Collateral Estoppel Results In Summary Judgment On Priority Date, Finjan, Inc. v. Proofpoint, Inc., et al., Case No. 13-cv-05808 (Judge Haywood Stirling Gilliam, Jr.)

How does an accused infringer use a patentee’s prior $40 million infringement win against the patentee? Defendant Proofpoint bolstered its invalidity position by successfully moving to limit patentee Finjan to a later priority date for one of its patents, based on the findings from a related bench trial that otherwise produced a favorable ruling for Finjan.

Although Judge Gilliam’s order is heavily redacted and involved several issues, it is worth highlighting the public details surrounding his finding that Finjan was collaterally estopped from asserting an earlier priority date for one of the asserted patents. Proofpoint moved for summary judgment that Finjan was stuck with a 1997 priority date for that asserted patent, based on collateral estoppel arising from the outcome of Finjan’s prior case against a different competitor. In the earlier case—Finjan v. Blue Coat—a jury in November 2015 found the patent to be valid and infringed and awarded Finjan nearly $40 million in damages. The jury also made a provisional finding that the patent was entitled to an earlier, November 8, 1996 priority date. However, following a bench trial on that and several other issues, Judge Freeman found that the patent was only entitled to a December 22, 1997 priority date, and not the date of the earlier provisional application.

Leap forward six months to the Proofpoint litigation. Finjan opposed Proofpoint’s summary judgment on collateral estoppel, arguing that the patent’s conception date was not essential to the final judgment in the prior case, since the jury found the patent was not invalid and Judge Freeman ultimately upheld that finding. According to Finjan, the jury’s conclusion meant that the conception date did not matter, even if Judge Freeman determined its application filing date, as opposed to its conception date, controlled the issue of what prior art could be asserted against the patent.

Judge Gilliam quickly dismissed that argument, saying “[i]t is of no consequence that the [District Court’s] determination [of the priority date] did not affect the jury’s validity finding, given that the determination [by Judge Freeman that, contrary to what the jury concluded, the priority date should be accorded the patent’s later 1997 application filing date] was made following a bench trial at which the priority date for the ’844 Patent was one of five issues decided.” Indeed, Judge Freeman’s final judgment upholding the validity of the patent, but concluding its priority date was the 1997 application filing date, referred to the specific findings of fact she made as a result of the bench trial, including her finding that Finjan had not proven it was diligent prior to 1997 in reducing to practice the invention described in the patent. That finding of fact reflected that the 1997 priority date was, in fact, essential to Judge Freeman’s validity findings.

The outcome of the summary judgment is that additional prior art is available for Proofpoint to use in trying to invalidate Finjan’s patent. The takeaway is that Finjan’s Blue Coat case was a mixed bag—Finjan may have won a hefty damages judgment, but the findings from the bench trial leave its patent subject to additional invalidity challenges in later cases.