Finjan, Inc. v. ESET, LLC et al

Filing 251

ORDER on Motion to Stay [Doc. No. 224 ]. Signed by Judge Cathy Ann Bencivengo on 5/7/2018. (jjg)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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FINJAN, INC.,

Case No.: 17-cv-00183-CAB-BGS
Plaintiff,

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v.

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ORDER ON MOTION TO SAY
[Doc. No. 224]

ESET, LLC and ESET SPOL. S.R.O.,
Defendants.

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The motion before the Court is a motion to stay litigation while the patents at issue

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are subject to review under the Inter Partes Review (IPR) procedures of the U.S. Patent

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Office. The Court finds the motion suitable for determination on the papers submitted and

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without oral argument in accordance with Civil Local Rule 7.1(d)(1). For the reasons set

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forth below, the motion is denied in part and granted in part.

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I.

Background

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Plaintiff Finjan, Inc. (“Finjan”), filed the initial complaint in this matter on July 1,

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2016 [Doc No. 1] against Defendants ESET, LLC and Eset Spol. S.R.O., (collectively

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“Defendants” or “Eset”) alleging infringement of United States Patent Nos. 6,154,844 (the

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“’844 Patent”); 6,804,780 (the “’780 Patent”); 7,975,305 (the “’305 Patent”); 8,079,086

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(the “’086 Patent”); 9,189,621 (the “’621 Patent”); and 9,219,755 (the “’755 Patent”). In

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April 2017, Eset filed its answers, asserting twelve affirmative defenses and sixteen

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counterclaims. [Doc. Nos. 118, 119.]

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The litigation has proceeded through the regular rounds of motion practice, including

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motions to dismiss, motions to transfer and an earlier motion to stay. On September 25-

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26, 2017 a claim construction hearing was held and a Preliminary Claim Construction

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Order issued.

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supplemental briefing on certain constructions. [Doc. Nos. 178-1, 181, 182, 183, 186, 187,

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190, 191.] On November 14, 2017, a Claim Construction Order issued. [Doc. No. 195.]

[Doc. Nos. 172, 174, 178-1.]

The Court requested and received

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Additionally, Finjan filed a Motion for Reconsideration of the Claim Construction

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Order. [Doc. No. 188.] Defendants filed a response in opposition [Doc. No. 194.] and

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Plaintiff filed its reply. [Doc. No. 196.] Finjan sought reconsideration on the grounds that

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the Court had not given appropriate deference to six decisions from three other district

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court judges regarding the term “before a web server makes the Downloadable available to

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web clients” in claims 1 and 15 of the ’844 patent. [Doc. No. 188-1.] The motion was

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denied at the February 26, 2018 case management conference. [Doc. No. 225.]

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On February 20, 2018, Defendants filed the motion to stay the litigation pending

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final resolution of ESET’s IPR petition on the sole unexpired patent in suit, the ’305 Patent.

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[Doc. No. 224.] Finjan opposed the motion. [Doc. No. 232.] Defendants filed a reply.

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[Doc. No. 238.] In addition, Finjan filed a Notice of Supplemental Authority Regarding

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Pending Motion to Stay. [Doc. No. 240.]

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II.

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Courts have inherent power to manage their dockets and stay proceedings. Factors

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to be considered are: (1) whether a stay will simplify the issues in question and trial of the

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case; (2) whether discovery is complete and whether a trial date has been set; and (3)

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whether a stay would unduly prejudice or present a clear tactical disadvantage to the

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nonmoving. TAS Energy, Inc. v. San Diego Gas & Elec. Co., 2014 WL 794215, at *3 (S.D.

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Cal. Feb. 26, 2014), citing Telemac Corp. v. Teledigital, Inc., 450 F. Supp. 2d 1107, 1111

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(N.D. Cal. 2006).

Legal Standard

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III.

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With regard to timing, the pleadings are finalized. Discovery is ongoing, with

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completion of document discovery anticipated on June 22, 2018, fact discovery closing on

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August 3, 2018 and expert discovery ending on September 28, 2018. [Doc. No. 214.]

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There has been a hearing on claim construction, [Doc. Nos. 172, 174], the issuance of a

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claim construction order [Doc. No. 195], and a trial date of February 4, 2019, has been set.

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[Doc. No. 214.]

Discussion

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Whether the stay would simplify the issues for trial is disputed. Defendants contend

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that following the IPR on all claims of the ’305 patent, the Patent Trial and Appeal Board

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(“PTAB”) will “invalidate those claims, thus significantly streamlining this litigation” and,

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as a result, the damages discovery and analysis will also be simplified. [Doc. No. 224-1 at

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10.] Relatedly, Eset asserts that should the ’305 claims survive IPR, the Board’s decision

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would engender a narrowing of the prior art available for invalidity defenses. [Id.] Finjan

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counters that the ’305 patent will likely be confirmed at the conclusion of the IPR

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proceeding. [Doc. No. 232. at 14-15.] The fact that the ’305 patent is currently in IPR

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weighs in favor of staying litigation of this specific patent.

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Further, Defendants assert a stay of the entire case is warranted because of: (1) the

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September 22, 2017, petition for IPR filed by Cisco Systems Inc., challengingly the validity

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of claims 1, 4, 5, 7, 8, 11, 15, 16, 21, and 43 of the ’844 patent; (2) the ongoing IPR initiated

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by Blue Coat Systems LLC, on March 1, 2017, challenging the validity of claims 1, and 6

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– 10 of the ’621 patent and; (3) the ongoing IPR initiated by Blue Coat Systems LLC, on

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July 15, 2016, challenging the validity of the claims 1, 5, 10, 13, and 15 of the ’621 patent.

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Defendants posit that these third party actions provide additional grounds for staying the

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entire action because these decisions could affect the claims in this litigation. [Doc. No.

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224-1 at 10-12.] Yet interestingly, while Defendants point to these instituted IPRs as

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grounds for a stay they have categorically stated on the record that they will not be bound

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by any determinations that they consider adverse to their position. The Court is not

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persuaded that these third party actions provide grounds for issuance of a stay. Further, as
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Finjan have demonstrated, the ’086 patent IPR has been terminated, the ’621 patent IPR

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will be terminated shortly, and the PTAB denied Cisco Systems’ petition to institute IPO

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on the ’844 patent on April 3, 2018. [Doc. Nos. 232 at 9-11; 240.] Therefore, “as it stands,

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there is only one instituted IPR for only one of the six Asserted Patents.” [Doc. No. 232 at

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8.]

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Finally, although the parties dispute whether Finjan will suffer undue prejudice or a

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clear tactical disadvantage beyond the delay inherent in the stay, the Court concludes that

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it would. Finjan’s efforts to develop and bring new products and services to market as well

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as license the patents-in-suit will be negatively impacted by a stay.

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At this time, the Court does not consider holding up litigation on five other patents

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while it awaits a determination from PTAB on the only other remaining patent at issue in

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the case to be a judicious use of its or the parties’ time and resources. The Court considers

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the most efficient route for this litigation is for it to proceed on all but the ‘305 patent. As

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to the ’305 patent, any other pending and further proceeding related to the ’305 patent are

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STAYED until the issuance of the Board’s decision. Consequently, Defendants’ motion

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to stay is denied in part and granted in part. [Doc. No. 224.]

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IT IS SO ORDERED.
Dated: May 7, 2018

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