Case 3:17-cv-00183-CAB-BGS Document 1052 Filed 11/21/23 PageID.50078 Page 1 of 5
`
`
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`UNITED STATES DISTRICT COURT
`
`SOUTHERN DISTRICT OF CALIFORNIA
`
`
`
`FINJAN LLC,
`
`v.
`
`ESET, LLC, et al,
`
`Plaintiff,
`
`Defendants.
`
` Case No.: 17-cv-183-CAB-BGS
`
`ORDER DENYING MOTION FOR
`ATTORNEYS FEES
`
`
`[Doc. No. 1026]
`
`Originally filed in 2016, this case was “exceptional” in many ways. However, the
`
`Court declines to find it exceptional pursuant to 35 U.S.C. § 285 and grant an award of
`
`attorney fees.
`
`I.
`
`INTRODUCTION
`
`This case was heavily litigated by both parties in seven years of litigation. Finjan
`
`filed this case against ESET, LLC and ESET, Spol. S.R.O. (collectively “ESET”) in 2016
`
`alleging willful infringement of six patents related to complicated anti-malware source
`
`code. An initial trial on five patents commenced in early March 2020. That trial was
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`1
`
`17-cv-183-CAB-BGS
`
`

`

`Case 3:17-cv-00183-CAB-BGS Document 1052 Filed 11/21/23 PageID.50079 Page 2 of 5
`
`
`
`abruptly terminated due to the COVID-19 pandemic, and the Court declared a mistrial for
`
`the public health and safety of the jury, witnesses, and litigants. [Doc. No. 783].
`
`This case was tried again before this Court between August 28, 2023 and September
`
`8, 2023 for eight days, in which Finjan asserted that the ESET entities infringed claims 1,
`
`7, and 15 of U.S. Patent No. 6,154,844 (‘844), claims 9 and 13 of U.S. Patent No. 6,
`
`804,780 (‘780), and claim 24 of U.S. Patent No. 8,079,086 (‘086). ESET counterclaimed
`
`alleging non-infringement, invalidity of the asserted patents, and other affirmative
`
`defenses.
`
`After eight days of trial, the jury returned its verdict that Finjan failed to establish
`
`that ESET infringed any of the asserted patents. While this rendered ESET the prevailing
`
`party in the litigation, the jury also found that ESET failed to establish any of its asserted
`
`defenses. ESET now brings a motion for attorney fees of $9.7 million. For the reasons
`
`asserted below, the Court DENIES ESET’s motion.
`
`II.
`
`STANDARD OF REVIEW
`
`Reasonable attorney fees may be awarded to the prevailing party in a patent
`
`infringement case only in “exceptional cases.” 35 U.S.C. § 285. A case is exceptional if it
`
`stands out from others with respect to either the (1) substantive strength of a party’s
`
`litigating position or (2) the unreasonable manner in which the case was litigated. Octane
`
`Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545, 554 (2014). “District courts
`
`may determine whether a case is exceptional in the case-by-case exercise of their
`
`discretion, considering the totality of the circumstances.” Id.
`
`Parties seeking attorney fees have the burden of establishing the case is exceptional
`
`by a preponderance of the evidence. Id. In determining whether to award fees, district
`
`courts may consider a nonexclusive list of factors, including “‘frivolousness, motivation,
`
`objective unreasonableness (both in the factual and legal components of the case) and the
`
`need in particular circumstances to advance considerations of compensation and
`
`deterrence.’” Id. at 554 n.6 (quoting Fogerty v. Fantasy, Inc., 510 U.S. 517, 534 n.19
`
`(1994)). There is no precise rule or formula for determining whether to award attorney’s
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`2
`
`17-cv-183-CAB-BGS
`
`

`

`Case 3:17-cv-00183-CAB-BGS Document 1052 Filed 11/21/23 PageID.50080 Page 3 of 5
`
`
`
`fees, but instead equitable discretion should be exercised in light of the above
`
`considerations. Id. At 554.
`
`III. DISCUSSION
`
`ESET requests attorney fees in the amount of $9.7 million for the period following
`
`the Court’s October 2017 claim construction order. In its motion, ESET argues this amount
`
`is justified because Finjan (1) knew or should have known that its infringement theories
`
`were “baseless”; (2) asserted “unserious” damages theories; and (3) engaged in trial
`
`misconduct throughout discovery and both trials. [Doc. No. 1026-1]. The Court is not
`
`convinced.
`
`“To be objectively baseless, the patentee’s assertions—whether manifested in its
`
`infringement allegations or its claim construction positions—must be such that no
`
`reasonable litigant could reasonably expect success on the merits.” Taurus IP, LLC v.
`
`DaimlerChrysler Corp., 726 F.3d 1306, 1327 (Fed. Cir. 2013) (quoting Dominant
`
`Semiconductors Sdn. Bhd. V. OSRAM GmbH, 524 F.3d 1254, 1260 (Fed. Cir. 2008))
`
`(internal quotations omitted). “The strength of a party’s litigation position is what is
`
`relevant to an exceptional case determination, not the correctness or success of that
`
`position.” FireBlok IP Holdings, LLC v. Hilti, Inc., 855 F. App’x 735, 739 (Fed. Cir.
`
`2021). “Fee awards are not to be used as a ‘penalty for failure to win a patent
`
`infringement suit.’” Stone Basket Innovations, LLC v. Cook Medical LLC, 892 F.3d 1175,
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`1184 (Fed. Cir. 2018).
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`The Court does not find Finjan’s infringement or damages theories were baseless or
`
`objectively unreasonable given the history of dispositive motions filed in this case. In
`
`October 2016, ESET filed two motions to dismiss for failure to state a claim, which were
`
`denied. [Doc. Nos. 105, 106]. In April 2019, both parties brought voluminous motions for
`
`summary judgment. The Court denied nearly all those motions except as to the exclusion
`
`of some of expert opinions and willful infringement. [Doc. Nos. 699, 720]. In August 2020,
`
`after the mistrial, the parties filed renewed motions for summary judgment. The Court
`
`granted ESET’s renewed motion as to indefiniteness, and judgment was entered in favor
`
`3
`
`17-cv-183-CAB-BGS
`
`

`

`Case 3:17-cv-00183-CAB-BGS Document 1052 Filed 11/21/23 PageID.50081 Page 4 of 5
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`of ESET. [Doc. No. 875]. Finjan appealed that judgment to the Federal Circuit. The Federal
`
`Circuit issued a mandate which reversed-in-part the Court’s October 2017 claim
`
`construction order, vacated the Court’s grant of summary judgment, and remanded the case
`
`for further proceedings. [Doc. No. 886]. Finally, after returning to this Court, ESET filed
`
`another set of summary judgment motions in advance of the 2023 trial, which were
`
`withdrawn and denied. [Doc. Nos. 928, 950].
`
`
`
`In light of the denial of the motions to dismiss, the failure of ESET to prevail on
`
`multiple motions for summary judgment, and the Federal Circuit’s mandate, ESET’s
`
`argument that Finjan should have known of its “baseless” infringement theories since the
`
`October 2017 claim construction is unpersuasive. Regardless of whether Finjan’s
`
`infringement theories shifted throughout the litigation, those theories withstood scrutiny
`
`by both this Court and the Federal Circuit. Additionally, ESET’s argument that Finjan
`
`dropped patents and claims on the eve of the 2023 trial is similarly unpersuasive, as it was
`
`done at the Court’s suggestion for a more efficient trial.
`
`15
`
`
`
`Furthermore, Finjan’s damages theories were not “unserious” enough to render this
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`case exceptional pursuant to section 285. The Court assessed the damages theories and, as
`
`ESET mentioned in its motion, “the Court permitted [Damages Expert Kevin Arst] a ‘do-
`
`over’ on his damages opinions, so long as he could tie his revised opinion to Finjan’s prior
`
`licenses.’” [Doc. No. 1026-1 at 18]. At the 2023 trial, Mr. Arst relied on the 2005 Licensing
`
`Agreement between Finjan and Microsoft and the Georgia-Pacific factors to give an
`
`opinion on damages. This is what the Court required of Finjan, and ESET has not
`
`demonstrated Finjan’s damages theories were “unserious” by a preponderance of the
`
`evidence. This case is not exceptional merely because Finjan’s theories did not prevail at
`
`trial. See FireBlok IP Holdings, LLC, 855 F. App’x at 739.
`
`Finally, ESET’s argument that Finjan engaged in exceptional trial misconduct is also
`
`unconvincing. In its motion, ESET argues that former counsel for Finjan violated
`
`protective orders during discovery. As with most discovery disputes, these violations were
`
`addressed by the magistrate judge. ESET also argues this case should be considered
`
`4
`
`17-cv-183-CAB-BGS
`
`

`

`Case 3:17-cv-00183-CAB-BGS Document 1052 Filed 11/21/23 PageID.50082 Page 5 of 5
`
`
`
`exceptional because Finjan’s counsel and experts tried to “mislead and confuse the jury”
`
`during the 2023 trial. [Doc. No. 1026-1 at 21]. The examples provided in ESET’s motion,
`
`such as Finjan’s allegedly “fake” impeachment practices and “fictitious” expert opinions
`
`[Doc. No. 1026-1 at 21], merely demonstrate Finjan’s ill-fated litigation strategy more than
`
`intentional misconduct.1
`
`IV. CONCLUSION
`
`Upon review of the totality of the circumstances, the Court does not find this case as
`
`“exceptional” to warrant attorney fees under section 285. The parties fought each other for
`
`seven years via voluminous motions for summary judgment, an appeal, and two trials. The
`
`jury found in ESET’s favor on Finjan’s claims and in Finjan’s favor on ESET’s defenses
`
`except the denial of infringement which ultimately made ESET the prevailing party. The
`
`litigation was not however so one-sided or objectively unreasonable as to find it
`
`exceptional and allow ESET to recover $9.7 million in fees. ESET’s motion is hereby
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`DENIED.
`
`15
`
`16
`
`
`
`It is SO ORDERED.
`
`17
`
`Dated: November 21, 2023
`
`
`
`18
`
`19
`
`20
`
`
`
`21
`
`22
`
`
`
`
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`
`
`1 ESET also states that “Finjan’s counsel attempted to incite panic amongst the jury by suggesting
`ESET’s witness could have jeopardized the health of the jury” when it “realized its infringement case
`had collapsed.” [Doc. No. 1026-1 at 21-22]. While the Court was displeased with Finjan’s counsel’s
`tactic to illustrate potential bias of a witness by invoking a COVID exposure issue in front of the jury,
`the Court declines to find this litigation strategy was designed to provoke a mistrial because Finjan
`assessed its case as failing.
`
`5
`
`17-cv-183-CAB-BGS
`
`