Finjan Holdings, Inc. (NASDAQ: FNJN), the parent of wholly-owned subsidiary Finjan, Inc., recently announced that the Patent Trial and Appeal Board (PTAB) for the United States Patent & Trademark Office (USPTO) denied six of Symantec Corporations petitions for inter partes review (IPR) of Finjan patents.
“This is an unprecedented response by the US Patent Office, today denying the institution of six IPRs and all challenged claims filed by Symantec in response to our lawsuit filed against it in 2014,” stated Phil Hartstein, President and CEO of Finjan, upon learning of the decision of the PTAB.
The word “unprecedented” gets thrown around all too frequently unfortunately, but the use of the word here is entirely appropriate. That Finjan would prevail in six separate IPR institution decisions relating to the same patent litigation seems an extraordinary long shot. While Finjan has not said it in a press release or to me directly (see more later), allow me to notice that this speaks volumes both about the relative strength of the Finjan patents and the relative weakness of the Symantec invalidity case against these patents. If the PTAB wasn’t even willing to take another look in a proceeding that is so hopelessly stacked against the patent owner these patents are about as rock solid from a validity standpoint as they could possibly be.
Just last week Judge Pauline Newman of the United States Court of Appeals for the Federal Circuit in a dissenting opinion in Ethicon Endo-Surgery, Inc. v. Covidien LP, pointed out that the statutory design of the IPR process is so horribly one sided at the initiation decision point that it is by design practically set up to force affirmative institution decisions. She wrote:
The Director’s institution decision carries a different burden of persuasion, is decided on limited submissions before trial, and is barred from appeal. In its implementing regulations, the Office excludes all substantive evidence from the patent owner’s preliminary response, including expert declarations or other rebuttal evidence. 37 C.F.R. § 42.107(c). Thus the statutory structure favors institution, for the overarching purpose is to provide a forum for early, expeditious review of granted patents.
This critique of the IPR initiation process is perfectly on point and exactly why there have been so many decisions to institute IPRs against patent owners ever since this post grant challenge procedure became available in September 2012. Indeed, the USPTO has only three months to determine whether to institute an IPR proceeding, and will do so if the petitioner can demonstrate that there is a reasonable likelihood that at least one of the challenged claims is unpatentable. See 37 C.F.R. 42.108(c). The reasonable likelihood threshold is a particularly easy threshold to satisfy ordinarily given that the patent owner is not allowed to submit substantive evidence in a patent owner preliminary response. See 37 C.F.R. 42.107(c). That means Finjan was able to defeat the Symantec IPR petitions without the benefit of testimonial evidence, which they will be allowed to introduce should Symantec continue to challenge the validity of these patents at trial.
The patents Symantec challenged were:
U.S. Patent No. 7,756,996, which is entitled Embedding management data within HTTP messages, and relates to the efficient delivery of management data between a network management server and multiple client computers.
U.S. Patent No. 7,757,289, which is entitled System and method for inspecting dynamically generated executable code, and relates to computer security generally and more specifically to protection against malicious code such as computer viruses.
U.S. Patent No. 7,930,299, which is entitled System and method for appending security information to search engine results, and relates to a system and method for combining operation of a search engine with operation of a content security filter in order to provide security assessments for web pages and media content located by the search engine.
U.S. Patent No. 8,015,182, which like the ‘299 patent is entitled System and method for appending security information to search engine results, and similarly relates to a system and method for combining operation of a search engine with operation of a content security filter. Both the ‘299 and ‘182 patents share a common priority claim to a provisional patent application filed on November 30, 2015.
U.S. Patent No. 8,141,154, which is entitled System and method for inspecting dynamically generated executable code, and similarly to the ‘289 patent relates to protection against malicious code such as computer viruses.
At this point it is unclear whether the lawsuit filed by Finjan in the United States Federal District Court for the Northern District of California will proceed. The patent lawsuit filed by Finjan in July of 2014 (CAND-3-14-cv-02998) against Symantec alleged infringement of eight U.S. patents, the five patents mentioned above and U.S. Patent Nos. 6,154,844, 7,613,926, and 8,677,494. Federal District Court Judge Haywood Gilliam had ordered the case stayed pending the decision on the first five petitions, with the three remaining IPR petitions expected to be decided in March. The parties are now to submit a joint report to the court so Judge Gilliam can decide whether it makes sense to keep the stay in place or whether the case can proceed.
“Our patents are strong and we are really focused on winning on the merits,” said Julie Mar-Spinola, Chief Intellectual Property Officer, Vice President of Legal Operations and a Member of the newly formed Finjan Mobile, Inc. Board of Directors. “All the credit goes to Michael Kim and our outside counsel team at Kramer Levin.”
Mar-Spinola also attributes this success to Finjan recognizing the value of filing patent owner’s preliminary responses, a tool that surprisingly seems under utilized even if it is procedurally not ideally fair. “We have used a patent owner’s preliminary response since our first challenges and I think, generally speaking, it helps the PTAB judges to have the patent owners perspective, when they are trying to determine whether or not to grant institution.”
Patent owners are no doubt at a severe disadvantage at the institution decision stage of an inter partes review challenge. While a preliminary response can be filed, no testimonial evidence can be supplied by the patent owner for the PTAB to consider. That and the other monumental procedural hurdles facing the patent owner are obviously not insurmountable, and based on Finjan’s success it seems that patent owners should be making aggressive use of the patent owners preliminary response. If you have good patents and you take the IPR petition seriously you clearly have a chance to persuade the PTAB not to institute, which will no doubt pay great dividends in any subsequent patent litigation.
For those interested in the PTAB denial decisions see the following files:
Updated Tuesday, January 19, 2016, at 8:59am ET. An earlier version of this article incorrectly identified Finjan Holdings as a subsidiary of Finjan, Inc., and also incorrectly identified Julie Mar-Spinola as a Member of the Finjan Board of Directors.