Fortinet, Inc. v. Forescout Technologies, Inc.

Filing 133

ORDER by Judge Edward M. Chen Denying 115 Plaintiff's Motion to Dismiss Counterclaims. (emcsec, COURT STAFF) (Filed on 11/29/2021)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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FORTINET, INC.,

Case No. 20-cv-03343-EMC

Plaintiff,

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v.

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FORESCOUT TECHNOLOGIES, INC.,

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United States District Court
Northern District of California

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Defendant.

ORDER DENYING PLAINTIFF’S
MOTION TO DISMISS
COUNTERCLAIMS
Docket No. 115

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I.

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INTRODUCTION

In this action, Defendant Forescout Technologies, Inc. (“Forescout”) counterclaims against

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Plaintiff Fortinet, Inc. (“Fortinet”), alleging that Fortinet infringed six of its patents and tortiously

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interfered with its business relations.

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Pending before the Court is Fortinet’s motion to dismiss Forescout’s counterclaim.

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Fortinet argues that four of Forescout’s patents claimed ineligible subject matter under 35 U.S.C. §

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101 and that Forescout’s claim for tortious interference should be dismissed due to: (1) lack of

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subject matter jurisdiction, (2) federal law preemption of the state claim, and (3) failure to state a

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plausible claim. For the following reasons, the Court DENIES Fortinet’s motion to dismiss.

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A.

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Factual Background
Fortinet sells cybersecurity products, software, and services to large institutional

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customers. Docket No. 67 at 1. Forescout is a competitor of Fortinet in the cybersecurity market

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and owns U.S. Patent No. 8,590,004 (“the ‘004 Patent”) (Method and System for Dynamic

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Security Using Authentication Server); Patent No. 10,652,116 (“the ‘116 Patent”) (Device

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Classification); Patent No. 10,530,764 (“the ‘764 Patent”) (Post-Connection Client Certificate

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Authentication); Patent No. 6,363,489 (“the ‘489 Patent”) (Method for Automatic Intrusion

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Detection and Deflection in a Network); and Patent No. 10,652,278 (“the ‘278 Patent”)

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(Compliance Monitoring). Counterclaim at 53, 55, 57, 60.

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On February 9, 2020, Forescout publicly announced a major acquisition in which Advent

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International (“Advent”), a global private equity investor, would acquire all outstanding shares of

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Forescout. Id. at 43. One business day before Advent was scheduled to close the acquisition,

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Fortinet filed its Complaint, then allegedly engaged in a campaign to smear Forescout. Id.

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Fortinet allegedly told CRN, an industry news source, that Fortinet:

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[D]oesn't take litigation lightly and has only engaged in lawsuits to
protect its intellectual property on seldom occasions when it is left
no alternative. But Forescout's wrongful incorporation of Fortinet's
intellectual property into its product offerings is material and goes
to the heart of Fortinet's business.

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United States District Court
Northern District of California

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Id. at 46.

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Forescout further alleges that Fortinet falsely raised doubts on Forescout’s financial

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solvency to “existing and potential customers.” Id. Fortinet's major accounts manager distributed

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a sample email used to “target folks looking at or using ForeScout,” which stated the following:

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With (insert company name) 's up and coming investment in (insert
NAC, zero trust security, whatever way you would like to describe
the project) I wanted to insure you were aware of the ongoing
legal problems and future of Forescout. In short, Fortinet has filed
lawsuit against Forescout for patent infringement related to
technology held within FortiNAC. Their acquisition by Advent
and bid to be taken private was put on hold resulting in Forescout
now filing a lawsuit against Advent, all this leaving Forescout on
uncertain ground financially. This information is all public and
can information on it is readily accessible.” – From here, you
could include any of the various links to articles detailing the
situation with Forescout, the financial comparison, or any other
info you think would resonate. Below are some [links to articles
about Forescout's legal problems caused by Fortinet][.]

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Id. at 46–47.

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B.

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Procedural Background
Fortinet alleged infringement of three patents in its original Complaint and two additional

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patents in its Amended Complaint. Docket No. 1; Docket No. 67. In November 2020 and June

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2021, the Court granted in part and denied in part Forescout’s motions to dismiss which argued
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that the patents claimed ineligible subject matter and were, therefore, invalid under § 101. Docket

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No. 24; Docket No. 71.
In July 2021, Forescout brought counterclaims against Fortinet, alleging infringement of

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six patents, as well as a claim for tortious interference based on extrajudicial statements made by

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Fortinet. On August 17, 2021, Fortinet moved to dismiss the counterclaims, including the ‘116,

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‘764, ‘489, and ‘278 Patents.
II.

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LEGAL STANDARD

The Federal Rule of Civil Procedure 8(a)(2) requires a complaint to include “a short and

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plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2).

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A complaint that fails to meet this standard may be dismissed pursuant to the Federal Rule of Civil

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United States District Court
Northern District of California

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Procedure 12(b)(6). See Fed. R. Civ. P. 12(b)(6). To overcome a Rule 12(b)(6) motion to dismiss

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after the Supreme Court's decisions in Ashcroft v. Iqbal, 556 U.S. 662 (2009), and Bell Atl. Corp.

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v. Twombly, 550 U.S. 544, 127 (2007), a plaintiff's “factual allegations [in the complaint] 'must . . .

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suggest that the claim has at least a plausible chance of success.” Levitt v. Yelp! Inc., 765 F.3d

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1123, 1135 (9th Cir. 2014). The court “accept[s] factual allegations in the complaint as true and

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construe[s] the pleadings in the light most favorable to the nonmoving party.” Manzarek v. St.

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Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). However, “allegations in a

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complaint . . . may not simply recite the elements of a cause of action [and] must contain sufficient

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allegations of underlying facts to give fair notice and to enable the opposing party to defend itself

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effectively.” Levitt, 765 F.3d at 1135. “A claim has facial plausibility when the plaintiff pleads

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factual content that allows the court to draw the reasonable inference that the defendant is liable

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for the misconduct alleged.” Ashcroft, 556 U.S. at 678. “The plausibility standard is not akin to a

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probability requirement, but it asks for more than a sheer possibility that a defendant has acted

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unlawfully.” Id.
III.

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A.

DISCUSSION

Patent Subject Matter Eligibility Under § 101

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Under the Patent Act of 1952, patents are “presumed valid.” 35 U.S.C. § 282(a). “As

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such, an alleged infringer asserting an invalidity defense pursuant to § 101 bears the burden of
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proving invalidity by clear and convincing evidence.” Cisco Sys., Inc. v. Uniloc USA, Inc., 386 F.

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Supp. 3d 1185, 1190 (N.D. Cal. 2019) (citing Microsoft Corp. v. I4I Ltd. P'ship, 564 U.S. 91, 95,

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131 (2011)). “Patent eligibility under 35 U.S.C. § 101 is ultimately an issue of law” but “may

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contain underlying issues of fact.” Berkheimer v. HP Inc., 881 F.3d 1360, 1365 (Fed. Cir. 2018).

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“Like other legal questions based on underlying facts,” patent eligibility “may be, and frequently

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has been, resolved on a Rule 12(b)(6) or (c) motion where the undisputed facts . . . require a

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holding of ineligibility under the substantive standards of law.” SAP Am., Inc. v. InvestPic, LLC,

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898 F.3d 1161, 1166 (Fed. Cir. 2018). Thus, “[a]lthough claim construction is often desirable, and

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may sometimes be necessary, to resolve whether a patent claim is directed to patent-eligible
subject matter,” it is not “an inviolable prerequisite to a validity determination under § 101,” and

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United States District Court
Northern District of California

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may be eschewed “[w]here the court has a full understanding of the basic character of the claimed

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subject matter.” Voip-Pal.Com, Inc. v. Apple Inc., 375 F. Supp. 3d 1110, 1124 (N.D. Cal. 2019).

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Section 101 defines the scope of patent-eligible subject matter. It provides: “Whoever

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invents or discovers any new and useful process, machine, manufacture, or composition of matter,

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or any new and useful improvement thereof, may obtain a patent therefor.” 35 U.S.C. § 101.

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Patents may not be obtained for “laws of nature, natural phenomena, [or] abstract ideas.” Alice

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Corp. Pty. v. CLS Bank Int'l, 573 U.S. 208, 217 (2014). In Alice, the Supreme Court established a

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two-step test that district courts must apply in a patent eligibility analysis under §101.

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At step one, the court must “determine whether the claims at issue are directed to a patent-

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ineligible concept,” i.e., a law of nature, natural phenomenon, or an abstract idea. Id. at 218. If

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so, then the court moves to step two, which “consider[s] the elements of each claim both

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individually and 'as an ordered combination' to determine whether [any] additional elements

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'transform the nature of the claim' into a patent-eligible application” of the ineligible subject

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matter. Id. at 217 (quoting Mayo Collaborative Servs. v. Prometheus Lab'ys, Inc., 566 U.S. 66,

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78–79 (2012)).

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While the precise contours of what constitutes an “abstract idea” under step one remains

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elusive, the Supreme Court has identified algorithms, mathematical formulae, “fundamental

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economic practice[s] long prevalent in our system of commerce,” and other “method[s] of
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organizing human activity” as impermissibly abstract. Alice, 573 U.S. at 218–20 (citing Bilski v.

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Kappos, 561 U.S. 593, 599 (2010)). To determine whether the claims at issue are directed to one

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of those patent-ineligible concepts, the courts “look to whether the claims . . . focus on a specific

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means or method that improves the relevant technology or are instead directed to a result or effect

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that itself is the abstract idea and merely invoke generic processes and machinery.” McRO, Inc. v.

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Bandai Namco Games Am. Inc., 837 F.3d 1299, 1314 (Fed. Cir. 2016).

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Merely applying an “abstract idea . . . on a generic computer” does not satisfy step one.
Bascom Glob. Internet Servs., Inc. v. AT&T Mobility LLC, 827 F.3d 1341, 1348 (Fed. Cir. 2016).

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Nor does “[l]imiting the invention to a technological environment” such as the Internet transform

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an otherwise abstract idea into non-abstract one. Berkheimer, 881 F.3d at 1367. According to the

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United States District Court
Northern District of California

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Federal Circuit, a computer-based patent should specifically “describe how to solve the problem

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[it addresses] in a manner that encompasses something more than the principle in the abstract” to

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claim eligible subject matter at step one. See Dropbox, Inc. v. Synchronoss Techs., Inc., 815 F.

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App'x 529, 533 (Fed. Cir. 2020) (Fed. Cir. 2020); see also Ancora Techs., Inc. v. HTC Am., Inc.,

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908 F.3d 1343, 1348 (Fed. Cir. 2018) (holding an invention patentable at step one where the claim

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“specifically identifies how th[e] functional improvement is effectuated in an assertedly

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unexpected way”). Put another way, courts at Alice step one seek to determine whether a patent's

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claimed advance represents a concrete “technological solution to a technological problem.” See

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Packet Intel. LLC v. NetScout Sys., Inc., 965 F.3d 1299, 1309 (Fed. Cir. 2020); see also Prism

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Techs. LLC v. T-Mobile USA, Inc., 696 F. App'x 1014, 1017 (Fed. Cir. 2017) (denying eligibility

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at step one because the claims did not “cover a concrete, specific solution to a real-world

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problem”). In this regard, the focus is placed on a patent’s specificity.

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If a patent is directed to an abstract idea at Alice step one, then Alice step two considers

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whether “the elements of [a] claim both individually and as an ordered combination” go beyond

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“well-understood, routine, [and] conventional activit[ies] previously known to the industry.”

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Alice, 573 U.S. at 217, 225 (quoting Mayo Collaborative Services, 566 U.S. at 73, 79). This

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second step is also described as “a search for an inventive concept.” Id. at 217–18 (quoting Mayo

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Collaborative Services, 566 U.S. at 72–73). In the case of a computer-implemented invention, the
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Federal Circuit has held that components recited in the claims “must involve more than

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performance of ‘well-understood, routine, conventional activit[ies]’ previously known to the

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industry” to render an abstract idea patent-eligible. In re TLI Commc'ns LLC Pat. Litig., 823 F.3d

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607, 613 (Fed. Cir. 2016). The components themselves may supply an inventive concept if they

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amount to more than “generic computer components.” See Customedia Techs., LLC v. Dish

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Network Corp., 951 F.3d 1359, 1366 (Fed. Cir. 2020). Further, “an inventive concept can also be

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found in the non-conventional and non-generic arrangement of known, conventional pieces” of

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computing components. Bascom, 827 F.3d at 1350.
Courts have recognized that step one and step two of the Alice test may overlap in many

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“cases involving computer-related claims,” such that “an analysis of whether there are arguably

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United States District Court
Northern District of California

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concrete improvements in the recited computer technology could take place” under both steps.

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See Enfish, LLC v. Microsoft Corp., 822 F.3d 1327, 1339 (Fed. Cir. 2016); see also Amdocs

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(Israel) Ltd. v. Openet Telecom, Inc., 841 F.3d 1288, 1294 (Fed. Cir. 2016) (observing that recent

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cases ‘‘suggest that there is considerable overlap between step one and step two, and in some

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situations [the inventive concept] analysis could be accomplished without going beyond step

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one.’’). Therefore, this Court previously adopted “a flexible approach in ‘characteriz[ing] what

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the claims are directed to,’ taking both step[]one and step[]two considerations into account[.]”

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Fortinet, Inc. v. Forescout Techs., Inc., No. 20-CV-03343-EMC, 2021 WL 2412995, at *8 (N.D.

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Cal. June 14, 2021). In addition, this Court previously discussed the role of a patent’s

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specification at length and concluded that “at this still-early stage of the litigation, [the Court

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should] construe the focus of [the patent] ‘in light of the specification,’ . . . and to credit the

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specification's account of whether and how ‘the claimed invention achieves multiple technological

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improvements’ over the prior art[.]” Id. at *10; see also Enfish, 822 F.3d at 1335.
The ‘489 Patent

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1.

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The ‘489 Patent concerns a method and a system for providing security to a network by

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“identifying an unauthorized user who is attempting to gain access to a node on the network, and

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. . . actively blocking that unauthorized user from further activities.” ‘489 Patent, at abstract. This

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is accomplished by marking false data which allows identification of intrusions of a network. Id.
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Claim 1 states the following:

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1. A method for detecting and handling a communication from an
unauthorized source on a network, the method comprising the steps
of:

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(a) receiving the communication from the unauthorized source,

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(b) analyzing the communication for detecting an information
gathering procedure;

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United States District Court
Northern District of California

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(c) if said information-gathering procedure is detected, indicating a
source address of the communication as a suspected network
reconnaissance collector;
(d) returning an earmark to said Suspected reconnaissance collector,
Such that Said earmark includes specially crafted false data, and
such that said earmark includes data that can serve to identify an
unauthorized Source;
(e) analyzing each subsequent communication for a presence of Said
earmark,
(f) if said earmark is present, indicating source address of the
communication as a suspected network reconnaissance collector,
and
(g) if said source address is said intruder source address, applying
intrusion handling procedures towards the communication from said
intruder source address.
‘489 Patent, at Claim 1.
a.

Step One

Courts at Alice step one seek to determine whether a patent represents a concrete

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“technological solution to a technological problem.” Packet Intel., 965 F.3d at 1309. Fortinet

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argues that the ‘489 Patent is directed to the abstract idea of detecting unauthorized users by

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baiting them with false information, then waiting for that falsified data to appear to take action

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against them. Docket No. 115 (“Mot.”) at 8. Fortinet argues that the idea of “baiting” an intruder

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with false information is a well-known “method of organizing human activity” that is

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impermissibly abstract under Alice. Id. Further, Fortinet notes that collecting and analyzing

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information for detecting and notifying fraud or misuse was already found to be abstract by the

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Federal Circuit. Id. (citing Bozeman Fin. LLC v. Fed. Rsrv. Bank of Atlanta, 955 F.3d 971, 977

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(Fed. Cir. 2020); FairWarning IP, LLC v. Iatric Sys., Inc., 839 F.3d 1089, 1094 (Fed. Cir. 2016)).
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Therefore, Fortinet argues that the claim “do[es] no more than break the abstract idea into basic

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steps.” Reply at 2 (quoting Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 714 (Fed. Cir. 2014).

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Further, Fortinet notes that what exactly constitutes “specially crafted” data is undescribed. Id.

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Forescout counters that the ‘489 Patent claims a specific improvement over the prior art:

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improved accuracy. Docket No. 116 (“Opp’n”) at 5. Forescout argues that this is a problem

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specific to computer networks and the ‘489 Patent recites a specific technique for computer

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network security that departs from earlier approaches. Id. at 6.

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The Court first examines whether the ‘489 Patent addresses a technological problem.
Fortinet argues that the presence of intruders is not confined to a computer network environment,
therefore, the problem is not unique to computer networks. Mot. at 8. Forescout notes that

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United States District Court
Northern District of California

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conventional networks used heuristics, resulting in many false alarms that “nullifie[d] the

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usefulness of such systems[,]” which created “a need for a useful security protection method.”

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Opp’n at 3–5. Therefore, Forescout contends that the ‘489 Patent claims an improvement directed

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toward solving a unique problem to intruder detection on computer networks, which is an

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“improvement in computer network technology.” Opp’n at 5 (citing SRI Int'l, Inc. v. Cisco Sys.,

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Inc., 930 F.3d 1295, 1303 (Fed. Cir. 2019), vacated in part on other grounds, 930 F.3d 1295 (Fed.

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Cir. 2019)). As Fortinet states, baiting an intruder is an abstract idea, and the mere fact that the

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claim is limited to a network environment does not make it non-abstract. Intell. Ventures I LLC v.

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Cap. One Bank (USA), 792 F.3d 1363, 1366 (Fed. Cir. 2015) (“An abstract idea does not become

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nonabstract by limiting the invention to a particular field of use or technological environment,

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such as the Internet.”). However, while intruders are not confined to a computer network,

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“identifying hackers or potential intruders to the network” is a technological problem arising in

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computer networks. SRI Int’l, 930 F.3d at 1303.

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Second, the parties argue as to whether the claimed improvement is a technological

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solution. Claim 1 can be summarized as follows: “receiving” communication from a device,

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“analyzing” it for suspicious activity, “identifying” the intruder using an earmark that is “specially

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crafted false data,” “analyzing” subsequent communications for the presence of the earmark, then

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“applying” intruder handling protocols. Fortinet argues that the ‘489 Patent simply attempts to
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claim the idea of “baiting an intruder with false information[,]”a “well-known human activity” that

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“constitute[s an] abstract idea” like Ericsson. Mot. a 9–10 (citing Ericsson Inc. v. TCL Commc'n

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Tech. Holdings Ltd., 955 F.3d 1317, 1326–27 (Fed. Cir. 2020) (finding that claims were ineligible

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for being directed to the abstract idea of controlling access to resources).

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However, unlike Fortinet’s representation, the ‘489 Patent is distinguished from Ericsson,

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as the claimed method is not the type of activity that “can be performed in the human mind, or by

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a human using a pen and paper.” Id. Ericsson does not apply because the human mind is not

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equipped to detect suspicious activity by using false data.

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A closer analogy can be found in SRI Int’l. The patent in SRI Int’l claimed an automated
computer network intrusion detection method “using a specific technique—using a plurality of

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United States District Court
Northern District of California

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network monitors that each analyze[d] specific types of data on the network and integrating

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reports from the monitors—to solve a technological problem arising in computer networks:

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identifying hackers or potential intruders into the network[.]” SRI Int’l, 930 F.3d at 1303. The

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Federal Circuit agreed with the district court that the claims were “more complex than merely

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reciting a known practice on the Internet and [were] better understood as being necessarily rooted

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in computer technology in order to solve a specific problem in the realm of computer networks.”

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Id. The ‘489 Patent addresses the same specific technological problem of identifying potential

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intruders into the network and provides that while prior art would normally use a firewall to

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prevent unauthorized entry, the ‘489 Patent uses security modules with false information that

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allows the unauthorized source to be identified later. Id. at 4:48–50, 63–66. This technology-

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based approach can fairly be characterized as a technological solution directed to improving

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intruder detection on computer networks by improving accuracy, protecting the network, and

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avoiding false alarms. Opp’n at 5.

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Fortinet argues that neither the language of the claims nor the specification detail

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technological specificity sufficient to demonstrate that the invention is a technological

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improvement. Reply at 2; Mot. a 9–10. Forescout counters that the ‘489 Patent’s claims a

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specific technological solution in its use of “specially crafted false data” and “imitative (fake)

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network services to identify and isolate intruders.” Opp’n at 5–6. The parties disagree on whether
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this “specially crafted false data” has the requisite specificity. Fortinet argues that “precisely how

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to ‘specially craft’ this data is not claimed, and instead is left entirely to the implementor . . . Any

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data that is in some way ‘specially crafted,’ such that it can be used to identify the bad actor, will

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suffice.” Reply at 2. Indeed, Claim 1 describes “specially crafted false data” sparsely as an

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“earmark includ[ing] data that can serve to identify an unauthorized source.” ‘489 Patent, at

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Claim 1. Limited solely to the language of Claim 1, the ‘489 Patent should arguably be deemed

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abstract due to its lack of specificity.

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However, the specification provides a greater degree of technological specificity that may
satisfy the step one inquiry. According to the specification, the mark is “designed such that any
attempt by an unauthorized user to use such false data results in the immediate identification of the

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United States District Court
Northern District of California

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unauthorized user as hostile.” ‘489 Patent at 2:16–18. The mark also includes an identifier for

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later identifying the unauthorized user which “[p]referably . . . features numeric data, which can be

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identified easily and preferably uniquely in order to avoid mistaken identification of an authorized

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user as being unauthorized.” Id. at 5:7–12. The specification also provides that this mark is

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attached after identifying possible unauthorized users that perform a “scan,” which is a method of

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information collection used by unauthorized users. Id. at 6:10–11. Once a “scan” is detected, the

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unauthorized user is added to the intruder database, and a mark is returned to the user. Id. at 28–

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34. If the unauthorized user returns, the suspected user is matched with the previous source

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address stored in the intruder database, allowing additional confirmation that the suspect is

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actually hostile. Id. at 39–51. This mark database is preferably “structured such that each entry

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has the form of <IP Address, Port Number>. Such an entry represents a false network service,

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which does not exist on the network. Thus, accessing such a network service is considered to be

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hostile, indicating the presence of an intruder, as legitimate users would not attempt to access the

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service.” Id. at 6:45–51. This detail regarding the “specially crafted false data” and “false

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network service” suggests that the ‘489 Patent describes a specific technique to solve a

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technological problem arising in computer networks. Further, the dependent claims describe the

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limitations in greater detail. For example, Claim 9 limits the information gathering procedure to

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be selected from the group consisting of a scan, a Domain Name Service (DNS) zone transfer, a
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“finger” probe, NIS/LDAP interrogation, and sniffing. ‘489 Patent at Claim 9. The “specially

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crafted false data” used for Claim 9 are specifically defined in the specification as below:

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The DNS zone transfer probe involves the interrogation of a DNS
server in order to receive a list of host names and addresses in the
network. Marks against this method are prepared by defining names
and addresses of non-existent hosts within the network at the DNS
server. The identifier associated with such a mark is the IP address
of the non existent host.

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The "finger probe is performed by interrogating a host computer,
which is a node on the network, for active users with the “finger”
service of the UNIX operating system. Replying to such an
interrogation with the name of a non-existent user or users provides
the marks for this method. The mark is in the form of <IP address,
user name>, such that this combination provides the identifier for
detecting any subsequent intrusion attempts.

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NIS/LDAP interrogation involves NIS and/or LDAP data bases
which are often used to store site-specific information and which
provide access methods over the network. Unless these databases
are protected, the unauthorized user can interrogate these databases
remotely, and retrieve information such as user names, encrypted
passwords, network node (computer) names and addresses, and so
forth. Marks against this probing method are prepared by
constructing a fake NIS and/or LDAP database, which contain any
of the previously described information items as mark.

United States District Court
Northern District of California

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The sniffing method involves recording network activities within the
network, particularly after the unauthorized user has penetrated the
network and has gained high level privileges . . . Marks against this
probing method are provided by simulating sessions over the
network, and including fake user names and passwords during these
“sessions”. The mark has the form of <IP address, user name,
password>.

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Id. at 7:61–8:26.

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Fortinet may ultimately prove that the above description of the “specially crafted false

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data” or “false network service” provides no meaningful detail sufficient to take the invention

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beyond an abstract concept. However, the Court cannot make such a determination on a Rule

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12(b)(6) motion. For the purposes of a motion to dismiss, all factual inferences are made in favor

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of the patentholder. The Court cannot conclude as a matter of law at this juncture that the patent

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claims are directed to an abstract idea rather than a technological improvement in computer

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technology.

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b.

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Step Two

Nevertheless, even if the Court were to find the ‘489 Patent to be ineligible subject matter

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at step one, the Court is reluctant to find the ‘489 Patent ineligible at step two because the same

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concerns recited at step one apply to step two. “An analysis of whether there are arguably

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concrete improvements in the recited computer technology could take place under either step one

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or step two.” Fortinet, 2021 WL 2412995 at *8 (quoting Enfish, 822 F.3d at 1339).

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At Alice step two, the Court must determine whether the claims contain an “inventive

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concept” sufficient to “transform” the abstract idea of using an earmark into a patent-eligible

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“application” of the abstract idea. Alice, 573 U.S. at 217–18. Alice step two is satisfied when the
claims recite more than performance of “well-understood, routine, conventional activities[,]”

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United States District Court
Northern District of California

10

which is a question of fact. Id. at 225; Berkheimer, 881 F.3d at 1368.

12

Fortinet argues that the ‘489 Patent fails to recite an inventive concept, as it simply

13

instructs the practitioner to “implement the abstract idea . . . on a generic computer,” which “does

14

nothing significant to differentiate a process from ordinary mental processes,” and therefore

15

should be excluded under § 101. Mot. at 10 (quoting Alice, 573 U.S. at 225; Elec. Power Grp.,

16

LLC v. Alstom S.A., 830 F.3d 1350, 1355 (Fed. Cir. 2016)). According to Fortinet, this method

17

does not require any configuration other than the conventional machine on a conventional network

18

and therefore does not “transform” the idea into an invention. Id.
Forescout argues that “an inventive concept can be found in the non-conventional and non-

19
20

generic arrangement of known, conventional pieces.” Bascom, 827 F.3d at 1349–50. Forescout

21

argues that the claims “when considered as a whole, detect and mitigate any unauthorized, hostile

22

sources by using false data requested by that source,” which is an inventive concept. Opp’n at 7.

23

Therefore, Forescout states that it is premature to conclude that the components of the claims as

24

combined were “well-understood, routine, and conventional” at the time of the invention in 1999.

25

Id.

26

Like step one, it would be difficult to conclude at this point that the ordered combination of

27

elements lacks an inventive concept. The ‘489 Patent, on its face, plausibly presents claims

28

directed to specific improvements that recite more than what was conventional. Forescout notes
12

1

that conventional systems used heuristics which had a “high rate of false alarms, which

2

nullifie[d]” the usefulness of such systems. Opp’n at 7. Further, the specification states that the

3

invention departs from the prior art method, which featured a firewall installed at the entry point to

4

prevent unauthorized entry that could be circumvented. ‘489 Patent at 4:42–47. The current

5

invention places security modules containing the earmark instead of a firewall and identifies an

6

unauthorized source as hostile “by analyzing its communication for false earmarked data” and

7

providing “an imitative, false network service rather than . . . the actual service on the network.”

8

‘489 Patent at 7:27–28. Forescout contends that this combination results in much more accurate

9

hostile source identifications and allows confirmation, which are improvements over the
conventional systems. Opp’n at 7. (citing '489 Patent at 1:36–37). Like step one, it cannot be

11

United States District Court
Northern District of California

10

determined at this stage of the litigation whether this “false earmarked data,” “false network

12

service,” or their combination thereof were “well-understood, routine, and conventional to a

13

skilled artisan in the relevant field”; questions of fact “must be proven by clear and convincing

14

evidence.” See Berkheimer, 881 F.3d at 1360. Therefore, the Court denies the motion to dismiss

15

for the ‘498 Patent.
The ‘116 Patent

16

2.

17

The ‘116 Patent concerns “device classification.” Specifically, “systems, methods, and

18

related technologies for device classification are described. Claim 1 recites:

19

1. A method comprising:

20

Detecting a device coupled to a network in response to the device
being coupled to the network;

21
22
23

Accessing first data associated with the device from an agent
installed on the device;

24

Accessing second data associated with the device from an external
system, wherein the second data associated with the device
comprises traffic data associated with the device;

25

Analyzing the traffic data of the device;

26

Determining a classification for the device based on the first data
associated with the device and the traffic data;

27
28

and storing the classification for the device.
13

1
2
3

‘116 Patent, at Claim 1.
a.

Step One

At Alice step one, Fortinet argues that the ‘116 Patent’s claims are directed to an abstract

4

idea of classifying devices on a network using more than one source of data. Mot. at 14. Fortinet

5

further argues that the claims describe the “data” being analyzed only in “extremely generic

6

terms,” which could be any data about the device. Id. Fortinet relies on several Federal Circuit

7

cases that had found claims combining multiple sources of data to be abstract. Id. (citing Credit

8

Acceptance Corp. v. Westlake Servs., 859 F.3d 1044, 1054 (Fed. Cir. 2017) (finding claims

9

reciting a method of “combining [] two sources of information to create a financing package” to be
directed to an abstract idea); Bozeman, 955 F.3d at 979 (finding claims reciting a method of

11

United States District Court
Northern District of California

10

“reducing check fraud by receiving financial transaction data from two sources” to be directed to

12

an abstract idea)). Fortinet also notes that the Federal Circuit has found the idea of classifying

13

devices to be a well-known “method of organizing a human activity.” Id. (citing Content

14

Extraction & Transmission LLC v. Wells Fargo Bank, Nat. Ass’n, 776 F.3d 1343, 1347 (Fed. Cir.

15

2014) (finding claims reciting a method of processing information and storing them according to

16

their classification to be abstract)).

17

The ‘116 Patent seems to claim a solution to a problem unique to computer networks that

18

improves network monitoring. The ‘116 Patent states that previous conventions resulted in

19

frequent false negatives and false positives which could “only provide high-level rough

20

classifications” that were unusable. Opp’n at 9 (citing ‘116 Patent at 2:51–54). This problem was

21

exacerbated by the proliferation of the Internet of Things (“IoT”), which are “systems and devices

22

being used for various applications and locations ranging from households to large industrial

23

environments.” Id. This problem of inaccuracy that is exacerbated by the IoT recites a problem

24

unique to computer networks and is improved by the ‘116 Patent.

25

The next question is then whether the claims “specifically identifies how th[e] functional

26

improvement is effectuated in an assuredly unexpected way.” Ancora Techs., 908 F.3d at 1348.

27

Forescout argues that this problem of inaccuracy is solved by “combining multiple sources: an

28

agent installed on the device and an external system” which contains “traffic data associated from
14

1
2

devices.” Opp’n at 9–10; see ‘116 Patent 2:66–3:01, 9:56–57.
At first glance, the claimed method boils down to using two different sets of data to

3

classify a device instead of using one set of data. Merely using several sources of information

4

does not make an abstract idea any less abstract; nor does merely applying an “abstract idea . . . on

5

a generic computer” satisfy step one. Bascom, 827 F.3d at 1348. Collecting and analyzing data is

6

an abstract concept. See, e.g., Electric Power Group, LLC, 830 F.3d at 1351–56 (holding that

7

“systems and methods for performing real-time performance monitoring . . . by collecting data

8

from multiple data sources, analyzing the data, and displaying the results” was abstract because

9

the claims focused merely on the abstract idea of collecting, analyzing, and displaying

10

United States District Court
Northern District of California

11

information).
However, the ‘116 Patent contains greater technological specificity than cases relied on by

12

Fortinet. Bozeman was directed to the abstract idea of collecting information to check for

13

transaction fraud or errors. 955 F.3d at 980. Credit Acceptance was directed to the abstract idea

14

of processing an application for financing a purchase. 859 F.3d at 1054. Unlike these cases, the

15

‘116 Patent is directed to an improvement in computer network security. Opp’n at 11.

16

A better analogy can be found in SRI Int’l, in which the Federal Circuit found that a

17

method of hierarchical event monitoring and analysis within a network that “deploy[ed] a plurality

18

of network monitors, detect[ed] suspicious network activity based on analysis of network traffic

19

data selected from one or more of [the listed categories], generat[ed] . . . reports . . . and

20

automatically receiv[ed] and integrat[ed] the reports of suspicious activity, by one or more

21

hierarchical monitors” to be sufficiently specific. SRI Int’l, 930 F.3d at 1303 (“The claims are

22

directed to using a specific technique—using a plurality of network monitors that each analyze

23

specific types of data on the network and integrating reports from the monitors.”). The Federal

24

Circuit noted that “the claims are not directed to just analyzing data from multiple sources . . .

25

[but] to an improvement in computer network technology” because the claims “recited using

26

network monitors to detect suspicious network activity based on analysis of network traffic data,

27

generating reports of that suspicious activity, and integrating those reports using hierarchical

28

monitors.” Id.
15

Taking the language of the claims and the specification together, the ‘116 Patent provides greater

2

technological specificity than Credit Acceptance, Bozeman, and Electric Power Group and more

3

closely mirrors SRI Int’l. Claim 1 clarifies that the second set of data used is from “an external

4

system” and “comprises traffic data” associated with the device. ‘116 Patent at Claim 1. The

5

specification further provides that the analysis of this traffic data can be through “active” or

6

“passive” traffic analysis, which may be a configurable option by the user on a per device basis or

7

network segment basis. Id. at 6:33–47. Passive traffic analysis includes observing

8

“communications to and from the device to be classified with other devices.” Id. at 6:37–39.

9

Active traffic analysis may analyze behavior “in response to communication that is sent to the

10

device to be classified from the device performing classification” by methods such as actively

11

United States District Court
Northern District of California

1

probing ports. Id. at 6:35, 40–44. This suggests that characterizing the ‘116 Patent as merely

12

combining two sets of data may be an oversimplification, as the specification indicates that the

13

usage of traffic data enables the device to not only receive data but actively seek it out by sending

14

communications to the device and observing its response. See id. The specification further

15

suggests that it is possible to use passive traffic analysis to determine classification and use active

16

traffic analysis to “confirm or fine tune the classification.” Id. at 6:49–52. Therefore, the two

17

types of analysis enabled by traffic data may also allow an additional confirmation step. See id.

18

This level of computer network-specific detail provided in the specification suggests that the

19

patent may be “understood as being necessarily rooted in computer technology in order to solve a

20

specific problem in the realm of computer networks.” See SRI Int’l, 930 F.3d at 1303. Therefore,

21

the Court declines to find the ‘116 Patent abstract at Alice step one on a Rule 12(b)(6) motion.

22
23

b.

Step Two

The Court does not need to consider Alice step two, as it does not find the ‘116 Patent

24

directed to an abstract ineligible subject matter at step one. Nevertheless, the Court also declines

25

to find that the ‘116 Patent fail Alice step two at this stage. Step two of Alice requires an

26

“inventive concept” that must involve more than “well-understood, routine, conventional activity

27

previously known to the industry.” Id. at 225. Any abstract idea must be “transform[ed]” into a

28

patent-eligible “application” of the abstract idea to pass this test. Alice, 573 U.S. at 217–18.
16

1

Fortinet argues that the ‘116 Patent fails to recite an inventive concept because claim 1

2

recites simple components “recited at a high level of generality[,]” and the steps of “accessing”

3

and “analyzing” data and “determining” classification simply recites the abstract idea itself.

4

Fortinet claims that the configuration provided does not add sufficient substance to the underlying

5

abstract idea and merely serves as “a conduit for the abstract idea.” Id. Therefore, nothing

6

transforms the idea into an invention and merely uses “well-understood, routine, conventional

7

components to apply [an] abstract idea.” Mot. at 16 (citing Yu v. Apple, Inc., 1 F.4th 1040, 1045

8

(Fed. Cir. 2021). Fortinet analogizes the ‘116 Patent to the patent in Universal Secure Registry, in

9

which the court found that the claims failed to recite a new authentication technique since the
techniques being combined were known, and their combination failed to “achieve[] more than the

11

United States District Court
Northern District of California

10

expected sum of the security provided by each technique.” Reply at 7 (citing Universal Secure

12

Registry LLC v. Apple Inc., No. 2020-2044, 2021 WL 3778395, at *10 (Fed. Cir. Aug. 26, 2021).

13

Forescout contends that the claims considered as a whole transform the abstract idea into a

14

“particular, practical application of that abstract idea[.]” Opp’n at 12 (citing Bascom, 827 F.3d at

15

1349–50). Forescout argues that having a second data set composed of traffic data solves the

16

unique problem of inaccurate and unreliable classifications in conventional network monitoring in

17

a specific and technological way beyond the general and expected improvement of accuracy

18

achieved through using additional datasets. Id.

19

Here, the Court finds similarity to Amdocs, a case with a similar patent claim that

20

combined two different datasets. Amdocs, 841 F.3d at 1300. In Amdocs, the Federal Circuit found

21

that claims correlating two network accounting records to enhance the first record had an inventive

22

concept, providing unconventional solutions to technological problems and advantages over the

23

prior art. Id. The Federal Circuit examined previous decisions that discussed claims related to the

24

collection and classification of data and explained that “claims involving the mere collection and

25

manipulation of information”—like Content Extraction and In re TLI Commc’ns— “do not satisfy

26

§ 101—under either step one or step two.” Id. at 1300; Content Extraction, 776 F.3d at 1347

27

(finding that collecting data, recognizing certain data within the collected data set, and storing the

28

recognized data was abstract); In re TLI Commc’ns, 823 F.3d at 613 (finding that the claims were
17

1

directed to the abstract idea of “classifying and storing digital images in an organized manner.”).

2

On the other hand, eligibility can be found “when somewhat facially-similar claims are directed to

3

an improvement in computer functionality under step one, see Enfish, 822 F.3d at 1335, or recite a

4

sufficiently inventive concept under step two—particularly when the claims solve a technology-

5

based problem, even with conventional, general components, combined in an unconventional

6

manner.” Id. (citing Bascom, 827 F.3d at 1349–52; DDR Holdings, LLC v. Hotels.com, L.P., 773

7

F.3d 1245, 1256–59 (Fed. Cir. 2014) (finding that the “ordered combination” of the elements

8

recited an invention that was not merely routine or conventional).

9

The Federal Circuit then concluded that the claims were “much closer to those in Bascom
and DDR Holdings than those in . . . Content Extraction and In re TLI Commc’ns.” Id. at 1300–02

11

United States District Court
Northern District of California

10

(noting that in Bascom, the individual limitations were generic, but the ordered combination of

12

them recited an inventive concept that improved the performance of the computer system itself

13

because installing a filtering tool at a specific location permitted both the benefits of a filter on a

14

local computer and an internet server). The solution only required “generic components,”

15

including network devices and “gatherers” which “gather” information. Id. However, like

16

Bascom, the benefits of the patent were possible because of the distributed, remote enhancement

17

that produced an unconventional result of reduced data flows and the possibility of a smaller

18

database. “Enhance,” which was construed as meaning “to apply a number of field enhancements

19

in a distributed fashion[,]” was a “critical advancement over the prior art” by enabling “load

20

distribution.” Id. at 1300–02. This “enhancing limitation” which depended on the invention’s

21

“distributed architecture” and the “network devices and gatherers . . . working together in a

22

distributed manner” “necessarily required that these generic components operate in an

23

unconventional manner to achieve an improvement in computer functionality.” Id. at 1301–02.

24

Similarly, Forescout plausibly asserts that the combination of the elements recites an

25

invention beyond what was merely routine or conventional that “improved the performance of the

26

computer system itself,” through its use of “traffic data” and “external system.” The ‘116 Patent

27

describes the conventional classification methodologies that relied on media access control (MAC)

28

addresses and hypertext transfer protocol (HTTP) user-agent strings as “particularly limited and
18

1

narrow in their classification abilities and in many cases unable to classify devices.” ‘116 Patent

2

at 1:18–23. This is because “certain characteristics of a particular device (e.g., whether such a

3

device is an access point) can be more difficult to determine with a high degree of accuracy.” Id.

4

at 2:8–17. According to Forescout, this technological problem is solved by the combination of

5

two datasets, wherein the second set of data is retrieved from an external system and comprised of

6

traffic data. Id. As discussed in the Alice step one analysis, the specification of the ‘116 Patent

7

suggests that the usage of traffic information may not merely act as additional collected data but

8

be specifically used to “confirm or fine tune the classification” through its two types of analysis.

9

‘116 Patent at 6:49–52. Further, the usage of an “external system” and “traffic data” may provide
not only an additional confirmation process but also a more comprehensible view of the device.

11

United States District Court
Northern District of California

10

See ‘116 Patent at 10:16–21, 6:49–52. An example data flow of device information provided in

12

the specification indicates that “the traffic and log analysis component may provide

13

comprehensive layer 2-layer 7 device information as well as device authentication information

14

(e.g., device login information) and segmentation information (e.g., network segment[s] such as a

15

data center or accounting network address range).” Id. at 10: 17–21.

16

Taking the specification into account, the ‘116 Patent seems closer to the claims in Amdocs

17

than the claims in Universal Secure Registry. Unlike Universal Secure Registry, in which nothing

18

in the specification or motion indicated that the claim achieves more than the “expected sum” of

19

the two datasets, the claims here suggest results beyond the expected sum. While Fortinet argues

20

that the features of the claim are merely “conventional” and do not amount to a meaningful and

21

unexpected result, the Court cannot make this assumption. Inferences must be resolved in

22

Forescout’s favor at the motion to dismiss stage, and there is a plausible argument that the above

23

features constitute an inventive concept. Berkeimer, 881 F.3d at 1368. Like Amdocs, the use of a

24

second data from an “external system” comprising of “traffic data” which includes more than, e.g.,

25

mere summarizing of data, may “operate in an unconventional manner to achieve an improvement

26

in computer functionality.” Id. at 1300–01. Absent further developments in this case such as

27

claim construction or expert testimony, the Court cannot conclude at this juncture whether there is

28

an “inventive concept” that goes beyond that which is “well-understood, routine and conventional
19

1

to a skilled artisan in the relevant field.” Berkheimer, 881 F.3d at 1368.
The ‘278 Patent

2

3.

3

The ‘278 Patent relates to a method of compliance monitoring in which the claim

4

“detect[s]” a device, “determine[s] a classification of the device[,]” “accesse[s] a compliance

5

rule[,]” “perform[s]” a compliance scan, then performs an “action” based on its compliance level.

6

'278 Patent at Claim 1. Claim 1 recites:

7

1. A method comprising

8

detecting, by a compliance monitoring device, a device coupled to a
network in response to the device being coupled to the network;

9

determining a classification of the device based on traffic
information associated with the device;

10

accessing a compliance rule based on the classification of the
device, wherein the compliance rule is a standard based compliance
rule;

United States District Court
Northern District of California

11
12

performing, by a processing device of the compliance monitoring
device, a compliance scan on the device based on the compliance
rule;

13
14

determining a compliance level of the device based on a result of the
compliance scan of the device; and performing an action based on
the compliance level.

15
16
17
18

Id.
a.

Step One

19

Fortinet argues that the ‘278 Patent is directed to the abstract idea of assessing compliance

20

based on device classification. Mot. at 20 (citing In re TLI Commc’ns, 823 F.3d at 611). It argues

21

that the idea of treating devices differently for compliance purposes is a common method of

22

organizing human activity and often a necessary step in assessing compliance with any set of

23

regulations. Id. It also argues that the compliance scanning uses existing technology and merely

24

“reduce[s] the burden on a system administrator by automating a task they would already perform

25

manually in effectively the same way.” Reply at 11.

26

Forescout counters that the ‘278 Patent allows for “automated and continuous compliance

27

checks,” which solves a problem specific to computer networks using a specific technological

28

solution: allowing automated use of different compliance rules for different types of devices rather
20

1

than manually doing so. Id. at 15, 18. Forescout compares the ‘278 Patent to the patent in Finjan,

2

asserting that it has similar improvements that “enables more flexible and nuanced” compliance

3

monitoring and that the classification allows customization of the compliance scans. Opp’n at 16

4

(citing Finjan, Inc. v. Blue Coat Sys., 879 F.3d 1299, 1299 (Fed. Cir. 2018).

5

First, the ‘278 Patent seems to identify a technological problem arising in computer

6

networks: preventing “access to network resources by unauthorized devices” and “effectively

7

manag[ing] access” for authorized devices. This problem is unique to computer networks in the

8

face of the “proliferation of network-connected devices” such as smartphones, tablets and

9

wearable devices. ‘278 Patent at 1:50–55.

10

However, Forescout’s argument that this technological problem is solved using a

United States District Court
Northern District of California

11

technological solution is not persuasive. It describes the solution only as follows: “e.g., the

12

standard based compliance rule, automatic classification, and automatic compliance scanning”

13

which “improves the functioning of the computer network . . . by preventing unauthorized access

14

by non-compliant devices.” Opp’n at 16. As such, Forescout fails to “specifically identif[y] how

15

th[e] functional improvement is effectuated in an assuredly unexpected way.” Ancora Techs., 908

16

F.3d at 1348. The ‘278 Patent essentially boils down to assessing compliance based on a device

17

classification, treating devices differently for compliance purposes, and automating the

18

implementation by a computer. See Mot. at 19.

19

As Fortinet contends, classification of data is a well-established “basic concept” under

20

Alice step one, and merely combining the idea of classifying and applying a compliance action

21

based on the classification does not make the patent non-abstract. RecogniCorp, LLC v. Nintendo

22

Co., 855 F.3d 1322, 1327 (Fed. Cir. 2017) (“Adding one abstract idea . . . to another abstract idea

23

. . . does not render the claim non-abstract.”). The limitations of the claims are also generic. First,

24

the method detects a device using any “compliance monitoring device,” but this device can be a

25

“computing system, [or] a network device . . . etc.” that monitors for compliance—i.e., generic

26

computer and network components which amounts to merely “a generic environment in which to

27

carry out the abstract idea.” ‘278 Patent at 4:14–19; In re TLI Commc’ns, 823 F.3d at 611. The

28

classification of the device is based on “traffic information,” but the significance of this traffic
21

1

information is not specified in the patent nor argued by Forescout. The “standard based

2

compliance rule” is no less generic, as the specification describes this limitation as “using

3

available standard based compliance content[,]” meaning that any available compliance rule falls

4

under Claim 1. ‘278 Patent at 3:21. Once a compliance scan is performed based on the rule, then

5

an “action” is performed. Again, this action can be anything. Forescout attempts to argue that this

6

“action” limitation is narrowed in its dependent claims, which “provide exemplary actions,

7

including ‘changing network access,’ ‘automatically initiating an update service,’ and ‘initiating a

8

patch service.’” Opp’n at 16. However, these dependent claims do not contain meaningful

9

limitations as they provide no more than generic compliance actions. Therefore, the claim
describes a combination of abstract ideas using generic parts and processes, which generally boils

11

United States District Court
Northern District of California

10

down to performing a classification and treating the classified items differently depending on their

12

classes—an abstract idea.

13

Similarly, the need to perform tasks automatically by itself is not a unique technical

14

problem. In re TLI Commc’ns, 823 F.3d at 613; OIP Techs., Inc. v. Amazon.com, Inc., 788 F.3d

15

1359, 1363 (Fed. Cir. 2015); Cellspin Soft, Inc. v. Fitbit, Inc., 927 F.3d 1306, 1316 (Fed. Cir.

16

2019). Making a “process more efficient” in itself does not “render an abstract idea less abstract.”

17

Secured Mail Sols. LLC v. Universal Wilde, Inc., 873 F.3d 905, 910 (Fed. Cir. 2017). Therefore,

18

mere automation of manual processes using generic computers as a tool does not constitute a

19

patentable improvement in computer technology. Credit Acceptance, 859 F.3d at 1055.

20

Finally, Forescout’s analogy to Finjan that the ‘278 Patent similarly “enables more flexible

21

and nuanced network compliance management” is inapposite because Forescout ignores the larger

22

ground on which the Federal Circuit found the claim non-abstract. Opp’n at 16; Finjan, 879 F.3d

23

at 1304. In Finjan, the Federal Circuit found a patent that described a new “behavior-based”

24

approach to virus scanning in contrast to the traditional “code-matching” system to be

25

eligible. 879 F.3d at 1304. However, Forescout does not claim a new approach to compliance

26

management. Forescout fails to demonstrate a new approach here comparable to that in Finjan.

27

See Opp’n at 18.

28

For the foregoing reasons, the Court finds the ‘278 Patent directed to the abstract idea of
22

1

automatically classifying devices and then assessing compliance and performing actions based on

2

compliance rules.

3

b.

4

Step Two

Accepting that the asserted claims are directed to an abstract idea, the Court turns to step

5

two to assess whether “the elements of each claim both individually and ‘as an ordered

6

combination’ . . . 'transform the nature of the claim' into a patent-eligible application.” Alice, 573

7

U.S. at 218.

8
9

Fortinet argues that the ‘278 Patent fails to recite an inventive concept and merely recites
the abstract idea of assessing compliance based on device classification. Mot. at 20. Fortinet
argues that the compliance monitoring device merely detects and scans devices, creating “a

11

United States District Court
Northern District of California

10

generic environment”—i.e., a computer network—” in which to carry out the abstract idea.” Id.

12

(citing Ericsson, 955 F.3d at 1326–27). Fortinet further notes that only general and conventional

13

hardware components are mentioned in the ‘278 Patent. Reply at 12 (citing ‘278 Patent at 2:10–

14

15). Forescout alleges that “the claims, when considered as a whole, perform a specific sequence

15

of device classification and standard based compliance scanning that was not well-understood,

16

routine, or conventional at the time of the invention.” Opp’n at 18–20.

17

From the specification it is clear, and Forescout does not argue otherwise, that the claims’

18

individual limitations recite only generic computer and network components. However, an

19

inventive concept can be found in the “non-conventional and non-generic arrangement of known,

20

conventional pieces.” Bascom, 827 F.3d at 1350; see also DDR Holdings, 773 F.3d at 1256–59;

21

Amdocs, 841 F.3d at 1300–01.

22

According to Forescout and the ‘278 Patent, the prior art used a “golden image”—“a

23

computing system image that has been customized to a particular configuration that may be copied

24

onto multiple computing systems or devices.” ‘278 Patent at 2:2–5; Opp’n at 14–15. Forescout

25

argues that the manual and pre-specified “golden image” approach is improved by the use of

26

“adaptable, device-specific compliance standards” achieved through “combin[ing] standards based

27

compliance with policy based network access control [(“NAC”)].” Opp’n at 17, 20 (citing ‘278

28

Patent at 2:25–28).
23

1

The ‘278 Patent states that its novel combination “allows the direct linking of compliance

2

within a NAC product to the results of a compliance scan based on the content.” ‘278 Patent at

3

3:26–28. Notably, the specification points out that the combination is advantageous because “the

4

use of standards based compliance content . . . is not dependent on or related to the particular

5

[NAC] solution being used.” Id. at 3:33–37. The specification further explains that “the modular

6

nature of [the] system may allow the components to be independent and allow flexibility to enable

7

or disable individual components or to extent/upgrade components without affecting other

8

components thereby providing scalability and extensibility.” Id. at 8:30–35. Further, the use of

9

standards based compliance content is defined technically rather than a “prose-based configuration
checklist being input to a NAC based policy engine[,]” thereby “avoid[ing] misinterpretations or

11

United States District Court
Northern District of California

10

misconfigurations.” Id. at 3:37–39.

12

Forescout also contends that “automated and multi-device compliance scanning” is a

13

specific improvement over conventional systems. Opp’n at 19. The specification provides that

14

“[a]utomated device compliance can be difficult to determine and review with existing

15

methodologies.” Id. at 2:6–10. According to Forescout, conventional systems had a problem—

16

there being too many devices connected to a network at once—that a conventional classification

17

system could not effectively manage. Opp’n at 19–20. Therefore, it claims that solving the

18

computer-specific problem of enforcing compliance by the numerous and different types of

19

devices on a network by automatically classifying them and applying a compliance rule is

20

inventive and not merely conventional. Id. Device classification also allows for customizing the

21

compliance scans such as performing a particular scan based on the device’s operating system.

22

Opp’n at 16–17 (citing ’278 patent at 3:43–51 (“[T]he compliance scans can be performed on

23

selected devices communicatively coupled to a network that have been classified as having a

24

particular operating system, e.g., Microsoft Windows.”)). The invention therefore “remove[s] the

25

need for network administrators to have to manually specific [sic] IP addresses or IP address

26

ranges for compliance scanning[,]” distinguishing the prior art approach of merely copying a

27

“golden image,” which is a previously specified “particular configuration.” ‘278 Patent at 2:2–5;

28

3:43–51.
24

In addition, the ‘278 Patent suggests benefits beyond mere automation. As described

1
2

previously, the invention allows for “adaptable and device-specific” compliance checks and its

3

modular structure enables flexible control that provides “scalability and extensibility” and

4

“avoid[s] misinterpretations or misconfigurations.” Opp’n at 17; ‘278 Patent at 3:37–39; 8:30–

5

35. It also “enables more flexible and nuanced” network compliance management through

6

allowing customization rather than being limited to particular configurations like the conventional

7

system. Opp’n at 16; ‘278 Patent at 5:29–34 (“For example, a user could open a compliance rules

8

file and remove one or more rules or modify one or more weights associated with the rules.”).

9

Finally, the “automated and continuous compliance checks” “enable the ongoing monitoring of
network devices and activity” and “can be also performed real-time[.]” Id. at 1:57–58; 3:5–7, 16–

11

United States District Court
Northern District of California

10

17.
Therefore, Forescout’s claims at the very least plausibly recite an inventive concept under

12
13

Alice step two, raising fact issues as to whether “conventional systems had difficulty effectively

14

managing access to network resources and required manual compliance” that the ‘278 Patent

15

“solved . . . by combining standards based compliance with policy based network access

16

control[,]” enabling automation, multi-device compliance scanning, and customization. Opp’n at

17

20. Considering that “whether a claim element or combination of elements is well-understood,

18

routine and conventional to a skilled artisan in the relevant field is a question of fact,” and the

19

court must weigh all factual inferences drawn from the specification in favor of Forescout, it is

20

premature to decide eligibility at this stage of the litigation. Berkheimer, 881 F.3d at 1368.

21

Further, Fortinet fails to establish that, as a matter of law, the ordered combination of the

22

limitations in the claims is conventional and not innovative. Thus, the ‘278 Patent creates fact

23

issues that preclude judgment for dismissal under Rule 12(b)(6), and the Court denies the motion

24

to dismiss as to the ‘278 Patent.
The ‘764 Patent

25

4.

26

The ‘764 Patent relates to a post-connection client certificate authentication. Claim 1

27
28

recites:
1. A system comprising:
25

1

A memory; and

2

A processing device operatively coupled to the memory, the
processing device to:

3
4
5

Detect a connection of an endpoint device at a network switch
coupled to a network;

6

Restrict access of the endpoint device to prevent the endpoint device
from accessing resources of the network by applying a VLAN
assignment to the network switch;

7

Establish a connection with the endpoint device;

8

Validate a client certificate corresponding to the endpoint device to
authenticate the endpoint device as a corporate device, wherein to
validate the client certificate, the processing device to:

9
10

Receive the client certificate from the endpoint name, the
client certificate from the endpoint device, the client
certificate comprising a subject name, a client public key and
a digital signature of the client public key by a certificate
authority;

United States District Court
Northern District of California

11
12
13

Retrieve a certificate authority certificate from the certificate
authority, the certificate authority certificate comprising a
certificate public key;

14
15

Verify the digital signature of the client public key using the
certificate authority public key; and

16

Verify the subject name using the client public key; and

17
18
19
20

Grant the endpoint device access to the resources of the network
‘764 Patent, at Claim 1.
a.

Step One

21

Fortinet argues that the ‘764 Patent is “directed to the abstract idea of validating

22

authorization after connection” and that it uses generic computer components that perform their

23

usual functions. Mot. at 24. Forescout again rebuts that the ‘764 Patent is not directed to an

24

abstract idea but recites a “technological solution to a technological problem.” According to

25

Forescout, prior NAC devices had to choose between prior art solutions that offered either tight

26

security or timeliness in granting access, but not both. Opp’n at 21. Further, it argues that prior

27

art had a “major drawback” because of its “fail-closed” system. Id. For example, if the device

28

fails in any way—i.e., a power outage—then all new connections were automatically denied,
26

1

which dampened user experience. Id. at 22. Forescout contends that the ‘764 Patent solves this

2

problem in dependent Claim 5, which describes a “fail-open” system that grants access upon a

3

NAC’s failure during authentication. Therefore, the ‘764 Patent claims a functional improvement

4

by allowing connection to the network with limited access, after which the device is validated,

5

allowing for smoother user experience while blocking access to sensitive resources until

6

verification. Id. at 22–25.

7

First, the balancing problem between user experience and network security is “a problem

8

specifically arising in the realm of computer networks.” DDR Holdings, 773 F.3d at 1257. The

9

balance of speed and security required in network access is the type of issue that is unique to
computer networks, especially considering the fact that improving either one necessarily

11

United States District Court
Northern District of California

10

compromises the other. There is thus a technological problem addressed by the ‘764.

12

The parties disagree as to whether Claim 1 is directed to a “specific technique.” Opp’n at

13

23. Fortinet compares the ‘764 Patent to Ericsson and Dropbox. Mot. at 24–25; Ericsson, 955

14

F.3d at 1326–27 (finding that all four components of the claim “collapsed” into the abstract idea of

15

controlling access to resources); Dropbox, 815 F. App’x at 529 (affirming the district court’s

16

finding that the patents were directed to functional results, not technological solutions). Although

17

the ‘764 does not detail its technical aspects at length, it offers more technology-based

18

improvements than Dropbox and Ericsson. In Ericsson, the patent’s purported inventive concept

19

did not appear in the language of the claims. Ericsson, 955 F.3d at 1328–9. In Dropbox, the

20

claims “recited conventional elements in a purely functional manner, without implementation

21

detail even in the specification.” Dropbox, 815 F. App'x at 533.

22

In contrast, Claim 1 places emphasis on the new ordering of authentication using the

23

specific technique of “post-connect certificate authentication,” which enables “limited access” to a

24

network instead of granting either complete access or no access at all. See ‘764 Patent at Claim 1;

25

Opp’n at 24–25. The specification clarifies this technique as utilizing a “Public-Private Key

26

Infrastructure with X.509 client certificates installed on connecting corporate endpoints” as “an

27

alternative to the pre-connect 802.1x protocol, using a post-connect paradigm.” ‘764 Patent at

28

2:22–26.
27

1

Claim 1 further provides that a processing device detects a connection of an endpoint

2

device at a “network switch,” “restricts access” by applying a “VLAN assignment” to the network

3

switch, establishes a connection with the device, and authenticates the device by validating and

4

verifying a client certificate provided by the device using a client “public key.” Id. at Claim 1. If

5

the client certificate is validated, the NAC device grants network access except for the most

6

sensitive parts of the network. Id. at 2:44–49. Further evaluation is then possible to remove such

7

restrictions or revoke the certificate. Id. at 2:49–56. According to the specification, this limited

8

access is possible because a network switch may be “configured such that when it detects a new

9

connection to the communication network, it immediately applies an access control list (ACL) or
wireless role to prevent the connecting device accessing the connecting device accessing any

11

United States District Court
Northern District of California

10

network resources except for the NAC device and potentially other resources[.]” Id. at 2:26–34.

12

An ACL manager can create, manage, and apply the ACL to switch to control what network

13

resources a particular device has access to. Id. at 4:50–64. This level of detail contained in Claim

14

1 and the specification suggests that the ‘764 Patent does not simply describe a post-verification

15

scenario but a solution that is technology-based.

16

Additionally, Claim 1 affords a completely new “fail-open” system described in Claim 5,

17

which solves the problem of the “fail-close” system. Opp’n at 26. Claim 5 describes a system

18

wherein the device is processed to “not restrict access of the endpoint device to the resources of

19

the network when a NAC in the network suffers a failure during authentication of the endpoint

20

device.” ‘764 Patent at Claim 5. In a “fail-open” configuration, all ports on the switch are

21

initially configured in an “open” mode instead of a “restrict” mode and only restricted when a new

22

device is connected. ‘764 Patent at 5:10–17. Therefore, upon failure, during which the device is

23

unable to restrict the ports, “all new and pending connections are granted access to the network as

24

a matter of policy.” See id. at 2:65–68; 5:14–17. This “fail-open” system is an improvement that

25

“solv[es] yet another problem in the prior art related to failures (e.g., power failures) during

26

authentication,” and is possible through this novel post-connect paradigm of Claim 1. Opp’n at

27

23–25 (citing ‘764 Patent at 2:22–49, 57–3:3) (“Allowing a device to connect first and then

28

performing certificate authentication before providing access to sensitive resources . . . allows for
28

1
2

a “fail-open” system[.]”).
For the aforementioned reasons, the ‘764 Patent is “directed to improvements to the

3

functionality of a computer or network platform itself,” rather than simply “a process or system

4

that qualifies an abstract idea for which computers are invoked merely as a tool.” Uniloc USA,

5

Inc. v. LG Electronics USA, Inc., 957 F. 3d 1303, 1306–07 (Fed. Cir. 2020). Further, statements

6

such that the ’764 patent claims an improvement over the prior art approach of using the “802.1x

7

protocol which ensures connecting devices are authenticated using an X.509 digital certificate, or

8

other credentials, prior to even gaining access to the network[,]” must be taken as true in

9

conducting the step-one inquiry. ‘764 Patent at 2:7–10; see CardioNet, 955 F.3d at 1369–70.

10

United States District Court
Northern District of California

11
12

Thus, the ‘764 Patent is not directed to a patent-ineligible abstract idea.
b.

Step Two

As the ‘764 Patent is not directed to a patent-ineligible abstract idea, the inventive concept

13

portion of the analysis need not be addressed. Nevertheless, even if the Court were to find the

14

‘764 Patent to be directed to an abstract idea, Forescout’s allegations support a reasonable

15

inference that the ‘764 Patent contains features that go beyond “well-understood, routine, and

16

conventional” activities as described above. Alice step two “consider[s] the elements of each

17

claim both individually and ‘as an ordered combination’ to determine whether the additional

18

elements ‘transform the nature of the claim’ into a patent-eligible application.” Alice, 573 U.S. at

19

217 (quoting Mayo, 566 U.S. at 77–78). Even if each element of Claim 1 individually is

20

conventional, “an inventive concept can be found in the non-conventional and non-generic

21

arrangement of known, conventional pieces.” Bascom, 827 F.3d at 1350. Here, Forescout places

22

the inventive concept on the new ordering of authentication, and this new ordering seems to be

23

achieved through techniques that are arguably non-conventional and non-generic, to give “limited

24

access” to a device. Opp’n at 25. This “post-connect paradigm” is purported to be an invention

25

that is achieved using “a working Public-Private Key Infrastructure with X.509 client certificates”

26

as “an alternative to the pre-connect 802.x protocol.” Id.; 2:15–17, 2:23–26, 4:63–64. In addition,

27

there are sufficient details in the specification to suggest that this novel approach achieves a

28

specific improvement beyond the conventional system, as discussed in step one. Enfish, 822 F.3d
29

1

at 1339 (“[A]n analysis of whether there are concrete improvements in the recited computer

2

technology could take place under step two.”).
In sum, Forescout claims to improve conventional systems that “are limited and narrow in

3
4

their authentication abilities[,] . . . negatively affect the user experience[,]” and compromise

5

security. Id. at 27 (citing ’764 patent at 1:17–20, 1:66–2:5). The achievement of the “post-

6

connect paradigm” using “Public-Private Key Infrastructure with X.509 client certificates” was

7

more than a “well-understood, routine, and conventional” technique. Therefore, the Court finds

8

that the ‘764 Patent recites patent-eligible subject matter at both step one and step two of Alice.

9

B.

10

Tortious Interference with Business Relations
Forescout alleges that Fortinet made false statements to Forescout’s existing and

United States District Court
Northern District of California

11

prospective customers by “republish[ing]” its patent infringement complaint allegations to the

12

media, and representing that they were facing “uncertain ground financially” to its customers.

13

Mot. at 29. Fortinet claims that the tortious interference claim should be dismissed for three

14

reasons: (1) the alleged conduct is not subject to this Court’s subject matter jurisdiction, (2) the

15

alleged statements are protected by federal law, which preempts the state law claim, and (3) the

16

alleged conduct does not satisfy California law to state a claim for tortious interference. Id.

17

1.

Subject Matter Jurisdiction

18

Under 28 U.S.C. § 1367(a), a federal district court which possesses original jurisdiction

19

may hear other state law claims “that are so related to claims in the action within such original

20

jurisdiction that they form part of the same case or controversy under Article III of the United

21

States Constitution.” In order for a claim to “form part of the same case or controversy,” the

22

claims must “derive from a common nucleus of operative fact.” United Mine Workers of Am. v.

23

Gibbs, 383 U.S. 715, 725 (1966).

24

28 U.S.C. § 1338(a) grants federal district courts original jurisdiction of any civil action

25

arising under any federal statute relating to patents. Christianson v. Colt Indus. Operating Corp.,

26

486 U.S. 800, 800 (1988). In Christianson, the U.S. Supreme Court clarified the scope of §

27

1338(a), finding that § 1338(a) confers jurisdiction over not only causes of action created by

28

federal patent law but also extends to cases in which the plaintiff's cause of action depends on the
30

1

resolution of a substantial question of federal patent law. Additive Controls & Measurement Sys.,

2

Inc. v. Flowdata, Inc., 986 F.2d 476, 477–78 (Fed. Cir. 1993) (citing Christianson, 486 U.S. at

3

808–09).

4

Fortinet argues that there is no common nucleus of operative fact with the federal claims.
Specifically, Fortinet asserts that the fact that the claim arose as a result of the patent dispute is

6

insufficient for supplemental jurisdiction and that the tortious interference claim is otherwise

7

unrelated to the patents. Mot. at 34–35. Fortinet also points out that the statement regarding

8

financial insolvency does not relate to the alleged patent infringement. Id. Forescout contends

9

that the tortious interference claim depends on the proof of the falsity of the infringement claim—

10

a substantial question of federal patent law—and therefore must be brought in federal court. See

11

United States District Court
Northern District of California

5

Opp’n at 35.

12

Courts have previously found federal jurisdiction for tortious interference claims based on

13

related issues of patent infringement, finding that the claims “form part of the same case or

14

controversy.” See, e.g., Mikohn Gaming Corp. v. Acres Gaming, Inc., 165 F.3d 891, 894 (Fed.

15

Cir. 1998) (finding that the district court had jurisdiction for the interference claim under § 1338

16

and § 1367). Additive Controls, while not a tortious interference case, also concerned a patent

17

dispute in which the defendant asserted a counterclaim of business disparagement when the

18

plaintiff sent letters to the defendant’s current and potential customers that warned them about its

19

alleged patent infringement. Additive Controls, 986 F.2d at 477. The Federal Circuit found it

20

proper that the business disparagement claim was removed to federal court, as it depended upon a

21

substantial question of patent law. Id. at 478–79 (“[The] allegedly disparaging statement was its

22

accusation that [the plaintiff] infringed the . . . patent. To prove this aspect of its case (falsity),

23

[the plaintiff] must show that its product does not infringe the . . . patent.”).

24

District courts have found that “claims aris[ing] out of the same dispute over the . . .

25

patent” are sufficient for supplemental jurisdiction over tortious interference claims because

26

“[t]he question of the patents’ validity []provides the ‘common nucleus of operative fact’ essential

27

to the determination of both [the plaintiff’s patent] claims in this suit and [the defendant’s]

28

counterclaim [of tortious interference].” Tools Aviation, LLC v. Digital Pavilion Elecs. LLC, No.
31

1

20-CV-02651-PKCVMS, 2021 WL 4340949, at *4 (E.D.N.Y. Sept. 23, 2021) (finding jurisdiction

2

because the claim “involve[d] the question of whether [the p]laintiff has validly asserted

3

infringement of its patents or, as [the d]efendants contend, used the prospect of an infringement

4

suit to threaten [the d]efendants’ business partners.”); see also Clear Lam Packaging, Inc. v. Rock-

5

Tenn Co., No. 02 C 7491, 2003 WL 22012203, at *2–3 (N.D. Ill. Aug. 22, 2003) (declining to

6

dismiss a tortious interference claim for lack of subject matter jurisdiction because, among other

7

reasons, “all the claims arise out of the same dispute over the . . . patent and therefore derive ‘from

8

a common nucleus of operative fact.’”).

9

Like Additive Controls and Tools Aviation, the tortious interference claim in this case
involves a statement that implicates Fortinet’s right to assert infringement, which raises questions

11

United States District Court
Northern District of California

10

of patent validity and infringement. The communications are not tortious if it asserts a valid

12

patent right. Whether Fortinet has valid patent rights related to the patents at issue and their

13

potential infringement are questions of patent law.

14

As Fortinet’s right to relief involves the resolution of a substantial question of patent law,

15

Forescout’s patent and tortious interference claims arise in the same “nucleus of operative fact.”

16

Although Forescout attempts to argue that some of Fortinet’s statements were beyond assertions of

17

patent rights, whether such statements were “far in excess of accurate notification of [the

18

plaintiff’s] patent rights” in bad faith goes to the merits of the claim, not subject matter

19

jurisdiction. See Clear Lam Packaging, Inc., 2003 WL 22012203, at *2–3 (finding subject matter

20

jurisdiction and thereafter discussing whether defamatory statements regarding the plaintiff’s

21

“stability and ability to meet customer needs” supported an allegation of bad faith). Thus, the

22

Court declines to dismiss the tort claim for lack of subject matter jurisdiction.

23

2.

Preemption

24

The Supremacy Clause of the U.S. Constitution states that “the Laws of the United States

25

. . . shall be the supreme Law of the Land[.]” U.S. Const. Art. VI, cl. 2. The Supremacy Clause

26

preempts state law by means of express preemption, field preemption, or conflict preemption. See

27

English v. Gen. Elec. Co., 496 U.S. 72, 78–79 (1990). Federal patent law does not provide

28

explicit preemption. Id. at 1332; 35 U.S.C. §§ 1–376 (2000). See also Dow Chemical Co. v.
32

1

Exxon Corp., 139 F.3d 1470, 1473–75 (Fed. Cir.1998). The Federal Circuit has explained that

2

conflict preemption, not field preemption, is used to preempt state law with patent law. See

3

Hunter Douglas, Inc. v. Harmonic Design, Inc., 153 F.3d 1318, 1335 (Fed. Cir. 1998) (overruled

4

on other grounds by Midwest Indus., Inc. v. Karavan Trailers, Inc., 175 F.3d 1356 (Fed. Cir.1999)

5

(“[C]onflict preemption is a more precise means of determining which state law causes of action

6

are preempted than the blunt tool of field preemption.”). Conflict preemption occurs in two ways:

7

“when it is impossible for a private party to comply with both state and federal requirements . . . or

8

when state law ‘stands as an obstacle to the accomplishment and execution of the full purposes

9

and objectives of Congress[.]’” Hunter Douglas, 153 F.3d at 1332 (quoting Hines v. Davidowitz,
312 U.S. 52, 67 (1941)). The Federal Circuit has noted the “essential criteria” for determining

11

United States District Court
Northern District of California

10

whether there is such conflict preemption considers the “objectives of the federal patent laws”:

12
13
14
15
16
17

First, patent law seeks to foster and reward invention; second it
promotes disclosure of inventions to stimulate further innovation
and to permit the public to practice the invention once the patent
expires; third, the stringent requirements for patent protection seek
to assure that ideas in the public domain remain there for the free
use of the public.
153 F.3d at 1333; see also Dow Chemical, 139 F.3d at 1473–74.
The court must assess whether the alleged tortious conduct to determine whether “a state

18

law tort, ‘as-applied,’ conflicts with federal patent law.” Id. at 1335–37 (finding that this conduct-

19

based approach is in harmony with the Federal Circuit’s obstacle preemption in Dow Chemical).

20

Under this formulation, “if a plaintiff bases its tort action on conduct that is protected or governed

21

by federal patent law, then the plaintiff may not invoke the state law remedy, which must be

22

preempted for conflict with federal patent law. Conversely, if the conduct is not so protected or

23

governed, then the remedy is not preempted.” Id.

24

As part of federal patent law, the Federal Circuit has “uniformly upheld a patentee’s right

25

to publicize the issuance of patents and to so inform potential infringers.” Mikohn Gaming Corp,

26

165 F.3d at 897. Federal patent law contemplates this right to notice “to inform a potential

27

infringer of the existence of the patent, whereby the recipient of the information may adjust its

28

activities, perhaps seek a license, or otherwise act to protect itself.” Id.; Hunter Douglas, 153 F.3d
33

1

at 1336. “Indeed, [the statute] . . . makes marking or specific notice of the patent to the accused

2

infringer a prerequisite to the recovery of damages.” Id. “Patents would be of little value if

3

infringers of them could not be notified of the consequences of infringement, or proceeded against

4

in the courts. Such action . . . cannot be said to be illegal.” 800 Adept, Inc. v. Murex Sec., Ltd.,

5

539 F.3d 1354, 1369 (Fed. Cir. 2008) (citing Virtue v. Creamery Package Mfg. Co., 227 U.S. 8,

6

37–38 (1913)). Therefore, preventing notice of patent rights, including the publication of the

7

patents and assertions of infringement, would be contrary to the purposes and objectives of patent

8

law to reward invention through allowing the patentholders to assert such rights. Further, the

9

Federal Circuit explained:

10

United States District Court
Northern District of California

11
12
13

The propriety of that notice depends on patent law and the patent
issues to which the notice pertains. National uniformity, in
confluence with the national scope of the patent grant and the
general federal exclusivity in patent causes, require that
determination of the propriety of [the plaintiff’s] actions in giving
notice of its patent rights is governed by federal statute and
precedent and is not a matter of state tort law.

14

Mikohn Gaming Corp., 165 F.3d at 896. Therefore, “federal patent law bars the imposition of

15

liability for publicizing a patent in the marketplace unless the plaintiff can show that the

16

patentholder acted in bad faith.” Id.

17

As federal patent law preempts state-law tort liability for good faith conduct in

18

communications asserting patent infringement and potential litigation, state-law tort claims

19

survive only if it is based on “a showing of ‘bad faith’ action in asserting infringement[.]”

20

Globetrotter Software, Inc. v. Elan Computer Grp., Inc., 362 F.3d 1367, 1374 (Fed. Cir. 2004);

21

Zenith Elecs. Corp. v. Exzec, Inc., 182 F.3d 1340, 1355 (Fed. Cir. 1999). Patent law “recognizes a

22

presumption that the assertion of a duly granted patent is made in good faith”; therefore, the party

23

arguing against the preemption has the burden of proving bad faith. Id. at 1374–77 (“[T]o avoid

24

preemption, bad faith must be alleged and ultimately proven, even if bad faith is not otherwise an

25

element of the tort claim.”) (internal quotation marks omitted); 800 Adept, Inc, 539 F.3d at 1370

26

(“[A] party attempting to prove bad faith on the part of a patentee enforcing its patent rights has a

27

heavy burden to carry.”).

28

In sum, to determine whether the tortious interference claim is preempted, a two-part
34

1

examination is relevant. First, the court determines whether Fortinet’s alleged conduct falls within

2

the scope of protection of patent rights—i.e., whether the communications served to notify

3

potential infringers of the patents or went beyond such notification. If the conduct was beyond the

4

scope of a patent right, such conduct is not protected and therefore cannot be a basis for

5

preemption. If the conduct was within the scope of patent rights, the Court must then proceed to

6

the next step to determine whether preemption applies. The second step considers whether the

7

conduct was made in bad faith. In this case, Forescout has the burden of alleging and proving bad

8

faith.
a.

9
10

Scope of Patent Rights

Fortinet contends that its actions were proper because statements informing others in the

United States District Court
Northern District of California

11

industry of a party’s infringement claims are protected and therefore preempted by patent law.

12

Further, Fortinet asserts that it has the right to notify users of Forescout’s products as the users are

13

also potential direct infringers and should be informed of the risk of an injunction. Reply at 17

14

(citing Globetrotter, 362 F.3d at 1374). Forescout argues that Fortinet’s wrongful conduct went

15

“far beyond the protected activity of simply notifying a party of potential patent infringement.”

16

Opp’n at 1.

17

As Forescout argues, Fortinet’s communications include both assertions of patent

18

infringement and other statements unrelated to a patentee’s right to publicize the “issuance of

19

patents and to so inform potential infringers.” Mikohn Gaming Corp., 165 F.3d at 897. Therefore,

20

a statement-by-statement examination of Fortinet’s communications is warranted in order to assess

21

whether Fortinet’s communications are protected by patent law and fall under preemption.

22

Fortinet’s email reads that its purpose was “to insure [Forescout’s customers that they]

23

were aware of the ongoing legal problems and future of Forescout” and proceeds to inform the

24

readers that “Fortinet has filed lawsuit against Forescout for patent infringement related to

25

technology held within FortiNAC.” Such statements relate to Fortinet’s assertion of patent

26

infringement. They “inform potential infringers” —the users of the infringing product—of their

27

patent right and the impending litigation within the rights of the patentee. See 35 U.S.C.A. §

28

271(a); Judkins v. HT Window Fashions Corp., 514 F. Supp. 2d 753, 765 (W.D. Pa. 2007), aff'd
35

1

sub nom. Judkins v. HT Window Fashion Corp., 529 F.3d 1334 (Fed. Cir. 2008) (noting that while

2

customers are rarely sued, “[they] are nonetheless infringers, and therefore, plaintiff is within his

3

rights to inform them of possible infringement of his patent.”). Therefore, these statements fall

4

squarely within Fortinet’s patent rights and a state tort claim precluding this right would conflict

5

with the purposes and objectives of federal patent law.

6

Fortinet’s statement to CRN that Forescout’s “wrongful incorporation” of its patents “is

7

material and goes to the heart of Fortinet’s business” is also an assertion of patent infringement

8

protected by patent law. Fortinet had the right to publicize its statement to the press, to inform

9

potential users of the products and the marketplace, in order to publicize its patents and warn
potential users that using the products would constitute infringement. See Hunter Douglas, 153

11

United States District Court
Northern District of California

10

F.3d at 1336; see also Mikohn Gaming Corp., 165 F.3d at 897.

12

Similarly, the statement to CRN that Fortinet “doesn’t take litigation lightly and has only

13

engaged in lawsuits to protect its intellectual property on seldom occasions when it is left no

14

alternative” informs Forescout and relevant parties of the litigation and communicates Fortinet’s

15

belief that they have a robust case. Such statements regarding the strength of the patent are

16

relevant to the purpose of notifying potential infringing users so that they can determine their

17

response to the assertion of infringement, and therefore fall under Fortinet’s patent rights. See

18

Globetrotter, 362 F.3d at 1374.

19

On the other hand, Fortinet’s statement that Forescout was left “on uncertain ground

20

financially” does not assert a patent right nor advance any of the objectives of patent law, and

21

therefore falls outside the governance of patent law. As such, tort claims based on extraneous

22

statements about Forescout’s financial situation do not obstruct the objectives of patent law, and

23

the Court finds these statements not preempted. However, the aforementioned statements

24

asserting Fortinet’s patent rights must proceed to the next step of the analysis, and Forescout must

25

show bad faith regarding these statements to survive preemption.

26
27
28

b.

Bad Faith

The bad faith standard has objective and subjective components. Golan v. Pingel Enter.,
Inc., 310 F.3d 1360, 1371 (Fed. Cir. 2002). The objective component requires a showing that the
36

1

infringement allegations are “objectively baseless.” Id. (citing Globetrotter, 362 F.3d at 1375).

2

The subjective component relates to a showing that the patentee demonstrated subjective bad faith

3

in enforcing the patent. Globetrotter, 362 F.3d at 1370. A party claiming bad faith patent

4

enforcement “must present affirmative evidence sufficient for a reasonable jury to conclude that

5

the patentee acted in bad faith, in light of the burden of clear and convincing evidence that will

6

adhere at trial.” Springs Window Fashions LP v. Novo Indus., L.P., 323 F.3d 989, 999

7

(Fed.Cir.2003); Golan v. Pingel Enter., Inc., 310 F.3d 1360, 1371 (Fed.Cir.2002).

8
9

c.

Objective Bad Faith

In order to ascertain whether Fortinet’s infringement allegations were made in “bad faith,”
the trial court is required to determine whether those allegations were objectively baseless.

11

United States District Court
Northern District of California

10

Globetrotter, 362 F.3d at 1375. Objective baselessness can be established if the patents at issue

12

are “obviously invalid or plainly not infringed.” Id.; see also Zenith, 182 F.3d at 1354

13

(“Obviously, if the patentee knows that the patent is invalid, unenforceable, or not infringed, yet

14

represents to the marketplace that a competitor is infringing the patent, a clear case of bad faith is

15

made out.”). This requires a showing that “the infringement allegations [were] such that no

16

reasonable litigant could reasonably expect success on the merits.” Dominant Semiconductors

17

Sdn. Bhd. v. OSRAM GmbH, 524 F.3d 1254, 1260 (Fed. Cir. 2008); 800 Adept, 539 F.3d at 1370

18

(citing Pro. Real Est. Invs., Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49, 50 (1993) (“[T]he

19

issue is whether the evidence was such that [defendant] could not have had a reasonable basis for

20

believing that the patent was valid when it asserted the patent against [plaintiff’s] customers.”);

21

see also Mikohn Gaming Corp., 165 F.3d at 897 (“Federal precedent is that communications to

22

possible infringers concerning patent rights is not improper if the patentholder has a good faith

23

belief in the accuracy of the communication.”).

24

Of the numerous arguments Forescout makes in support of finding objective baselessness,

25

the most notable is that Fortinet “knew, or should have known, [the asserted patents] were invalid

26

and/or not infringed by Forescout.” Opp’n at 1. Forescout asserts that patents are invalid under §

27

101 and because of prior art, including the accused product itself. Opp’n at 29 (citing Nuance

28

Commc’ns, Inc. v. MModal LLC, No. 17-1484-MN-SRF, 2018 WL 6804488, at *4 (D. Del. Dec.
37

1

27, 2018) (denying the Rule 12 motion because “[the counterclaimant] identifie[d] numerous

2

specific prior art references under §§ 102 and 103 purporting to show that [the plaintiff] ha[d] no

3

basis for alleging the Asserted Patents [were] valid and enforceable.”). Forescout also notes that

4

the question of bad faith is a factual contest and cannot be resolved on a motion to dismiss.

5

Opp’n. at 33. Fortinet argues that Forescout did not meet the high bar of showing bad faith and

6

failed to sufficiently plead that Fortinet's infringement lawsuit is objectively unreasonable. Mot. at

7

31–34. Indeed, it is true that bad faith is a high bar that must be found by clear and convincing

8

evidence. Zenith, 182 F.3d at 1352; 800 Adept, 539 F.3d at 1370 (The “party attempting to prove

9

bad faith on the part of a patentee enforcing its patent rights has a heavy burden to carry.”).

10

United States District Court
Northern District of California

11

Fortinet also notes that patents are entitled to a presumption of validity. Mot. at 32.
The Court finds that it is premature to determine the question of bad faith at this stage.

12

First, the question of patent validity is “open to reasonable debate at this point.” As Fortinet

13

argues, the Court finds that there is no obvious invalidity under § 101 in light of the uncertainty

14

discussed in sections above as to how Alice applies to the patents in question. Nor can the Court

15

determine at this stage whether Forescout’s assertions of the patent’s invalidity for anticipation

16

and obviousness under §§ 102 and 103 are so obvious that Fortinet could not have “realistically

17

expected success on the merits at the time the suit was filed.” Hoffman-La Roche Inc. v.

18

Genpharm Inc., 50 F. Supp. 2d 367, 380 (D.N.J. 1999). On the other hand, Forescout specifically

19

identifies numerous prior art that purports to anticipate or render obvious the patents at issue, as

20

well as their exemplary combinations. Docket No. 107-1 at 7–10; Docket No. 107-2 at 7–10.

21

That identification is sufficient to meet the plausibility requirement at this stage. See, e.g., Nuance

22

Commc’ns, Inc., 2018 WL 6804488, at *4 (“MModal identifies numerous specific prior art

23

references under §§ 102 and 103 purporting to show that Nuance has no basis for alleging the

24

Asserted Patents are valid and enforceable. Consequently, MModal meets the standard of

25

plausibility required at the 12(b)(6) stage.”) (citation omitted). Therefore, Forescout’s pleadings

26

“adequately allege bad faith by pointing to a specific basis” for its allegations. Id.; Indect USA

27

Corp. v. Park Assist, LLC, No. 3:18-CV-02409-BENMDD, 2019 WL 3780274, at *8 (S.D. Cal.

28

Aug. 12, 2019).
38

1

Second, the Court must also consider whether there was a basis for Fortinet to reasonably

2

believe that Forescout infringed its patents. 800 Adept, Inc., 539 F.3d at 1371. However,

3

Forescout alleges nothing about whether Fortinet undertook a reasonable investigation regarding

4

the infringement. Cf. Sandisk Corp. v. LSI Corp., No. C 09-02737 WHA, 2009 WL 3047375, at

5

*3 (N.D. Cal. Sept. 18, 2009) (dismissing the plaintiff’s claim when the plaintiff alleged that the

6

defendant “knew or should have known its allegations of infringement were false” but failed to

7

provide any specific facts to support such an assertion and because the defendant had analyzed and

8

determined that plaintiff’s products infringed). “The resolution of the question whether plaintiffs’

9

suit is objectively baseless . . . involves the determination of whether plaintiffs undertook a
reasonable investigation before filing suit, whether plaintiffs knew or should have known that

11

United States District Court
Northern District of California

10

[Forescout] had not infringed the [Fortinet] patents, and whether a reasonable litigant could have

12

realistically expected success on the merits at the time the suit was filed.” Id. Reasonableness is a

13

generally question of fact; the Court cannot at this juncture determine whether there was objective

14

bad faith.

15
16
17
18

Therefore, because the questions of patent validity and infringement are not obvious, it is
premature to determine the question of objective bad faith at this stage of the litigation.
d.

Subjective Bad Faith

Finding subjective bad faith is primarily concerned with the parties using litigation as a

19

weapon when it is a mere “sham”; therefore, the subjective prong of this test looks to the

20

“subjective expectation of success” in the underlying litigation. Pro. Real Est. Invs., 508 U.S. at

21

57. For example, accusing a competitor of patent infringement for an invalid patent and never

22

actually filing the infringement suit shows that there was never any subjective expectation of

23

success. In such cases, the patent infringement action is used merely as a weapon. Globetrotter,

24

362 F.3d at 1375. Subjective bad faith focuses on “whether the baseless lawsuit conceals an

25

attempt to interfere directly with the business relationships of a competitor.” Nuance Commc’ns,

26

Inc., 2018 WL 6804488, at *3 (internal quotation marks omitted). This includes the history of

27

bringing patent infringement suits against its market competitors as a predicate to acquiring them,

28

threats to sue as retribution for a failure to sell, dissemination of misleading press release with
39

1

false accusations of patent infringement, never actually filing an infringement lawsuit, the timing

2

of communications alleging infringement, or inadequate investigation. Id.; Globetrotter, 362 F.3d

3

at 1375; Dominant Semiconductors, 524 F.3d at 1264; Well Master Corp. v. Luckyshot LLC, No.

4

19-CV-01617-CMA-STV, 2019 WL 11314994, at *3 (D. Colo. Dec. 10, 2019).

5

In its motion to dismiss, Fortinet does not meaningfully engage with the subjective bad

6

faith analysis and acknowledges that it focused its briefing on the objective prong. Mot. at 31, n4.

7

Fortinet is correct that “[a]n objectively reasonable effort to litigate “cannot be [a] sham regardless

8

of subjective intent.” Globetrotter, 362 F.3d at 1375–76 (quoting Pro. Real Est. Invs, 508 U.S. at

9

57) (“Absent a showing that the infringement allegations are objectively baseless, it is unnecessary
to reach the question of the patentee's intent.”). 800 Adept, 539 F.3d at 1370. However, the

11

United States District Court
Northern District of California

10

question of subjective intent remains relevant as absent a sufficient allegation of subjective bad

12

faith, any applicable preemption cannot be overcome.

13

Forescout alleges that Fortinet filed its lawsuit with the intention of interfering with

14

Forescout’s corporate acquisition and customer relations. Counterclaim at 46. It reasons that

15

Fortinet “knew or should have known” that the lawsuit was baseless, that it filed its suit one

16

business day before the acquisition was scheduled to close, and included extraneous allegations

17

relating to the acquisition in the Complaint. Id. Fortinet’s knowledge or recklessness as to patent

18

invalidity, if established, would indicate that it filed sham litigation to tortiously interfere with the

19

competitor’s business. Conbraco Indus., Inc. v. Mitsubishi Shindoh Co., No. 3:14-CV-00368-

20

RJC, 2015 WL 3506487, at *3 (W.D.N.C. Jan. 30, 2015). In light of these allegations, the truth

21

and accuracy of which cannot yet be adjudicated, the Court cannot find that Forescout has failed to

22

plausibly plead subjective bad faith. Accordingly, the Court cannot find preemption of Fortinet’s

23

tortious interference claim as a matter of law at this juncture.

24

3.

Claim for Tortious Interference

25

Forescout asserts a claim for tortious interference. Fortinet argues that Forescout’s claim

26

fails because Forescout has not specified which form of tortious interference it claims. In

27

California, there are two distinct forms of tortious interference: “intentional interference with

28

contract and intentional interference with prospective economic advantage.” Korea Supply Co. v.
40

1

Lockheed Martin Corp., 29 Cal.4th 1134, 1157 (2003). Fortinet notes that Forescout merely

2

pleads “tortious interference with business relationships” and argues that the claim mixes the

3

elements of the two torts, ultimately failing to plead either claim. Reply at 22.

4
5

a.

Intentional Interference with Contract

Fortinet argues that a claim of intentional interference with contract fails because

6

Forescout did not identify a specific contract. Reply at 21. Forescout contends that it has pled the

7

essential elements of a tortious interference claim, noting that intentional interference with an

8

existing contract is a “wrong in and of itself.” Id. at 1158. However, no contract was identified.

9

Korea Supply, 29 Cal.4th at 1157. Even assuming that the botched acquisition deal with Advent is
the contractual relationship at issue, intentional inference is a tort that requires an enforceable

11

United States District Court
Northern District of California

10

contract, which Forescout did not have. Therefore, there is no claim of intentional interference

12

with a specific contract. PMC, Inc. v. Saban Ent., Inc., 45 Cal. App. 4th 579 (1996) (“[A] cause of

13

action for intentional interference with contract requires an underlying enforceable contract.”),

14

overruled on other grounds by Korea Supply, 29 Cal.4th at 1134.

15

b.

Intentional Interference with Prospective Economic Advantage

16

In California, intentional interference with prospective economic advantage has five

17

elements: (1) the existence, between the plaintiff and some third party, of an economic relationship

18

that contains the probability of future economic benefit to the plaintiff; (2) the defendant’s

19

knowledge of the relationship; (3) intentional acts by the defendants designed to disrupt the

20

relationship; (4) actual disruption of the relationship; and (5) harm proximately caused by the

21

defendant’s action. Id. at 1153. The defendant’s intentional acts must be wrongful and

22

independently actionable by some measure beyond the interference itself. Della Penna v. Toyota

23

Motor Sales, U.S.A., Inc., 11 Cal.4th 376, 393 (1995). The tort does not punish lawful

24

competition, choice of commercial relationships, or pursuit of commercial objectives, even if

25

carried out with an improper motive. Korea Supply, 29 Cal.4th at 1158–59.

26

Fortinet argues that Forescout failed to adequately plead two elements of its claims. First,

27

Fortinet states that Forescout failed to establish how Fortinet committed an independently

28

actionable wrong. Mot. at 36. Independently actionable violations include violations of law or
41

1

unethical practices such as violence, misrepresentation, defamation, libel, or infringement. Ingrid

2

& Isabel, LLC v. Baby Be Mine, LLC, 70 F. Supp. 3d 1105, 1120 (N.D. Cal. 2014). Forescout

3

counters that there was independently actionable wrong because Fortinet’s conduct included

4

misrepresentation, defamation and unfounded litigation as its claims are objectively baseless

5

because Fortinet knew or should have known that its claims were not infringed and were invalid or

6

patent-ineligible. Opp’n at 36. While it is premature to determine whether Fortinet’s infringement

7

action was objectively baseless, Forescout has sufficiently pled a claim of wrong to survive a

8

motion to dismiss. Id.

9

Second, Fortinet argues that Forescout failed to identify any particular customers it was
deprived of. Mot. at 37. In order to state a claim for intentional interference with prospective

11

United States District Court
Northern District of California

10

business advantage, the plaintiff must allege facts showing that the defendant interfered with the

12

plaintiff's relationship with an “identifiable buyer.” Westside Ctr. Associates v. Safeway Stores,

13

Inc., 42 Cal.App.4th 507, 527 (1996). Allegations that a defendant interfered with the plaintiff's

14

relationship with an “as yet unidentified” customer generally will not suffice. Id. Merely stating

15

that an ongoing relationship with customers was harmed is conclusory and insufficiently pleaded.

16

Sybersound Recs., Inc. v. UAV Corp., 517 F.3d 1137, 1151 (9th Cir. 2008); see also Amaretto

17

Ranch Breedables, LLC v. Ozimals, Inc., 790 F. Supp. 2d 1024, 1032 (N.D. Cal. 2011). Fortinet

18

argues that the tort requires Forescout to show that Fortinet’s actions affected more than a

19

relationship with “repeat customers.” Reply at 22 (citing Google Inc. v. Am. Blind & Wallpaper

20

Factory, Inc., No. C-03-05340 JF, 2005 WL 832398, at *9 (N.D. Cal. Mar. 30, 2005) (relationship

21

with “repeat customers who “probabl[y] will continue to seek to visit its Web site and purchase its

22

goods and services” was too speculative and did not “rise to the level of the requisite promise of

23

future economic advantage.”)).

24

Forescout contends that identification of a specific customer is unnecessary, and some

25

manner of an economic relationship is all that is required. Opp’n at 37. Forescout is correct—an

26

identification by name is not required, just “that the defendant was aware its actions would

27

frustrate the legitimate expectations of a specific, albeit unnamed, party.” Roy Allan Slurry Seal,

28

Inc. v. Am. Asphalt S., Inc., 184 Cal. Rptr. 3d 279, 284 (Ct. App. 2015), rev'd on other grounds, 2
42

1

Cal. 5th 505 (2017) (citing Ramona Manor Convalescent Hosp. v. Care Enterprises, 177 Cal.

2

App. 3d 1120, 1133 (Ct. App. 1986)). However, “while . . . a plaintiff need not give the name of

3

the third-party, none of them abrogates the requirement that a plaintiff still must allege sufficient

4

facts to allow the Court to plausibly infer some real third-party—named or unnamed—existed and

5

expected to partake in the relationship.” Logistick, Inc. v. AB Airbags, Inc., No. 321-CV-00151,

6

2021 WL 2433944, at *5 (S.D. Cal. June 15, 2021).

7

Courts in this district have not found this requirement to be a high bar at the motion to

8

dismiss stage. It is sufficient that the plaintiff plausibly alleges “specific facts putting the

9

defendant on notice that a third-party . . . existed.” Id. at *7. For instance, in Code Rebel, the
Court found that alleging interference with “actual and potential customers” for a specific program

11

United States District Court
Northern District of California

10

to be sufficient:

12

15

Plaintiff alleges that an economic and business relationship existed
between Plaintiff and its actual and prospective customers of the
iRAPP programs. Although Plaintiff does not specifically identify
existing third parties with whom there was an existing economic or
business relationship, Plaintiff's allegation of interference with
“actual and potential customers” is sufficient to satisfy federal
pleading requirements.

16

Code Rebel, LLC v. Aqua Connect, Inc., No. CV-13-4539, 2013 WL 5405706, at *5–7 (C.D. Cal.

17

Sept. 24, 2013) (citation omitted).

13
14

18

Similarly, in Logistick, the defendant argued that the plaintiff failed to name its customers

19

and to specify what actions its customers took toward purchasing the plaintiff’s products.

20

Logistick, Inc., 2021 WL 2433944 at *5. The plaintiff had only argued that “it [was] evident from

21

the [c]omplaint that these customers were consumers of [the p]laintiff’s disposable load bars that

22

compete with [the d]efendant’s . . . product.” Id. This was sufficient for the court to find that

23

“specific facts putting the defendant on notice that a third-party, indeed, existed[,]” and therefore

24

sufficient to pass the Twombly/Iqbal standard. Id. at *7.

25

Therefore, Code Rebel and Logistick suggest that while merely pointing to “customers” or

26

“repeated customers” generally is insufficient, alleging that a relationship with customers existed

27

for specific products is sufficient to plausibly allege that a relationship existed and pass the Rule

28

12(b)(6) stage. In this case, Forescout alleges that Fortinet’s sample email was used to “target
43

1

folks looking at or using ForeScout.” Counterclaim at 46. However, only one product, FortiNAC,

2

is at issue and specified in the sample email. See Complaint at 46–47. Therefore, like the “actual

3

and prospective customers” of iRAPP programs in Code Rebel, the allegation that Fortinet

4

interfered with “current and prospective customers” of FortiNAC products is “sufficient to satisfy

5

federal pleading requirements.” Code Rebel, 2013 WL 5405706, at *6.
IV.

6

CONCLUSION

7

For the foregoing reasons, the Court DENIES Fortinet’s motion to dismiss.

8

This order disposes of Docket No. 115.

9
10

IT IS SO ORDERED.

United States District Court
Northern District of California

11
12

Dated: November 29, 2021

13
14
15

______________________________________
EDWARD M. CHEN
United States District Judge

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