent
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`Finjan’s oral argument reinforced that the damages issues applied to all of the patents involved in
`the appeal, including the ’154 patent. (See Oral Argument Recording at 28:32-32:54 (available
`at http://oralarguments.cafc.uscourts.gov/default.aspx?fl=19-
`2405_10072020.mp3).) Specifically, Finjan’s counsel argued that unless the Federal Circuit
`reversed the District Court’s exclusion of Finjan’s damages expert, Finjan would have a wrong
`with no remedy:
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` And to be candid with the court, even if we got relief on the ’154, or the ’780, or
`the ’494, and we were remanded for either a trial or even a summary judgment
`and Juniper was found to infringe, if the Court does not deal with what the lower
`court did as far as the damages are concerned, we will have a wrong with no
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`remedy. Juniper will be liable for infringement, and we will not be able to
`recover one penny.
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`(Oral Argument Recording at 28:45-29:10.)
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`At the very end of the argument, Finjan’s counsel was asked if the damages issue applied to all
`patents. In response, counsel for Finjan confirmed that it did, and therefore a reversal of liability
`without a reversal of the District Court’s order excluding Finjan’s damages expert would result
`in a wrong without a remedy. Specifically, Finjan’s counsel stated:
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`Judge Stoll: “On the damages issue, Ms. Brooks, does it relate to all the patents in
`suit, or just to the ’494 patent?”
`Ms. Brooks: “It would relate to all the patents-in-suit, Your Honor, because all of
`them are systems claims. So unless the district court is told by this Court that
`what the district court did by granting this Daubert was wrong, then we’re going
`to go back and we’re going to end up with the exclusion of our damages expert in
`its entirety for any of the patents.”
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`(Oral Argument Recording at 32:18-32:45.) In other words, Finjan’s counsel explained to the
`Court that if the Federal Circuit affirmed on the damages issues, that affirmance would apply to
`all three patents and make it unnecessary to reach the liability issues raised in the appeal.
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`Rapid7 attempts to turn Finjan’s argument on its head, arguing that Finjan did not, and could not,
`argue that the resolution of the damages issues would also resolve the liability issue on the ’154
`patent. But as with many of Rapid7’s statements, this is not Finjan’s argument. Instead, Finjan
`argued to the Federal Circuit that resolution of the damages issues adversely to Finjan would
`effectively resolve the entire matter adversely to Finjan. As a result, the Federal Circuit could
`have decided the damages issues adversely to Finjan, and failed to even consider the liability
`issues. Because it is impossible to know the basis for the Federal Circuit’s decision in this
`instance, the application of collateral estoppel is inappropriate here.
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`Respectfully submitted,
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`/s/ Susan E. Morrison
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`Susan E. Morrison
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