Finjan, LLC v. Qualys Inc.

Background

Finjan sought financial information concerning Qualys’s foreign sales of accused products. The request was presented in a motion to compel discovery, meaning a request for an order requiring the opposing party to provide information.

The court began with the rule that patent infringement under 35 U.S.C. § 271(a) is generally limited to making, using, offering to sell, or selling the patented invention within the United States, or importing it into the United States. Foreign sales may nevertheless be relevant to damages when the accused products were made, used, offered for sale, or sold in the United States. The court also stated that the whole patented invention, rather than merely part of it, must be involved in the domestic conduct.

Parties’ Positions and Analysis

Qualys argued that Finjan’s infringement contentions stated that the accused products infringed only when combined with or connected to other devices and software on a network. According to Qualys, the contentions did not claim that Qualys used, offered for sale, or sold the patented technology in the United States for foreign customers, and domestic development alone was not enough to show that the foreign-sold products were made in the United States.

Finjan did not dispute Qualys’s characterization in the discovery briefing. Instead, Finjan argued that the Patent Local Rules allow infringement contentions to be amended for good cause, including after receiving nonpublic information in discovery, and that the requested discovery could help it obtain that information. At the hearing, Finjan also argued that its contentions disclosed a theory that Qualys domestically made the patented invention and then sold it abroad. The court rejected that argument as to the cited claim because the claim incorporated an analysis requiring a system with specified components, not merely software stored on a medium.

The court declined to resolve the parties’ factual dispute about whether the foreign sales involved products that infringed domestically. It concluded that the requested sales information did not bear on the primary conduct needed to establish those infringement theories. The court also noted that fact discovery was scheduled to close on October 1, 2020, Finjan had not moved to amend its infringement contentions, and Finjan’s new theories had not been made part of its liability case. The court clarified that infringement contentions do not always define the outer limits of discovery relevance, but found the timing and circumstances important here.

The court also rejected or found inadequate Finjan’s additional arguments that foreign customers benefited from security updates developed using information from U.S. customers, that Qualys induced foreign customers to infringe through a U.S.-based cloud platform, and that foreign sales showed commercial success. The court found those arguments either did not show that the foreign products infringed, did not explain how the requested information related to damages, or were too undeveloped to assess.

Ruling

Judge Hixson denied Finjan’s motion to compel the foreign-sales information. The order did not decide the disputed factual question of where Qualys’s alleged infringement occurred and did not hold that Patent Local Rule infringement contentions always establish the limits of discovery relevance.