The Software IP Report

Written Decision Needed For IPR Estoppel

By Mark St. Amour

Categories: Estoppel - Patent, Patent Civil Procedure, The Software IP Report, USPTO Post-Issue Proceedings

In Finjan, Inc. v. Cisco Systems, Inc. Case No. 17-cv-00072-BLF (N. D. Cal. Feb. 3, 2020) the Northern District of California denied Plaintiff Finjan’s motion for summary judgement of validity of a number of claims of various patents asserted against defendant Cisco. Finjan’s arguments were centered around a pair of petitions for inter partes review filed by Cisco, and the court’s denial articulates the applicably of estoppel in situations where petitions are denied institution.

The pair of petitions at the center of Finjan’s arguments were filed with the PTAB by Cisco after Finjan had sought enforcement of a few of its patents. The patents at issue had been subject to, and survived, challenges at the PTAB and Federal Circuit. Cisco was not a party to, or identified as a party of interest in, the previous challenges. The PTAB denied institution of the pair of petitions filed by Cisco.

In addition to the petitions, Cisco challenged the validity of Finjan’s patents in the district court case. The invalidity theories presented in the district court were different than those of the IPR petitions – namely, they used different art and relied on expert testimony.

Finjan’s primary argument pieced together Cisco’s use of its “strongest” and “best” prior art in the IPR petitions with a comparison of standards for invalidation at the PTAB (lower) and the district court (higher). According to Finjan, no reasonable jury could find its patents invalid because Cisco was using “inferior” prior art (compared to the “strongest” presented in the petitions) that would be judged against a stricter standard (compared to the lower standard of IPR proceedings).

Finjan’s secondary argument was policy based and tied in the Supreme Court’s decision SAS Inst., Inc. v. Iancu, 138 S. Ct. 1348, 1355-56 (2018). According to Finjan, the SAS holding indicates that IPR’s are “not intend to give defendants multiple bites at the apple by holding some prior art in reserve in case the IPR did not go their way.” Following this intent to its conclusion – Finjan argued that Cisco should no be allowed “seek yet a second attempt at invalidity with prior art that it could have raised … before the PTAB.”

Finjan further sought to persuade the court by pointing out the numerous validity challenges its patent portfolio has faced, and survived, from third parties in previous disputes. Finjan attempted to tie in the previous challenges by alluding to Cisco’s “active involvement with the joint defense group that continually harasses Finjan with IPR challenges.” However, Finjan did not go so far as to allege that Cisco was a “party in interest or privy” with petitioners of the third party IPRs.

In denying Finjan’s motion, the court identified that finding in favor of Finjan would amount to creating estoppel without a written decision from the PTAB. Statutorily, estoppel from an IPR is premised on a petition that results in a written decision. Based on the statute, the court declined to expand this estoppel despite Finjan’s policy arguments. Further, the court found Finjan’s arguments regarding its previous challenges unpersuasive, as Finjan did not establish the necessary link to Cisco for the previous challenges to be relevant to the case at hand.

            The court also looked to the standard required for summary judgement, namely, “whether there is a genuine factual issue for trial.” The court found that because Cisco was using different art and expert testimony not before the PTAB, a live question of fact did indeed exist. Finjan’s characterizations of the Cisco’s invalidity contentions before the court as “second-sting” and “weak” merely were directed toward the weight of such contentions and did not establish that there was no material dispute of facts for trial.

Lessons for Practice

            It appears that the court may have been open to exploring the effects of the previous third party IPRs, but Finjan did not properly establish a connection between such IPRs and Cisco. Perhaps Finjan may have been successful in they could establish such connection. Without knowing the underlying facts, we are merely speculating what Finjan may had been able to argue. As practitioners, it is an important take away that when relying on decisions involving a third party, connecting the dots, i.e., via being a “party in interest or privy,” can provide the necessary relevance to rely on such decisions.

            Also of note, it is unclear whether the court would have rejected Finjan’s motion had Cisco used the same art and invalidity arguments in the petitions and invalidity contentions. The court relied on the differences in the present case to illustrate that there was a dispute of fact. Perhaps the court would have found no dispute if there were no differences. As practitioners, another important take-away is to be mindful of when you want to reuse the same argument, e.g., to rely on a previous decision, and when you what to use a different argument, e.g., to create a different question of fact.