Finjan, Inc. v. Blue Coat Systems, Inc.

RESPONSE to re Objection Finjan's Response to Blue Coat's November 2, 2017 Objections Regarding Infringement Under Section 271

N.D. Cal.November 5, 2017

FINJAN’S RESP. TO BLUE COAT’S NOV. 2, 2017 OBJS. CASE NO. 15-cv-03295-BLF-SVK RE: INFRINGEMENT UNDER § 271(A) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PAUL ANDRE (State Bar No. 196585) pandre@kramerlevin.com LISA KOBIALKA (State Bar No. 191404) lkobialka@kramerlevin.com JAMES HANNAH (State Bar No. 237978) jhannah@kramerlevin.com KRAMER LEVIN NAFTALIS & FRANKEL LLP 990 Marsh Road Menlo Park, CA 94025 Telephone: (650) 752-1700 Facsimile: (650) 752-1800 Attorneys for Plaintiff FINJAN, INC. IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION FINJAN, INC., a Delaware Corporation, Plaintiff, v. BLUE COAT SYSTEMS LLC, a Delaware Corporation, Defendant. Case No.: 15-cv-03295-BLF-SVK FINJAN’S RESPONSE TO BLUE COAT’S NOVEMBER 2, 2017 OBJECTIONS REGARDING INFRINGEMENT UNDER § 271(A) BY ITS MANUFACTURE AND USE OF GIN Case 5:15-cv-03295-BLF Document 405 Filed 11/05/17 Page 1 of 7 1 FINJAN’S RESP. TO BLUE COAT’S NOV. 2, 2017 OBJS. CASE NO. 15-cv-03295-BLF-SVK RE: INFRINGEMENT UNDER § 271(A) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Finjan has substantial evidence that Blue Coat infringes under 35 U.S.C. § 271(a) through its making and using the Global Intelligence Network (“GIN”) within the United States. Blue Coat improperly conflates different concepts of the law of infringement to allege that Finjan must show that GIN is made, used, and sold in the U.S. to prove infringement under §271(a), when in fact, Finjan can establish infringement through any one of these actions. Carnegie Mellon Univ. v. Marvell Tech. Grp., Ltd., 807 F.3d 1283, 1306–07 (Fed. Cir. 2015), reh’g en banc denied in part, 805 F.3d 1382 (Fed. Cir. 2015) (“§ 271(a)…states a clear definition of what conduct Congress intended to reach—making or using or selling in the United States or importing into the United States, even if one or more of those activities also occur abroad.”) (emphasis in original). As proven at trial, GIN and each of its components, infringes Finjan’s asserted patents under § 271(a) because it is made and used in the U.S. Thus, infringement under § 271(a) can be proven by a preponderance of the evidence without a showing that GIN is sold in the U.S. A. Blue Coat is Estopped from Arguing that WebPulse is Made Outside the U.S. Blue Coat is estopped from arguing that “WebPulse” (a component of GIN) is not made in the U.S., because Blue Coat attempt to make this argument in the first case in its post-trial motion for judgment as a matter of law (“JMOL”) and failed to prevail. Blue Coat I, Dkt. No. 543 at 9-10. In that case, this Court held that Blue Coat infringed by making WebPulse in Draper, Utah and that “Blue Coat did not contest Finjan’s evidence that WebPulse was made and pushed out of Utah . . . . there was substantial evidence for the jury to conclude that WebPulse was made in the United States.” Id. at 10. Blue Coat did not appeal the JMOL Order to the Federal Circuit, and it is now collaterally estopped from arguing that WebPulse is not made in the U.S. Dkt. No. 276 at 22-23 (collaterally estopping Blue Coat from re-litigating the “identical” issues); see also Roche Palo Alto LLC v. Apotex, Inc., 526 F. Supp. 2d 985, 995 (N.D. Cal. 2007), aff’d, 531 F.3d 1372 (Fed. Cir. 2008) (finding that issue preclusion (collateral estoppel) prevented accused infringer from re-litigating issues it previously raised and lost). Blue Coat cannot argue that there are any new circumstances from the previous case, as neither Finjan nor Blue Coat dispute now that WebPulse is still made and updated from the U.S. for Case 5:15-cv-03295-BLF Document 405 Filed 11/05/17 Page 2 of 7 2 FINJAN’S RESP. TO BLUE COAT’S NOV. 2, 2017 OBJS. CASE NO. 15-cv-03295-BLF-SVK RE: INFRINGEMENT UNDER § 271(A) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 all its users worldwide. Trial Tr. at 889:9-23 (admissions that WebPulse developed in the U.S. and updates pushed from the U.S.). B. GIN is Made in the U.S. Every component of GIN is made in the U.S. This has already been, and will be further established at trial with substantial evidence through admitted trial exhibits, expert testimony, fact testimony, and Blue Coat’s admissions. Software is made when the source code is compiled into a program. CNET Networks, Inc. v. Etilize, Inc., 528 F. Supp. 2d 985, 994 (N.D. Cal. 2007). The evidence at trial has shown that all of GIN’s source code is maintained in the U.S., it is compiled in the U.S., and all updates of GIN are made in the U.S. and are pushed out to all of its data centers. Accordingly, every version of GIN running on any of Blue Coat’s worldwide data centers are made in the U.S. This is true for every component of GIN involved in this case – WebPulse and FRS (including GIN sandboxing with MAA). Microsoft Corp. v. AT&T Corp., 127 S.Ct. 1746 (2007), is not relevant to § 271(a)1 here, because this is not a case where the parties agree that infringement only occurs when software is installed abroad. To the contrary, in this case GIN is undisputedly made (compiled) in the U.S and GIN itself infringes without the need for any additional components to be installed outside of the U.S. Under § 271(a), “[w]hen [the accused infringer] made the [accused products] in this country, it infringed [the claim at issue] … [and] [w]hether those [accused products] were sold in the U.S. or elsewhere is therefore irrelevant . . . .” See Card-Monroe Corp. v. Tuftco Corp., No. 1:14-cv-292, 2017 WL 3841878, at *43–45 (E.D. Tenn. Sept. 1, 2017) (quoting Railroad Dynamics, Inc. v. A. Stuki Co., 727 F.2d 1506, 1519 (Fed. Cir. 1984) (holding that a royalty award could reach units made in the U.S.—valued at their sale price—regardless of whether they were sold abroad)); see also Goulds’ Mfg. Co. v. Cowing, 105 U.S. 253, 256 (1881) (approving an award based on defendant’s profits, reaching units made in the U.S. where some were to be used only abroad). 1 Microsoft involves infringement for a combination of components abroad under § 271(f), and not infringement under § 271(a) for making or using an infringing component in the U.S. Case 5:15-cv-03295-BLF Document 405 Filed 11/05/17 Page 3 of 7 3 FINJAN’S RESP. TO BLUE COAT’S NOV. 2, 2017 OBJS. CASE NO. 15-cv-03295-BLF-SVK RE: INFRINGEMENT UNDER § 271(A) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1. Evidence Proves Blue Coat Makes GIN in the U.S. Blue Coat argues that Finjan’s expert, Dr. Meyer, is not entitled to use worldwide users as part of her user-based damages opinions “until substantial evidence supporting infringement under § 271(a) is proffered.” Blue Coat’s November 2, 2017 Objections, Dkt. No. 403 at 1. Even before the close of evidence, Finjan has already established with substantial evidence that all of GIN is made in the U.S. First, Finjan’s experts have already testified, based on an internal Blue Coat document and Blue Coat depositions, that all development of GIN is done in the U.S., and that all versions of GIN are pushed out of the U.S. Trial Tr. at 495:7-496:21 (Cole testimony that all GIN development is in the U.S.); 764:17-765:22 (Mitzenmacher testimony that all GIN development is in U.S. and updates are pushed from the U.S.); PTX-216 at BC2-0776971. Finjan also submitted the deposition testimony of Patrik Runald, the head of the Global Intelligence Network, who unequivocally stated that (1) “[t]here’s no development for GIN done outside of Draper,” (2) the source code for GIN is maintained in the U.S., and (3) WebPulse is developed “[o]nly in Draper.” Trial Tr. at 535:12-536:16; PTX-1275 at 233:21- 234:18. Finjan also entered Blue Coat’s own admissions to Finjan’s discovery requests into evidence, which further confirmed that GIN and its components, WebPulse and DRTR, are made in the U.S. Trial Tr. at 889:9-23 (reading Blue Coat’s RFA responses into the record). As such, to date, Finjan has presented substantial evidence that Blue Coat makes GIN in the U.S. C. Blue Coat Uses GIN in the U.S. In addition to the undisputed fact that GIN is made in the U.S., it is also used in the U.S. Finjan anticipates that Blue Coat may attempt to allege that certain components of GIN are made and used outside the U.S. As such, Finjan also provided substantial evidence for the alternative infringement theory that Blue Coat uses GIN in the U.S. because the GIN components used abroad are controlled by Blue Coat in the U.S. and Blue Coat gains the benefit from those GIN components in the U.S. As Finjan only asserted system claims against GIN, any component Blue Coat alleges was used outside the U.S. still infringes because the system as a whole is controlled by Blue Coat in the U.S. and Blue Coat obtains the benefit from those GIN components in the U.S. NTP, Inc. v. Research In Motion, Ltd., 418 F.3d 1282, 1316-17 (Fed. Cir. 2005). Case 5:15-cv-03295-BLF Document 405 Filed 11/05/17 Page 4 of 7 4 FINJAN’S RESP. TO BLUE COAT’S NOV. 2, 2017 OBJS. CASE NO. 15-cv-03295-BLF-SVK RE: INFRINGEMENT UNDER § 271(A) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1. Evidence Proves Blue Coat Uses GIN in the U.S. Finjan can reasonably support its user based damages model based on worldwide users because the evidence provided at trial supports that worldwide use of GIN is controlled by Blue Coat in the U.S. for its own benefit. Finjan presented substantial evidence that the GIN system as a whole is controlled in the U.S. and that the benefit of GIN is for Blue Coat in the U.S. Specifically, both Drs. Cole and Mitzenmacher testified that any GIN component located abroad was not only made in the U.S., but also that Blue Coat in the U.S. exercised control of every component of the system and received the benefit from every component in the U.S. Trial Tr. at 496:5-21, 513:16-515:3, 530:7- 532:18, 535:12-536:16 (Dr. Cole testifying about Blue Coat’s controlling and benefiting from GIN in the U.S.); Trial Tr. at 828:2-829:20, 830:6-13 (Dr. Mitzenmacher testifying about Blue Coat’s controlling and benefiting from GIN in the U.S.). Blue Coat’s documents also confirmed the control and benefit aspect of GIN. See JTX-3043 at BC2-0031075 (every Blue Coat product is reliant on GIN, stating that “[e]very Blue Coat thing uses some kind of data from GIN . . . Most things also contribute some kind of data to GIN.”); PTX-105 at 2 (GIN provides [Blue Coat] valuable data to feed [their] analytics engines; PTX-49 at FINJAN-BLCT 011588 (“The Blue Coat Global Intelligence Network contains web and threat data gained from our partnership with over 15,000 of the largest global enterprises”). Even Blue Coat’s own engineers confirmed that the U.S. is where control of the GIN system is exercised and beneficial use of the GIN system is obtained. Trial Tr. at 531:15-532:18 (Mr. Runald deposition testimony that MAAs operated for benefit of FRS in GIN); 513:3-514:3 (Mr. C. Larsen deposition testimony that Blue Coat runs MAAs for benefit of GIN); 535:12-536:16 (Mr. Runald’s deposition testimony that GIN is controlled in the U.S.). As such, Finjan presented substantial evidence that GIN worldwide use is infringement under § 271(a) based on the worldwide user base of GIN. D. Blue Coat Misapplies the Relevant Case Law Blue Coat misapplies the case law in attempting to exclude evidence of GIN’s worldwide user base. Dkt. No. 403 at 1. First, Blue Coat misapplies Microsoft Corp. v. AT&T Corp. to argue that GIN is not “made” in the U.S., when that case relates to 35 U.S.C. § 271(f) on exporting a component to be Case 5:15-cv-03295-BLF Document 405 Filed 11/05/17 Page 5 of 7 5 FINJAN’S RESP. TO BLUE COAT’S NOV. 2, 2017 OBJS. CASE NO. 15-cv-03295-BLF-SVK RE: INFRINGEMENT UNDER § 271(A) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 later assembled outside the U.S. to manufacture an accused product. Microsoft does not apply to this case here where the infringing product is completely made in the U.S. Similarly, Microsoft is not applicable to a case where the benefit and control of a system claim is in the U.S. Instead, in Microsoft the Court concluded that exporting a component that would later be assembled into an infringing system did not amount to infringement under 35 U.S.C. § 271(f). Microsoft, 127 S.Ct. at 1755-60. As such, Microsoft is inapplicable, because the complete infringing product, GIN, and components like WebPulse, FRS, DRTR, and MAA, are all made and used in the U.S. Notably, this Court in CNET Networks, Inc. v. Etilize, Inc. considered Microsoft and concluded that an infringing product was made in the U.S. when it was “expressed and stored as machine-readable object code, e.g. burned on a CD– ROM or written to a server hard drive such that it is capable of being downloaded from the internet…[and the] software become an actual, physical component amenable to combination.” 528 F. Supp. 2d 985, 994 (N.D. Cal. 2007) (citing Microsoft, 127 S.Ct. at 1756). CNET mirrors this case because Finjan provided evidence that GIN and it subcomponents were developed, compiled and stored on a computer readable medium in the U.S. as a complete infringing system. Blue Coat also relies on Ziptronix, Inc. v. Omnivision Techs., Inc., but this case is also inapposite because it focuses on whether the accused products were “sold” in the US and not if they were “made” in the U.S. 71 F. Supp. 3d 1090, 1094 (N.D. Cal. 2014) (“Because it is undisputed that neither TSMC Ltd. nor TSMC NA make, use, or import into the United States the accused image sensors or the wafers used in the image sensors, the question before the Court with respect to TSMC Ltd.’s and TSMC NA’s direct infringement liability is whether the transactions between the TSMC entities and OmniVision constitute sales or offers to sell ‘within the United States.’”). As such, Ziptronix is inapplicable where there is substantial evidence that the infringing product is made in the U.S. Similarly, nothing in Fr. Telecom S.A. v. Marvell Semiconductor Inc. extends the holding in Microsoft in a way to discredit all the evidence of infringement by GIN within the U.S, as the accused product in Fr. Telecom was never made, used or sold within the U.S. 39 F. Supp. 3d 1080, 1102–03 (N.D. Cal. 2014) (recognizing that accused infringer established “undisputed evidence that the manufacturing, sale, and delivery of the accused chips all occurred outside the United States”). Case 5:15-cv-03295-BLF Document 405 Filed 11/05/17 Page 6 of 7 6 FINJAN’S RESP. TO BLUE COAT’S NOV. 2, 2017 OBJS. CASE NO. 15-cv-03295-BLF-SVK RE: INFRINGEMENT UNDER § 271(A) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Respectfully submitted, Dated: November 5, 2017 By: /s/ Paul J. Andre Paul J. Andre Lisa Kobialka James Hannah KRAMER LEVIN NAFTALIS & FRANKEL LLP 990 Marsh Road Menlo Park, CA 94025 Telephone: (650) 752-1700 Facsimile: (650) 752-1800 pandre@kramerlevin.com lkobialka@kramerlevin.com jhannah@kramerlevin.com Attorneys for Plaintiff FINJAN, INC. Case 5:15-cv-03295-BLF Document 405 Filed 11/05/17 Page 7 of 7