Finjan, Inc. v. Fireeye, Inc.

Filing 86

ORDER by Judge Saundra Brown Armstrong denying #81 Renewed Motion to Stay and REOPENING the Case. (fs, COURT STAFF) (Filed on 3/28/2017)

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UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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OAKLAND DIVISION

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FINJAN, INC., a Delaware Corporation,

Case No: C 13-03133 SBA

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Plaintiff,
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vs.

ORDER DENYING RENEWED
MOTION TO STAY AND
REOPENING THE CASE

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FIREEYE, INC., a Delaware Corporation,

Dkt. 81

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Defendant.
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Plaintiff Finjan, Inc. (“Finjan”) brings the instant patent infringement action against

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Defendant FireEye, Inc. (“FireEye”), alleging infringement of U.S. Patent Nos. 6,804,780

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(“the ’780 patent”), 8,079,086 (“the ’086 patent”), 7,975,305 (“the ’305 patent”), 8,225,408

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(“the ’408 patent”), 7,058,822 (“the ’822 patent”), 7,647,633 (“the ’633 patent”), and

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6,154,844 (“the ’844 patent”) (collectively, the “patents-in-suit”). First Am. Compl.

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(“FAC”), Dkt. 11. The Court previously stayed the action pending reexamination with

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respect to certain of those patents.

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The parties are presently before the Court on FireEye’s renewed motion to stay the

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action pending ex parte reexamination and in partes review of several of the patents-in-suit.

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Dkt. 81. Having read and considered the papers filed in connection with this matter and

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being fully informed, the Court hereby DENIES Defendant’s motion, for the reasons stated

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below. The Court, in its discretion, finds this matter suitable for resolution without oral

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argument. See Fed. R. Civ. P. 78(b); N.D. Cal. Civ. L.R. 7-1(b).

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I.

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BACKGROUND
Finjan brought the instant infringement action on July 8, 2013, and filed the

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operative First Amended Complaint on August 16, 2013. Dkt. 1, 11. On September 3,

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2013, FireEye filed an Answer and Counterclaim, seeking a declaratory judgment of non-

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infringement and invalidity as to each of the patents-in-suit. Dkt. 13.

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Shortly thereafter, FireEye filed requests with the Patent and Trademark Office

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(“PTO”) for ex parte reexamination of the ’086, ’822, and ’633 patents. On October 7,

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2013, FireEye moved to stay this action pending resolution of the reexamination

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proceedings. Dkt. 28. The Court granted FireEye’s motion and administratively closed the

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case. Order Granting Mot. to Stay Pending Reexam. (“Initial Stay Order”), Dkt. 72.

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In September 2016, the parties filed a Joint Status Report notifying the Court that the

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aforementioned reexamination proceedings have concluded. Dkt. 79. However, in the

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same filing, FireEye notified the Court that four of the seven patents-in-suit are the subject

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of additional proceedings before the PTO. Id. Thereafter, FireEye filed the instant motion

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to continue the stay of this action pending resolution of the additional proceedings before

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the PTO. Dkt. 81. Finjan opposes the motion. Dkt. 82.

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On March 22, 2017, Finjan also filed a Statement of Recent Decisions, notifying the

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Court of decisions in several of the additional PTO proceedings. Dkt. 85.

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II.

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LEGAL STANDARDS
A district court has inherent power to stay judicial proceedings pending the review

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or reexamination of a patent by the PTO. Proctor & Gamble Co. v. Kraft Foods Glob., Inc.,

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549 F.3d 842, 849 (Fed. Cir. 2008) (citing Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1427

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(Fed. Cir. 1988)). In deciding whether to stay a patent infringement action pending the

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resolution of proceedings before the PTO, courts in this district consider: (1) whether

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discovery is complete and whether a trial date has been set; (2) whether a stay will simplify

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the issues in question and trial of the case; and (3) whether a stay would unduly prejudice

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or present a clear tactical disadvantage to the nonmoving party. PersonalWeb Techs., LLC

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v. Apple Inc., 69 F. Supp. 3d 1022, 1025 (N.D. Cal. 2014) (citations omitted).
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III.

DISCUSSION

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A.

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The first factor for the Court’s consideration is the stage of the litigation. Courts

STAGE OF THE LITIGATION

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may consider: (1) whether the parties have engaged in costly expert discovery and

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dispositive motion practice; (2) whether the court has issued its claim construction order;

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and (3) whether the court has set a trial date. Personal Web Techs., LLC, 69 F. Supp. 3d at

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1025-26 (citations omitted). A stay is particularly appropriate in cases that are still in the

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initial stages of litigation and where there has been little or no discovery. Telemac Corp. v.

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Teledigital, Inc., 450 F. Supp. 2d 1107, 1111 (N.D. Cal. 2006).

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Here, as the Court found when it granted FireEyes’s initial motion to stay the action,

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“the stage of the litigation factor weighs in favor of a stay.” Initial Stay Order at 2. This is

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unsurprising, given that the Court initially stayed the action “at such an early stage of the

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litigation.” Id. The Court has set no pretrial or trial dates in this matter. Aside from

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Finjan’s Disclosure of Asserted Claims and Infringement Contentions, the parties have not

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completed any discovery. Nor have the parties exchanged claim construction materials or

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filed any disposition motions. The instant litigation therefore remains in its initial stages.

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Despite the foregoing, Finjan argues that this case is not in its early stages because it

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“has been pending more than three years during which time FireEye litigated the validity of

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the ’633 and ’822 Patents before the [Patent Trial and Appeal Board (‘PTAB’)].” Opp’n at

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5. The Court notes that “[the first] element of the stay analysis focuses on the stage of

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litigation proceedings, not the length of time that has passed since the filing of the case.”

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Wireless Recognition Techs. v. A9.com Inc., 2012 WL 4005459, at *2 (N.D. Cal. 2012);

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accord LifeScan, Inc. v. Shasta Techs., LLC, 2013 WL 11449819, at *2 (N.D. Cal. 2013).

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Furthermore, although the PTO has already reexamined a subset of the patents-in-suit, the

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institution of additional reexamination and review proceedings means that the procedural

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posture of the action remains largely unchanged. Thus, the infancy of this action militates

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slightly in favor of a stay.

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B.

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The second factor for the Court’s consideration is simplification of the issues. “A

SIMPLIFICATION OF ISSUES

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stay is favored where ‘the outcome of the reexamination would be likely to assist the court

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in determining patent validity and, if the claims were canceled in the reexamination, would

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eliminate the need to try the infringement issue.’” Personal Web Techs., LLC, 69 F. Supp.

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3d at 1027 (quoting Slip Track Sys. Inc. v. Metal Lite, Inc., 159 F.3d 1337, 1341 (Fed. Cir.

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1998)). “The standard is simplification of the district court case, not complete elimination

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of it by the PTAB.” Finjan Inc. v. Symantec Corp., 139 F. Supp. 3d 1032, 1036 (N.D. Cal.

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2015) (citation omitted). Nevertheless, granting a stay is more likely to meaningfully

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simplify a case when a party has obtained PTO review of all or a substantial portion of the

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patents-in-suit. Id.; Robert Bosch Healthcare Sys., Inc. v. Cardiocom, LLC, 2014 WL

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3107447 at *5 (N.D. Cal. 2014).

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The Court notes that the status of the proceedings before the PTO has shifted greatly

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since FireEye filed the instant motion. At the outset, the ’408 patent was the subject of

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inter partes review (IPR2015-02001 and IPR2016-00157), as well as a separate petition for

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inter partes review (IPR2016-01441); the ’633 patent was the subject of inter partes review

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(IPR2015-01974); the ’086 patent was the subject of a petition for inter partes review

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(IPR2016-01444); and the ’305 patent was the subject of ex parte reexamination

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(90/013,660). The PTO recently issued decisions concluding four of those five

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proceedings. Specifically, the PTO issued decisions confirming the validity of the ’408

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patent (IPR2015-02001 and IPR 2016-00157), and denying the institution of further inter

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partes review of that patent (IPR2016-01441); confirming the validity of the ’633 patent

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(IPR2015-01974); and denying the institution of inter partes review of the ’086 patent.

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Statement of Recent Decision, ¶¶ 1-4, Ex. A-D.

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Of the seven patents-in-suit, only one—the ’305 patent—is currently the subject of

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proceedings before the PTO. As to the ’305 patent, the PTO has already issued a Final

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Office Action invalidating four of its claims. Cunningham Decl., Ex. 8, Dkt. 81-1.

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Although the Final Office Action is subject to further appeal, the remaining claims of the
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’305 patent (roughly 70% of the patent’s claims overall) are unchallenged. Issues will

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therefore undoubtedly remain for the Court’s determination upon completion of the

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reexamination process. Consequently, the second factor weighs heavily against a stay.

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See, e.g., Esco Corp. v. Berkeley Forge & Tool, Inc., 2009 WL 3078463, at *3 (N.D. Cal.

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2009) (denying a stay upon finding that issues likely would remain for the Court’s

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determination because one of two patents at issue had survived reexamination by the PTO).

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C.

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The third factor for the Court’s consideration examines whether a stay would unduly

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UNDUE PREJUDICE

prejudice or present a clear tactical disadvantage to the non-moving party. Although

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FireEye and Finjan were not direct competitors when the initial stay took effect, Finjan

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asserts that the two companies are competitors presently. Finjan thus asserts prejudice in

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the form of direct market competition and impairment of its licensing efforts.

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The Court does not dwell unnecessarily on this factor, given how strongly the

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second factor weighs against the continuation of the stay. In brief, assuming that Finjan

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and FireEye are direct competitors, “courts in this district require ‘evidence to substantiate

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an argument that direct competition will result in prejudice to the non-moving party.’”

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Finjan, Inc., 139 F. Supp. 3d at 1037-38 (quoting Cypress Semiconductor Corp. v. GSI

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Tech., Inc., 2014 WL 5021100, at *5 (N.D. Cal. 2014) (collecting cases)). Finjan has failed

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to provide such evidence. Additionally, absent a showing that a litigant’s competitive

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position would be prejudiced, courts have consistently found that a licensor does not risk

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irreparable harm from a stay because monetary damages provide adequate redress for

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infringement. Id. at 1038; PersonalWeb Techs., LLC, 69 F. Supp. 3d 1029. Hence, this

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factor does not tip the scales either in favor of, or against, a stay.

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IV.

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CONCLUSION
Taking all three of the pertinent factors into consideration, the Court finds that a

continued stay of the action is unwarranted. Accordingly,

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IT IS HEREBY ORDERED THAT:

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FireEye’s renewed motion to stay is DENIED.
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The Clerk shall REOPEN the case forthwith.

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This Order terminates Docket 81.

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IT IS SO ORDERED.

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Dated: 3/28/17

______________________________
SAUNDRA BROWN ARMSTRONG
Senior United States District Judge

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