IP Law Daily, PATENT—Fed. Cir.: Invalidity decision for malware detention patents based on collateral estoppel vacated, (Oct 13, 2023)

By Brian Craig, J.D.

The Federal Circuit vacated the judgment upon which the district court based its application of collateral estoppel for invalidity.

In Finjan LLC’s infringement suit over malware detention patents brought against SonicWall, Inc, the U.S. Court of Appeals for the Federal Circuit has vacated a decision by the federal district court in San Jose that invalidated the patents. Because the district court based its judgment of invalidity for indefiniteness on a collateral estoppel decision that the Federal Circuit later vacated, the Federal Circuit vacated the district court’s judgment of invalidity. The Federal Circuit affirmed, however, the district court’s finding of noninfringement as to certain claims and the decision to exclude Finjan’s expert analysis. Judge William Bryson dissented on the noninfringement issue (Finjan, Inc. v. SonicWall, Inc., October 13, 2023, Cunningham, T.).

Finjan owns U.S. Patent Nos. 8,677,494, 6,154,844 (the ’844 Patent), 6,804,780, and 7,613,926 (collectively, the “Downloadable Patents”), as well as U.S. Patent No. 8,225,408 (the “ARB Patent”). The Downloadable Patents relate to ways to protect network-connectable devices from undesirable downloadable operations. Finjan sued SonicWall alleging patent infringement with several of SonicWall’s products. In March 2021, the district court in San Jose ruled that the indefinite claim term “downloadable” rendered five of Finjan’s patents invalid. On November 1, 2022, in related litigation, the Federal Circuit vacated a summary judgment of invalidity because the trial court in San Diego erred in its claim construction. Finjan LLC v. ESET, LLC, 51 F.4th 1377, 1379, 1384 (Fed. Cir. 2022). Finjan appealed the decision by the federal district court in San Jose.

Invalidity. The Federal Circuit first vacated the district court’s finding of patent invalidity, based on principles of collateral estoppel. If a court reverses or vacates a judgment upon which a collateral estoppel decision is based, then collateral estoppel can no longer apply based on that decision. In the 2022 decision, the Federal Circuit vacated the judgment upon which the district court based its application of collateral estoppel. Because the district court based its judgment of invalidity on a collateral estoppel decision that the Federal Circuit has since vacated, the Federal Circuit vacated the district court’s judgment of invalidity. The Federal Circuit remanded the case to the district court on the invalidity issue.

Noninfringement. Next, the Federal Circuit affirmed the district court’s grant of summary judgment of noninfringement as to certain claims for the ’844 Patent and the ARB Patent. The district court’s judgment of noninfringement flows from the parties’ agreed upon claim construction for the ’844 Patent. The parties adopted a single construction of “Downloadable” for each of these claims: “an executable application program, which is downloaded from a source computer and run on the destination computer.” The Federal Circuit concluded that a device that merely receives and forwards packets without reassembling their contents does not receive a downloadable, under the parties’ agreed-upon construction. That device does not receive an executable application program, the appeals court found. As to the ARB Patent, even if an infringing system can use one or more computers, the plain language of the claims requires at least one of those computers to perform all the functions listed in the claims of the ARB Patent. Thus, the Federal Circuit affirmed the district court’s decision on invalidity.

Expert testimony. The Federal Circuit also affirmed the district court’s decision to exclude Finjan’s expert analysis. Finjan challenged the district court’s grant of SonicWall’s motion to exclude the apportionment analysis of one Finjan expert and the opinion of another Finjan expert relying on the apportionment analysis. The Federal Circuit ruled the district court did not abuse its discretion in excluding the expert testimony. Finjan’s expert failed to carefully tie his analysis to allegedly infringing features and to exclude value attributable to unpatented features.

Dissent. Circuit Judge William Curtis Bryson wrote a dissenting opinion stating that he would vacate the district court’s grant of summary judgment of non-infringement with respect to the downloadable patents and remand for further proceedings on that issue. Judge Bryson agreed with the majority on the issues relating to invalidity and admissibility of the expert testimony, but he dissented on the noninfringement finding. Although the parties stipulated to the construction of the term “Downloadable” in the patent claims, the parties did not share the same understanding of the term “executable,” as used in that construction.

The Case is No. 22-1048.

Attorneys: Juanita Rose Brooks (Fish & Richardson, PC) for Finjan LLC, f/k/a Finjan, Inc. Matthew Christopher Gaudet (Duane Morris LLP) for Sonicwall, Inc.

Companies: Finjan LLC, f/k/a Finjan, Inc.; Sonicwall, Inc.

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