United States Court of Appeals 

for the Federal Circuit ______________________ 

FINJAN, INC.,

Plaintiff-Appellee

v.

BLUE COAT SYSTEMS, INC.,

Defendant-Appellant

______________________ 

2016-2520

______________________ 

Appeal from the United States District Court for the 

Northern District of California in No. 5:13-cv-03999-BLF, 

Judge Beth Labson Freeman.

______________________ 

Decided: January 10, 2018

______________________ 

 PAUL J. ANDRE, Kramer Levin Naftalis & Frankel 

LLP, Menlo Park, CA, argued for plaintiff-appellee. Also 

represented by JAMES R. HANNAH, LISA KOBIALKA. 

 MARK A. LEMLEY, Durie Tangri LLP, San Francisco, 

CA, argued for defendant-appellant. Also represented by 

SONALI DEEKSHA MAITRA, SONAL NARESH MEHTA,

CLEMENT ROBERTS; OLIVIA M. KIM, EDWARD POPLAWSKI, 

Wilson, Sonsini, Goodrich & Rosati, P.C., Los Angeles, 

CA.

______________________ 
2 FINJAN, INC. v. BLUE COAT SYSTEMS, INC. 

Before DYK, LINN, and HUGHES, Circuit Judges.

DYK, Circuit Judge. 

A jury found Blue Coat Systems, Inc. (“Blue Coat”) liable for infringement of four patents owned by Finjan, 

Inc. (“Finjan”) and awarded approximately $39.5 million

in reasonable royalty damages. After trial, the district 

court concluded that the ’844 patent was patent-eligible 

under 35 U.S.C. § 101 and denied Blue Coat’s post-trial 

motions for judgment as a matter of law (“JMOL”) and a 

new trial. Blue Coat appeals.

We find no error in the district court’s subject matter 

eligibility determination as to the ’844 patent and agree 

that substantial evidence supports the jury’s finding of 

infringement of the ’844 and ’731 patents. However, we 

conclude that Blue Coat was entitled to JMOL of noninfringement for the ’968 patent because the accused 

products do not perform the claimed “policy index” limitation. On appeal, Blue Coat does not challenge the verdict 

of infringement for the ’633 patent. 

With respect to damages, we affirm the award with 

respect to the ’731 and ’633 patents. We vacate the damages award for the ’968 patent, as there was no infringement. With respect to the ’844 patent, we agree with Blue 

Coat that Finjan failed to apportion damages to the 

infringing functionality and that the $8-per-user royalty 

rate was unsupported by substantial evidence. 

We therefore affirm-in-part, reverse-in-part, and remand to the district court for further consideration of the 

damages issue as to the ’844 patent. 

BACKGROUND

On August 28, 2013, Finjan brought suit against Blue 

Coat in the Northern District of California for infringement of patents owned by Finjan and directed to identifying and protecting against malware. Four of those patents 
FINJAN, INC. v. BLUE COAT SYSTEMS, INC. 3

are at issue on appeal. Claims 1, 7, 11, 14, and 41 of U.S. 

Patent No. 6,154,844 (“the ’844 patent”) recite a system 

and method for providing computer security by attaching 

a security profile to a downloadable. Claims 1 and 17 of

U.S. Patent No. 7,418,731 (“the ’731 patent”) recite a 

system and method for providing computer security at a 

network gateway by comparing security profiles associated with requested files to the security policies of requesting users. Claim 1 of U.S. Patent No. 6,965,968 (“the ’968 

patent”) recites a “policy-based cache manager” that

indicates the allowability of cached files under a plurality 

of user security policies. Claim 14 of U.S Patent No. 

7,647,633 (“the ’633 patent”) relates to a system and 

method for using “mobile code runtime monitoring” to 

protect against malicious downloadables. 

After a trial, the jury found that Blue Coat infringed 

these four patents and awarded Finjan approximately 

$39.5 million for Blue Coat’s infringement: $24 million for 

the ’844 patent, $6 million for the ’731 patent, $7.75 

million for the ’968 patent, and $1,666,700 for the ’633 

patent. After a bench trial, the district court concluded 

that the ’844 patent is directed to patent-eligible subject 

matter under 35 U.S.C. § 101.

Thereafter, the district court denied Blue Coat’s motions for judgment as a matter of law and a new trial, 

concluding that Finjan had provided substantial evidence 

to support each finding of infringement and the damages 

award. Blue Coat appeals the district court’s rulings on 

subject matter eligibility of the ’844 patent; infringement 

of the ’844, ’731, and ’968 patents; and damages for the 

’844, ’731, ’968, and ’633 patents. We have jurisdiction 

pursuant to 28 U.S.C. § 1295(a)(1). 
4 FINJAN, INC. v. BLUE COAT SYSTEMS, INC. 

DISCUSSION

I. Subject Matter Eligibility of the ’844 Patent

We first address subject matter eligibility with respect 

to the ’844 patent. We review the district court’s decision

de novo. McRO, Inc. v. Bandai Namco Games Am. Inc., 

837 F.3d 1299, 1311 (Fed. Cir. 2016).

Section 101 provides that a patent may be obtained 

for “any new and useful process, machine, manufacture, 

or composition of matter, or any new and useful improvement thereof.” 35 U.S.C. § 101. The Supreme Court has 

long recognized, however, that § 101 implicitly excludes 

“laws of nature, natural phenomena, and abstract ideas”

from the realm of patent-eligible subject matter, as monopolization of these “basic tools of scientific and technological work” would stifle the very innovation that the 

patent system aims to promote. Alice Corp. v. CLS Bank 

Int’l, 134 S. Ct. 2347, 2354 (2014) (quoting Ass’n for 

Molecular Pathology v. Myriad Genetics, Inc., 133 S. Ct. 

2107, 2116 (2013)); see also Mayo Collaborative Servs. v. 

Prometheus Labs., Inc., 132 S. Ct. 1289, 1294-97 (2012); 

Diamond v. Diehr, 450 U.S. 175, 185 (1981).

The Supreme Court has instructed us to use a twostep framework to “distinguish[] patents that claim laws 

of nature, natural phenomena, and abstract ideas from 

those that claim patent-eligible applications of those 

concepts.” Alice, 134 S. Ct. at 2355. At the first step, we 

determine whether the claims at issue are “directed to” a 

patent-ineligible concept. Id. If they are, we then “consider the elements of each claim both individually and ‘as an 

ordered combination’ to determine whether the additional 

elements ‘transform the nature of the claim’ into a patenteligible application.” Id. (quoting Mayo, 132 S. Ct. at 

1298). This is the search for an “inventive concept”—

something sufficient to ensure that the claim amounts to 

“significantly more” than the abstract idea itself. Id. 

(quoting Mayo, 132 S.Ct. at 1294).
FINJAN, INC. v. BLUE COAT SYSTEMS, INC. 5

Starting at step one, we must first examine the ’844 

patent’s “claimed advance” to determine whether the 

claims are directed to an abstract idea. Affinity Labs of 

Tex., LLC v. DIRECTV, LLC, 838 F.3d 1253, 1257 (Fed. 

Cir. 2016). In cases involving software innovations, this 

inquiry often turns on whether the claims focus on “the 

specific asserted improvement in computer capabilities . . . or, instead, on a process that qualifies as an 

‘abstract idea’ for which computers are invoked merely as 

a tool.” Enfish, LLC v. Microsoft Corp., 822 F.3d 1327, 

1335–36 (Fed. Cir. 2016). 

The ’844 patent is directed to a method of providing

computer security by scanning a downloadable and attaching the results of that scan to the downloadable itself 

in the form of a “security profile.” Claim 1 of the ’844 

patent, which the district court found representative for 

§ 101 purposes, reads:

1. A method comprising:

receiving by an inspector a Downloadable;

generating by the inspector a first Downloadable 

security profile that identifies suspicious code in 

the received Downloadable; and

linking by the inspector the first Downloadable 

security profile to the Downloadable before a web 

server makes the Downloadable available to web 

clients.

’844 patent, col. 11 ll. 11–21. At claim construction, the 

parties agreed that “Downloadable” should be construed 

to mean “an executable application program, which is 

downloaded from a source computer and run on the 

destination computer.” Additionally, the district court 

construed “Downloadable security profile that identifies 

suspicious code in the received Downloadable” to mean “a 

profile that identifies code in the received Downloadable 

that performs hostile or potentially hostile operations.” 
6 FINJAN, INC. v. BLUE COAT SYSTEMS, INC. 

We determined in Intellectual Ventures I LLC v. Symantec Corp., 838 F.3d 1307, 1319 (Fed. Cir. 2016), that 

“[b]y itself, virus screening is well-known and constitutes 

an abstract idea.” We also found that performing the virus 

scan on an intermediary computer—so as to ensure that 

files are scanned before they can reach a user’s computer—is a “perfectly conventional” approach and is also

abstract. Id. at 1321. Here the claimed method does a 

good deal more. 

Claim 1 of the ’844 patent scans a downloadable and 

attaches the virus scan results to the downloadable in the 

form of a newly generated file: a “security profile that 

identifies suspicious code in the received Downloadable.”

The district court’s claim construction decision emphasizes that this “identif[y] suspicious code” limitation can only 

be satisfied if the security profile includes “details about 

the suspicious code in the received downloadable, such 

as . . . ‘all potentially hostile or suspicious code operations 

that may be attempted by the Downloadable.’” Finjan, 

Inc. v. Blue Coat Sys., Inc., No. 13-CV-03999-BLF, 2014 

WL 5361976, at *9 (N.D. Cal. Oct. 20, 2014). The security 

profile must include the information about potentially

hostile operations produced by a “behavior-based” virus 

scan. This operation is distinguished from traditional, 

“code-matching” virus scans that are limited to recognizing the presence of previously-identified viruses, typically 

by comparing the code in a downloadable to a database of 

known suspicious code. The question, then, is whether 

this behavior-based virus scan in the ’844 patent constitutes an improvement in computer functionality. We 

think it does.

The “behavior-based” approach to virus scanning was 

pioneered by Finjan and is disclosed in the ’844 patent’s 

specification. In contrast to traditional “code-matching” 

systems, which simply look for the presence of known 

viruses, “behavior-based” scans can analyze a downloadable’s code and determine whether it performs poten-
FINJAN, INC. v. BLUE COAT SYSTEMS, INC. 7

tially dangerous or unwanted operations—such as renaming or deleting files. Because security profiles communicate the granular information about potentially suspicious 

code made available by behavior-based scans, they can be 

used to protect against previously unknown viruses as 

well as “obfuscated code”—known viruses that have been 

cosmetically modified to avoid detection by code-matching 

virus scans. 

The security profile approach also enables more flexible and nuanced virus filtering. After an inspector generates a security profile for a downloadable, a user’s 

computer can determine whether to access that downloadable by reviewing its security profile according to the 

rules in whatever “security policy” is associated with the 

user. Administrators can easily tailor access by applying

different security policies to different users or types of 

users. And having the security profile include information 

about particular potential threats enables administrators 

to craft security policies with highly granular rules and to 

alter those security policies in response to evolving 

threats. 

Our cases confirm that software-based innovations 

can make “non-abstract improvements to computer technology” and be deemed patent-eligible subject matter at 

step 1. Enfish, 822 F.3d at 1335–36. In Enfish, for instance, the court determined that claims related to a 

database architecture that used a new, self-referential 

logical table were non-abstract because they focused on 

“an improvement to computer functionality itself, not on 

economic or other tasks for which a computer is used in 

its ordinary capacity.” Id. at 1336. Indeed, the selfreferential database found patent eligible in Enfish did 

more than allow computers to perform familiar tasks with 

greater speed and efficiency; it actually permitted users to 

launch and construct databases in a new way. While 

deployment of a traditional relational database involved 

“extensive modeling and configuration of the various 
8 FINJAN, INC. v. BLUE COAT SYSTEMS, INC. 

tables and relationships in advance of launching the 

database,” Enfish’s self-referential database could be 

launched “with no or only minimal column definitions” 

and configured and adapted “on-the-fly.” Id. at 1333. 

Similarly, the method of claim 1 employs a new kind 

of file that enables a computer security system to do 

things it could not do before. The security profile approach 

allows access to be tailored for different users and ensures 

that threats are identified before a file reaches a user’s 

computer. The fact that the security profile “identifies 

suspicious code” allows the system to accumulate and 

utilize newly available, behavior-based information about 

potential threats. The asserted claims are therefore 

directed to a non-abstract improvement in computer 

functionality, rather than the abstract idea of computer 

security writ large.

Even accepting that the claims are directed to a new 

idea, Blue Coat argues that they remain abstract because 

they do not sufficiently describe how to implement that 

idea. To support this argument, Blue Coat points to 

Apple, Inc. v. Ameranth, Inc., where we invalidated claims 

related to a computer system that can generate a second 

menu from a first menu based on a selection of items on 

the first menu. 842 F.3d 1229, 1240–41 (Fed. Cir. 2016).

In that case, we held that the patents were directed to an 

abstract idea because they “d[id] not claim a particular 

way of programming or designing the software . . . but 

instead merely claim the resulting systems.” Id. at 1241. 

Blue Coat also relies on Affinity Labs, where we held that 

a claim related to wirelessly communicating regional 

broadcast content to an out-of-region recipient was abstract and patent ineligible because there was nothing in 

the claim “directed to how to implement [the idea]. Rather, the claim is drawn to the idea itself.” 838 F.3d at

1258. And Blue Coat also notes that, in Intellectual Ventures, we found claims directed to email filtering to be 

abstract and patent ineligible when there is “no re-
FINJAN, INC. v. BLUE COAT SYSTEMS, INC. 9

striction on how the result is accomplished . . . [and] [t]he 

mechanism . . . is not described.” 838 F.3d 1307, 1316 

(Fed. Cir. 2016) (quoting Internet Patents Corp. v. Active 

Network, Inc., 790 F.3d 1343, 1348 (Fed. Cir. 2015)).

Apple, Affinity Labs, and other similar cases hearken 

back to a foundational patent law principle: that a result, 

even an innovative result, is not itself patentable. See 

Corning v. Burden, 56 U.S. 252, 268 (1853) (explaining 

that patents are granted “for the discovery or invention of 

some practicable method or means of producing a beneficial result or effect . . . and not for the result or effect 

itself”); O’Reilly v. Morse, 56 U.S. 62, 112–113 (1853) 

(invalidating a claim that purported to cover all uses of 

electromagnetism for which “the result is the making or 

printing intelligible characters, signs, or letters at a 

distance” as “too broad, and not warranted by law”).

Here, the claims recite more than a mere result. Instead, they recite specific steps—generating a security 

profile that identifies suspicious code and linking it to a 

downloadable—that accomplish the desired result. Moreover, there is no contention that the only thing disclosed 

is the result and not an inventive arrangement for accomplishing the result. There is no need to set forth a further 

inventive concept for implementing the invention. The 

idea is non-abstract and there is no need to proceed to 

step two of Alice. 

II. Infringement

At trial, the jury found that Blue Coat’s products infringed the ’844, ’731, and ’968 patents. The district court 

denied Blue Coat’s post-trial motions for judgment as a 

matter of law and a new trial, finding that Finjan had 

provided substantial evidence to support each finding of 

infringement and that the jury verdict was not against 

the weight of the evidence. We review denials of motions 

for JMOL de novo and motions for new trial for abuse of 
10 FINJAN, INC. v. BLUE COAT SYSTEMS, INC. 

discretion. Revolution Eyewear, Inc. v. Aspex Eyewear, 

Inc., 563 F.3d 1358, 1370–71 (Fed. Cir. 2009). 

A. ’844 Patent

Blue Coat first argues that the district court should 

have granted JMOL of non-infringement as to the asserted claims in the ’844 patent because substantial evidence 

did not support the jury verdict. Specifically, Blue Coat 

contends that the asserted claims, requiring linking a 

security profile to a downloadable “before a web server 

makes the Downloadable available to web clients,” can 

only be infringed by a server-side product that evaluates 

content before it is published to the Internet in the first 

place. Blue Coat’s product, WebPulse, is a cloud-based 

service that provides information about downloadables to 

a customer’s network gateway in order to help the network gateway determine whether a particular downloadable can be accessed by a specific end user. Because 

WebPulse only evaluates downloadables that are already 

publicly available on the Internet, Blue Coat argues that 

it does not infringe. 

Blue Coat made no request for a claim construction

that would require linking the security profile to the 

downloadable before the downloadable is placed on the 

Internet. Blue Coat cannot raise the claim construction 

issue for the first time in post-trial motions: “it is too late 

at the JMOL stage to argue for or adopt a new and more 

detailed interpretation of the claim language and test the 

jury verdict by that new and more detailed interpretation.” Hewlett-Packard Co. v. Mustek Sys., Inc., 340 F.3d 

1314, 1321 (Fed. Cir. 2003). Under such circumstances, 

“the question for the trial court is limited to whether 

substantial evidence supports the jury’s verdict under the 

issued construction.” Wi-Lan, Inc. v. Apple, Inc., 811 F.3d 

455, 465 (Fed. Cir. 2016). Here, the claim, as construed by 

the district court, requires “linking by the inspector the 

first Downloadable security profile to the Downloadable 
FINJAN, INC. v. BLUE COAT SYSTEMS, INC. 11

before [a/the] non-network gateway web server make[s] 

the Downloadable available to web clients.” ’844 patent, 

col. 11 ll. 18-20; J.A. 25. The jury was instructed to apply

this construction. 

It was reasonable for the jury to interpret “web clients” in this context to refer to the specific web clients 

protected by the claimed system. Likewise, the limitation 

requiring that linking occur before a downloadable is 

“ma[de] . . . available to web clients” could reasonably be 

understood to require that linking occur at some point 

before users are permitted to access that downloadable—

but not necessarily before the downloadable is made 

available on the Internet. Blue Coat concedes that, at the 

time a security profile is linked, the “particular web client 

cannot yet receive the downloadable—but the web server has made it available . . . .” Reply Br. 9. Given the 

undisputed evidence that WebPulse links security profiles 

to downloadables before downloadables can be received by

users of the service, we find that the ’844 infringement 

verdict was supported by substantial evidence. 

B. ’731 Patent

We next consider Blue Coat’s claim that it was entitled to JMOL of non-infringement as to the asserted 

claims of the ’731 patent. The ’731 patent is directed to a 

computer gateway that protects a private intranet from 

malicious software embedded in webpages on the public 

Internet.1 The claimed gateway operates by scanning 

 

1 Claim 1 of the ’731 patent reads: 

1. A computer gateway for an intranet of computers, comprising:

a scanner for scanning incoming files from the 

Internet and deriving security profiles for the 

incoming files, wherein each of the security 
12 FINJAN, INC. v. BLUE COAT SYSTEMS, INC. 

potentially malicious files and creating “security profiles” 

that each comprise “a list of computer commands that the 

file is programmed to perform.” ’731 patent, col. 4 ll. 47–

48. Claim 17 further specifies that the security profile 

include “a list of at least one computer command that the 

retrieved file is programmed to perform.” ’731 patent,

col. 13 ll. 7–8. Once these security profiles have been 

generated, they can be compared with the security policy 

associated with a given user in order to decide whether 

the file should be provided to that user. 

Blue Coat argues that the ’731 patent was not infringed as a matter of law because the “security profiles” 

created by the accused product do not contain the requi-

 

profiles comprises a list of computer commands that a corresponding one of the incoming files is programmed to perform;

a file cache for storing files that have been 

scanned by the scanner for future access, 

wherein each of the stored files is indexed by a 

file identifier; and

a security profile cache for storing the security 

profiles derived by the scanner, wherein each 

of the security profiles is indexed in the security profile cache by a file identifier associated 

with a corresponding file stored in the file 

cache; and

a security policy cache for storing security policies for intranet computers within the intranet, the security policies each including a list 

of restrictions for files that are transmitted to 

a corresponding subset of the intranet computers.

’731 patent, col. 11 ll. 35–55.
FINJAN, INC. v. BLUE COAT SYSTEMS, INC. 13

site “list of computer commands.” Because Blue Coat did 

not request a construction of the “list of commands” term,

we apply the ordinary meaning. We find that substantial 

evidence supports the jury’s finding of infringement. 

At trial, Finjan presented evidence demonstrating 

that the accused product creates a new file called “cookie2” each time it scans an incoming file for potential 

malware. Cookie2 comprises a set of fields, each field 

representing various characteristics about the downloadable file. Fields 78–80 of Cookie2 represent certain

commands and show whether those commands—such as 

eval(), unescape(), and document.write()—appear in the 

incoming file. In fields 78–80, an integer represents the 

number of times each command appears. Finjan’s expert, 

Dr. Mitzenmacher, testified that the data contained in 

fields 78–80 “is clearly a list of computer commands.” J.A. 

40383.

Blue Coat argues that this is not enough and that the 

“list of commands” limitation cannot be satisfied by “an 

identifier of a type of command the system should watch 

for.” Appellant Br. 34. But the claim language simply

requires that the security profile contain “a list of computer commands that a corresponding one of the incoming 

files is programmed to perform.” It does not mandate any

particular representation of that information—much less 

require that the commands be listed in the form of executable code. Dr. Mitzenmacher testified at trial that the 

integers in fields 78–80 are “clearly a list of computer 

commands” because “those numbers determine whether 

or not those commands are in the security profile.” J.A. 

40383–84. He also notes that “there are many ways of 

representing a list [of computer commands], including the 

way it is represented here.” J.A. 40384. Substantial 

evidence supports the jury’s implied finding that the “list 

of commands” limitation is satisfied by the integers in 

Fields 78–80 of Cookie2, and the patent is infringed. 
14 FINJAN, INC. v. BLUE COAT SYSTEMS, INC. 

C. ’968 Patent

Blue Coat also argues that it was entitled to JMOL of 

non-infringement with respect to the ’968 patent because 

Finjan failed to introduce substantial evidence that the

accused products implement the claimed “policy index.” 

We agree. 

The ’968 patent is directed to a “policy-based” cache 

manager that can efficiently manage cached content 

according to a plurality of security policies. The patentee 

agrees that a “policy” is a rule or set of rules that determines whether a piece of content can be accessed by a 

user. Different policies can apply to different users, and 

the decision of whether to let a user access content is 

made by comparing the content’s security profile with the 

policy governing the user’s access. Thus, the policy based 

cache manager in the ’968 patent is a data structure that 

keeps track of whether content is permitted under various 

policies. Claim 1, the sole asserted claim, is reproduced 

below, with key language underlined: 

1. A policy-based cache manager, comprising: 

a memory storing a cache of digital content, a plurality of policies, and a policy 

index to the cache contents, the policy index including entries that relate cache 

content and policies by indicating cache 

content that is known to be allowable relative to a given policy, for each of a plurality of policies; 

a content scanner, communicatively coupled with said memory, for scanning a digital content received, to derive a 

corresponding content profile; and 

a content evaluator, communicatively coupled with said memory, for determining 

whether a given digital content is allowa-
FINJAN, INC. v. BLUE COAT SYSTEMS, INC. 15

ble relative to a given policy, based on the 

content profile, the results of which are 

saved as entries in the policy index. 

’968 patent col. 9 ll. 47–62. At claim construction, the 

parties stipulated that “policy index” means “a data 

structure indicating allowability of cached content relative to a plurality of policies.” The jury was instructed to 

apply this construction. Once again, we test the jury’s 

infringement verdict based on this claim language and 

claim construction. Hewlett-Packard Co., 340 F.3d at

1320–21. 

Trial testimony demonstrated that the accused product, Proxy SG, is a gateway between an intranet of computers and the Internet at large. Every time a user 

requests a file, Proxy SG will analyze that file and determine whether access is permitted under the user’s security policy. As Proxy SG evaluates a file, it can cache the 

results of individual rules within a policy and use that 

information to speed up the process of making an ultimate policy decision. Early in its analysis, for instance, 

Proxy SG can check the “category” of the file and then 

determine whether the user’s policy has any rules related 

to the “category” field. Proxy SG can then store “the 

evaluations of the parts of the rules that deal with this 

category field . . . . So you don’t have to reevaluate those 

conditions again.” J.A. 40327–28. As Finjan’s expert 

expressly acknowledged, however, Proxy SG does not save 

final decisions about whether content can be accessed by 

users subject to a given policy. It simply stores the evaluation of each individual rule that goes into making an 

ultimate policy decision. This is not what the claim language requires. The policy index claimed in the ’968 

patent must store the “results” of a content evaluator’s

determination of “whether a given digital content is 

allowable relative to a given policy.” 
16 FINJAN, INC. v. BLUE COAT SYSTEMS, INC. 

At summary judgment, the district court agreed that 

this claim language requires the policy index to store final 

allowability determinations and noted that “Defendant’s 

argument would likely prevail if all policies consist of 

multiple rules or conditions.” Finjan, Inc. v. Blue Coat 

Sys., Inc., No. 13-CV-03999-BLF, 2015 WL 3630000, at *9 

(N.D. Cal. June 2, 2015). The court nevertheless declined 

to grant summary judgement because “the ’968 patent 

specifically provides that a policy can be just one rule.” Id. 

If Proxy SG saved the results of applying each rule that 

makes up a one-rule policy, it would be saving final allowability determinations for a plurality of policies and 

thus infringing. The district court therefore gave Finjan 

the opportunity to prove at trial that “the Proxy SG policy 

cache contains a number of condition evaluations, each of 

which is determinative of whether a file is allowable 

relative to one of a plurality of single condition policies.”

Id. 

At trial, Finjan made no such showing. There was no 

evidence indicating that the condition determinations 

stored by Proxy SG are final allowability decisions for 

users governed by single-rule policies. Indeed, Finjan’s 

expert acknowledged that Proxy SG never saves final 

allowability determinations and must instead re-evaluate 

the allowability of content each time it is requested. It is 

therefore clear that the jury’s infringement verdict was 

not supported by substantial evidence.

Because Finjan failed to present evidence that the accused product ever stores final allowability determinations, Blue Coat was entitled to JMOL of noninfringement.

III. Damages

We now turn to Blue Coat’s damages arguments with 

respect to the ’844, ’731, and ’633 patents. The starting 

point is 35 U.S.C. § 284, which limits damages to those 

“adequate to compensate for the infringement.” Two 
FINJAN, INC. v. BLUE COAT SYSTEMS, INC. 17

categories of compensation for infringement are the 

patentee’s lost profits and the “reasonable royalty he 

would have received through arms-length bargaining.” 

Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1324 

(Fed. Cir. 2009). 

The only measure of damages at issue in this case is a 

reasonable royalty, which “seeks to compensate the patentee . . . for its lost opportunity to obtain a reasonable 

royalty that the infringer would have been willing to pay 

if it had been barred from infringing.” AstraZeneca AB v. 

Apotex Corp., 782 F.3d 1324, 1334 (Fed. Cir. 2015) (citing 

Lucent Techs., 580 F.3d at 1325). 

A. ’844 Patent

Blue Coat first argues that, in calculating a royalty 

base, Finjan failed to apportion damages to the infringing 

functionality. We agree. 

When the accused technology does not make up the 

whole of the accused product, apportionment is required. 

“[T]he ultimate combination of royalty base and royalty 

rate must reflect the value attributable to the infringing 

features of the product, and no more.” Ericsson, Inc. v. D–

Link Sys., Inc., 773 F.3d 1201, 1226 (Fed. Cir. 2014); see 

also Mentor Graphics v. EVE-USA, 870 F.3d 1298, 1299 

(Fed. Cir. 2017) (order denying rehearing en banc) 

(“[W]here an infringing product is a multi-component 

product with patented and unpatented components, 

apportionment is required.”); VirnetX, Inc. v. Cisco Sys., 

Inc., 767 F.3d 1308, 1326 (Fed. Cir. 2014) (“No matter 

what the form of the royalty, a patentee must take care to 

seek only those damages attributable to the infringing 

features.”). In such cases, the patentee must “give evidence tending to separate or apportion the [infringer]'s 

profits and the patentee's damages between the patented 

feature and the unpatented features, and such evidence 

must be reliable and tangible, and not conjectural or 

speculative.” Garretson v. Clark, 111 U.S. 120, 121 (1884).
18 FINJAN, INC. v. BLUE COAT SYSTEMS, INC. 

Finjan, as the present patent holder, had the burden of 

proving damages by a preponderance of the evidence. 

WebPulse, the infringing product, is a cloud-based 

system that associates URLs with over eighty different 

categories, including pornography, gambling, shopping,

social networking, and “suspicious”—which is a category 

meant to identify potential malware. WebPulse is not sold 

by itself. Rather, other Blue Coat products, like Proxy SG, 

use WebPulse’s category information to make allowability 

determinations about URLs that end users are trying to 

access.

DRTR, which stands for “dynamic real-time rating 

engine,” is the part of WebPulse responsible for analyzing 

URLs that have not already been categorized. DRTR 

performs both infringing and non-infringing functions. 

When a user requests access to a URL that is not already 

in the WebPulse database—a brand new website, for 

instance—DRTR will analyze the content, assign a category or categories, and collect metadata about the site for 

further use. As part of that analysis, DRTR will examine 

the URL for malicious or suspicious code, create a kind of 

“security profile” highlighting that information, and then 

“attach” the security profile to the given URL. This infringes the ’844 patent. But the DRTR analysis also 

evaluates whether the URL fits into categories ranging 

from pornography to news. These additional categories 

are unrelated to DRTR’s malware identification function

but are still valuable for companies trying to, say, prevent 

employees from using social media while on the job. 

DRTR also collects metadata about the URL for Blue 

Coat’s later use. In other words, all of the infringing 

functionality occurs in DRTR, but some DRTR functions 

infringe and some do not. 

At trial, Finjan attempted to tie the royalty base to

the incremental value of the infringement by multiplying 

WebPulse’s total number of users by the percentage of 
FINJAN, INC. v. BLUE COAT SYSTEMS, INC. 19

web traffic that passes through DRTR, the WebPulse

component that performs the infringing method. DRTR

processes roughly 4% of WebPulse’s total web requests, so 

Finjan established a royalty base by multiplying the 75 

million worldwide WebPulse users by 4%. Although 

DRTR also performs the non-infringing functions described above, Finjan did not perform any further apportionment on the royalty base. 

Finjan argues that apportionment to DRTR is adequate because DRTR is the “smallest, identifiable technical component” tied to the footprint of the invention. 

Appellee Br. 49–50. This argument, which draws from

this court’s precedent regarding apportionment to the 

“smallest salable patent-practicing unit” of an infringing 

product, does not help Finjan. The smallest salable unit 

principle directs that “in any case involving multicomponent products, patentees may not calculate damages based on sales of the entire product, as opposed to the 

smallest salable patent-practicing unit, without showing 

that the demand for the entire product is attributable to 

the patented feature.” LaserDynamics, Inc. v. Quanta 

Comput., Inc., 694 F.3d 51, 67–68 (Fed. Cir. 2012). The 

entire market value rule is not at issue in this case, 

however, and the fact that Finjan has established a 

royalty base based on the “smallest, identifiable technical 

component” does not insulate them from the “essential 

requirement” that the “ultimate reasonable royalty award

must be based on the incremental value that the patented 

invention adds to the end product.” Ericsson, 773 F.3d at

1226. As we noted in VirnetX, if the smallest salable 

unit—or smallest identifiable technical component—

contains non-infringing features, additional apportionment is still required. VirnetX, 767 F.3d at 1327 (rejecting 

a jury instruction that “mistakenly suggest[ed] that when 

the smallest salable unit is used as the royalty base, there 

is necessarily no further constraint on the selection of the 

base”). 
20 FINJAN, INC. v. BLUE COAT SYSTEMS, INC. 

Finjan further defends its apportionment methodology by asserting that it demonstrated that “many of these 

other categories were unimportant.” Appellee Br. 51. But 

the claimed unimportance of particular categories (e.g. 

“Macy’s and shopping”) does not speak to the overall 

importance of identifying categories unrelated to malware. Malware detection is undoubtedly an important 

driver of DRTR’s (and WebPulse’s) value. At trial, for 

instance, Dr. Layne-Farrar pointed to an internal Blue 

Coat email stating that “[t]oday the main value of [WebFilter and WebPulse] centers around zero-day malware 

protection.” J.A. 40571. She also referenced a 2012 publicfacing document entitled “Five reasons to choose Blue 

Coat,” which gave “negative-day defense: stop malware at 

the source” as reason number two. J.A. 40572–73. But it 

is evident that Blue Coat’s customers also value 

WebPulse’s ability to identify and filter other categories of 

content. A Blue Coat whitepaper discussed at trial prominently advertises the fact that WebPulse provides “the 

granular category control that businesses need to implement acceptable Internet use policies.” J.A. 53136. And

Finjan’s expert used an example about a company that 

wanted to bar access to certain sites categorized as “gambling.” “Whether ‘viewed as valuable, important, or even 

essential,’ the patented feature must be separated.” 

VirnetX, 767 F.3d at 1329 (quoting LaserDynamics, 694 

F.3d at 68). 

Because DRTR is itself a multi-component software 

engine that includes non-infringing features, the percentage of web traffic handled by DRTR is not a proxy for the 

incremental value of the patented technology to WebPulse

as a whole. Further apportionment was required to reflect 

the value of the patented technology compared to the 

value of the unpatented elements.

Blue Coat also identifies a second error in Finjan’s 

reasonable royalty calculation. To arrive at a lump sum 

reasonable royalty payment for infringement of the ’844 
FINJAN, INC. v. BLUE COAT SYSTEMS, INC. 21

patent, Finjan simply multiplied the royalty base by an 

$8-per-user royalty rate. Blue Coat contends that there is 

no basis for the $8-per-user rate. 

We agree with Blue Coat that the $8-per-user royalty 

rate employed in Finjan’s analysis was unsupported by 

substantial evidence. There is no evidence that Finjan 

ever actually used or proposed an $8-per-user fee in any 

comparable license or negotiation. Rather, the $8-per-user 

fee is based on testimony from Finjan’s Vice President of 

IP Licensing, Ivan Chaperot, that the current “starting 

point” in licensing negotiations is an “8 to 16 percent 

royalty rate or something that is consistent with 

that . . . like $8 per user fee.” J.A. 40409. Mr. Chaperot 

further testified that the 8–16% figure was based on a 

2008 verdict obtained by Finjan against Secure Computing. On this basis, Finjan’s counsel urged the jury to use

an $8-per-user royalty rate for the hypothetical negotiation because “that’s what Finjan would have asked for at 

the time.” J.A. 41654. 

While any reasonable royalty analysis “necessarily involves an element of approximation and uncertainty, a 

trier of fact must have some factual basis for a determination of a reasonable royalty.” Unisplay, S.A. v. Am. Elec. 

Sign Co., 69 F.3d 512, 517 (Fed. Cir. 1995). Mr. Chaperot’s testimony that an $8-per-user fee is “consistent with” 

the 8–16% royalty rate established in Secure Computing

is insufficient. There is no evidence to support Mr. Chaperot’s conclusory statement that an 8–16% royalty rate

would correspond to an $8-per-user fee, and Finjan fails to 

adequately tie the facts of Secure Computing to the facts

in this case. See LaserDynamics, 694 F.3d at 79 

(“[A]lleging a loose or vague comparability between different technologies or licenses does not suffice.”). 

Secure Computing did not involve the ’844 patent, and 

there is no evidence showing that the patents that were at 

issue are economically or technologically comparable. 
22 FINJAN, INC. v. BLUE COAT SYSTEMS, INC. 

Finjan’s evidence on this point is limited to the fact that 

that the infringing products in Secure Computing were 

also in the computer security field and that Secure Computing was a competitor of Blue Coat in 2008. This surface similarity is far too general to be the basis for a 

reasonable royalty calculation. In any case, Mr. Chaperot’s testimony that an 8–16% royalty rate would be the 

current starting point in licensing negotiations says little 

about what the parties would have proposed or agreed to 

in a hypothetical arm’s length negotiation in 2008. And 

Finjan’s evidence of a $14–34 software user fee is not 

indicative of how much the parties would have paid to 

license a patent. See Uniloc USA, Inc. v. Microsoft Corp., 

632 F.3d 1292, 1317 (Fed. Cir. 2011) (“[T]here must be a 

basis in fact to associate the royalty rates used in prior 

licenses to the particular hypothetical negotiation at issue 

in the case.”). In short, the $8-per-user fee appears to 

have been plucked from thin air and, as such, cannot be 

the basis for a reasonable royalty calculation.

While it is clear that Finjan failed to present a damages case that can support the jury’s verdict, reversal of 

JMOL could result in a situation in which Finjan receives 

no compensation for Blue Coat’s infringement of the ’844 

patent. Ordinarily, “the district court must award damages in an amount no less than a reasonable royalty” when 

infringement is found, Dow Chem. Co. v. Mee Indus., Inc., 

341 F.3d 1370, 1381 (Fed. Cir. 2003); see Riles v. Shell 

Expl. & Prod. Co., 298 F.3d 1302, 1313 (Fed. Cir. 2002), 

unless the patent holder has waived the right to damages 

based on alternate theories, Promega Corp. v. Life Tech. 

Corp., No. 2013-1011, slip op. at 15 (Fed. Cir. 2017). We 

therefore remand to the district court to determine 

whether Finjan has waived the right to establish reasonable royalty damages under a new theory and whether to 

order a new trial on damages. 
FINJAN, INC. v. BLUE COAT SYSTEMS, INC. 23

B. ’731 and ’633 Patents

For the ’731 and ’633 patents, Finjan’s expert did apportion the revenues comprising the royalty base between 

infringing and non-infringing functionality of Proxy SG. 

Blue Coat argues that the apportionment was insufficient. 

We disagree. 

Finjan’s expert, Dr. Layne-Farrar, based her apportionment analysis for the ’731 and ’633 patents on an 

architectural diagram prepared by Blue Coat. The diagram is entitled “Secure Web Gateway: Functions” and 

shows twenty-four boxes representing different parts of 

the Secure Web Gateway system. Dr. Layne-Farrar 

assumed that each box represented one top level function 

and that each function was equally valuable. Thus, because one function infringed the ’633 patent, and three 

infringed the ’731 patent, she used a 1/24th apportionment for the ’633 patent and a 3/24th apportionment for 

the ’731 patent. 

Blue Coat argues that there was no evidence to support Dr. Layne-Farrar’s assumption that each box represents a “function” and that each function should be 

treated as equally valuable. But at trial, Dr. Layne-Farrar 

testified that her assumption was based on Blue Coat’s 

own diagram, which is entitled “Secure Web Gateway: 

Functions”, as well as her discussions with Mr. Medovic, a 

Finjan technical expert who explained the use of architectural diagrams and identified certain components within 

the diagram that did and did not infringe. Dr. LayneFarrar also testified that she relied on the deposition of a 

Blue Coat engineer, in which the engineer stated that the 

diagram in question represents the full scope of Secure 

Web Gateway functionality. Based on this evidence, Dr. 

Layne-Farrar based her analysis on the twenty-four

“functions” identified in the Blue Coat diagram and 

considered each function equally valuable. 
24 FINJAN, INC. v. BLUE COAT SYSTEMS, INC. 

Blue Coat notes that Dr. Layne-Farrar’s conclusions 

conflict with testimony from Mr. Shoenfeld, Blue Coat’s 

Senior VP of Products, stating that each box in the diagram can “have many, many things behind [it] . . . so 

there’s no equal weighing of these [boxes] . . . .” See J.A.

40756. But the existence of conflicting testimony does not 

mean the damages award is unsupported by substantial 

evidence. The jury was entitled to believe the patentee’s 

expert. The jury’s damages awards for infringement of the 

’731 and ’633 patents were based on substantial evidence.2 

CONCLUSION

For the foregoing reasons, we reverse the denial of 

JMOL of non-infringement with respect to the ’968 patent 

and remand to the district court to determine the issue of 

damages with respect to the ’844 patent. We affirm in all 

other respects. 

 

2 Blue Coat also argues that the damages award 

was flawed because the jury awarded damages in excess 

of the estimates offered by Finjan’s damages expert. 

Indeed, Finjan’s damages expert gave a range of 

$2,979,805 to $3,973,073 for infringement of the ’731 

patent and a range of $833,350 to $1,111,133 for infringement of the ’633 patent, JA 40623, but the jury 

awarded $6,000,000 for the ’731 patent and $1,666,700 for 

the ’633 patent, J.A. 125. We agree with Blue Coat that

the statute’s direction to award damages “in no event less 

than a reasonable royalty” does not mean that the patentee need not support the award with reliable evidence. 35 

U.S.C. § 284. A jury may not award more than is supported by the record, but here the record contains evidence 

that the expert’s estimates were conservative and that the 

underlying evidence could support a higher award. J.A. 

40619–20, 40656.
FINJAN, INC. v. BLUE COAT SYSTEMS, INC. 25

AFFIRMED-IN-PART, REVERSED-IN-PART, AND

REMANDED. 

COSTS

Each party shall bear its own costs.