McAfee Loses Finjan Patent Infringement Appeal, Owes Damages

Federal judges deny McAfee's appeal to overturn the verdict in the patent infringement lawsuit with Finjan which would require it to pay more than $13 million in damages.

A federal appeals court has rejected McAfee's appeal to overturn the verdict in Finjan Software's patent infringement suit.

On Nov. 4, the United States Court of Appeals for the Federal Circuit in Washington upheld the finding that Secure Computing's Webwasher security line infringed on Finjan's security patents and as a result Secure Computing owed damages.

The appeals court sent the case back to district court to determine how much Finjan is owed for sales that occurred between March 2008, when the trial began, and August 2009, when a judge ordered Secure Computing to stop selling Webwaster products.

In Finjan Software v Secure Computing, Israel-based Finjan sued Secure Computing in 2006 for infringing on three of its proactive scanning patents. McAfee acquired Secure Computing in 2008. Secure Computing had counter-claimed in court that it was actually Finjan that had violated its patents.

In the lawsuit, Finjan said Secure Computing's Webwasher application used its proactive scanning technology, a security technique Finjan used in its products to detect and remove previously unknown Internet-based threats to computers, according to court documents. Finjan had registered the technology in 1996, according to court documents.

A jury agreed with Finjan and rejected Secure Computing's counter-claim. The jury awarded the closely-held company $9.18 million in damages and found that that the violation was intentional. Judge Gregory M Sleet of US District Court, District of Delaware, in Wilmington later increased the amount to more than $13.7 million to include "damages for infringing sales that the jury did not consider," according to court documents.

McAfee had appealed the damages and the infringement verdict. Finjan had filed a cross-appeal, seeking damages for the period between the verdict and when the injunction was issued.

"We also affirm the damages award, but remand for determination of post-judgment, pre-injunction damages," the judges wrote in the verdict.

McAfee has said it had redesigned Webwasher to avoid using Finjan's patents so the verdict should not apply to sales during the period in question. It also argued that the damages had been calculated based on the profits of Secure Computing as a company and not on the profits from the products in question. It also argued that the calculations included sales to the US government, which Finjan can't try to claim.

The circuit judges denied McAfee's request for new damages trial and instead ordered the lower court to recalculate damages to include the contested period.

However, the appellate judges reversed the verdict in one of the patents. Finjan had claimed three types of patent infringement, but since its evidence had indicated the possible infringement "may" have occurred in Germany, the claim was invalid.

Secure Computing offered three products that Finjan claimed violated its patents: Webwasher the free software download, Webwasher the hardware appliance, and its Cyberguard TSP hardware appliance, Finjan said in the lawsuit. The antivirus, anti-malware, and content protection capabilities on the three products used proactive scanning, Finjan said, according to court documents.

McAfee is currently in the process of going through regulatory approvals for its acquisition by Intel. The acquisition is expected to complete either before the end of the year of mid-2011, according to Intel and McAfee.

Finjan sold most of its technology assets to security vendor M86 Security in July, but retained its portfolio of 12 computer-security related patents. Besides this McAfee/Secure Computing appeal, Finjan also sued Symantec, McAfee, Webroot Software, Websense, and Sophos in July for patent infringement of two patents. M86 Security has distanced itself from the lawsuits, saying the acquisition did not included patents.