Case 1:11-cv-01258-SLR Document 13 Filed 02/28/12 Page 1 of 19 PageID #: 153

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE JUNIPER NETWORKS, INC., Plaintiff, v. PALO ALTO NETWORKS, INC., Defendant. ) ) ) ) ) ) ) ) )

C.A. No. 11-1258 (SLR)

PLAINTIFFS OPENING BRIEF IN SUPPORT OF ITS MOTION TO STRIKE DEFENDANTS AFFIRMATIVE DEFENSE OF INVALIDITY BASED ON ASSIGNOR ESTOPPEL

OF COUNSEL: Morgan Chu Jonathan S. Kagan IRELL & MANELLA LLP 1800 Avenue of the Stars Suite 900 Los Angeles, CA 90067-4276 (310) 277-1010 Lisa S. Glasser IRELL & MANELLA LLP 840 Newport Center Drive Suite 400 Newport Beach, CA 92660 (949) 760-0991 February 28, 2012

MORRIS, NICHOLS, ARSHT & TUNNELL LLP Jack B. Blumenfeld (#1014) Jennifer Ying (#5550) 1201 North Market Street P.O. Box 1347 Wilmington, DE 19801 (302) 658-9200 jblumenfeld@mnat.com jying@mnat.com Attorney for Plaintiff Juniper Networks, Inc.

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TABLE OF CONTENTS Page I. II. III. IV. INTRODUCTION ........................................................................................................... 1 NATURE AND STAGE OF THE PROCEEDINGS ........................................................ 2 SUMMARY OF ARGUMENT ....................................................................................... 3 STATEMENT OF FACTS .............................................................................................. 4 A. B. C. V. The Parties ........................................................................................................... 4 Mao and Zuk Are Inventors Of The Patents-in-Suit .............................................. 4 Mao and Zuk Leave Juniper To Form PAN .......................................................... 6

ARGUMENT .................................................................................................................. 8 A. B. The Applicable Legal Standards ........................................................................... 8 Assignor Estoppel Bars PANs Invalidity Defense ............................................. 11 1. 2. Assignor Estoppel Applies to Mao and Zuk ............................................ 11 PAN is in Privity with Mao and Zuk ....................................................... 13

VI.

CONCLUSION ............................................................................................................. 14

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TABLE OF AUTHORITIES CASES PAGES Acushnet Co. v. Dunlop Maxfli Sports Corp., C. A. No. 98-717-SLR, 2000 WL 987979 (D. Del. June 29, 2000) ...................................... 13 Applied Materials, Inc. v. Negevtech, Inc., C.A. No. 04-03656 SI, 2005 WL 1656894, (N.D. Cal. July 14, 2005) ............................ 10, 11 Buck v. Hampton Twp. Sch. Dist., 452 F.3d 256 (3d Cir. 2006) .................................................................................................. 8 Carroll Touch, Inc. v. Electro Mech. Sys., Inc., 15 F.3d 1573 (Fed. Cir. 1993)................................................................................ 2, 9, 11, 12 Cipollone v. Liggett Group, Inc., 789 F.2d 181 (3d Cir. 1986), revd on other grounds, 505 U.S. 504 (1992)............................ 8 Diamond Scientific Co. v. Ambico, Inc., 848 F.2d 1220 (Fed. Cir. 1988)..................................................................................... passim Doron Precision Sys., Inc. v. FAAC, Inc., 423 F. Supp. 2d 173 (S.D.N.Y. 2006) .................................................................................... 7 Fteja v. Facebook, Inc., C.A. No. 11-918 (RJH), 2012 WL 183896 (S.D.N.Y. Jan. 24, 2012) ..................................... 7 Hendrickson v. eBay, Inc., 165 F. Supp. 2d 1082 (C.D. Cal. 2001) .................................................................................. 7 Hoganas AB v. Dresser Indus., Inc., 9 F.3d 948 (Fed. Cir. 1993) ................................................................................................... 5 Johnson v. Anhorn, 334 F. Supp. 2d 802 (E.D. Pa. 2004)...................................................................................... 8 Kos Pharms., Inc. v. Andrx Corp., 369 F.3d 700 (3d Cir. 2004) .................................................................................................. 5 Mellor v. Carroll, 141 F. 992 (C.C.D. Mass. 1905) .......................................................................................... 13 Mentor Graphics Corp. v. Quickturn Design Sys., Inc., 150 F.3d 1374 (Fed. Cir. 1998).......................................................................................... 3, 4 Monsanto Co. v. Aventis Corpscience SA, 226 F. Supp. 2d 531 (D. Del. 2002) ............................................................................... 10, 12

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Pandrol USA, LP v. Airboss Ry. Prods., 424 F.3d 1161 (Fed. Cir. 2005).............................................................................................. 1 Procter & Gamble Co. v. Nabisco Brands, Inc., 697 F. Supp. 1360 (D. Del. 1988) .......................................................................................... 8 Rearden LLC v. Rearden Commerce, Inc., 597 F. Supp. 2d 1006 (N.D. Cal. 2009).................................................................................. 7 Saint-Gobain Performance Plastics Corp., HCM Div. v. Truseal USA, Inc., 351 F. Supp. 2d 290 (D.N.J. 2005) ...................................................................................... 11 Shamrock Techs., Inc. v. Medical Sterilization, Inc., 903 F.2d 789 (Fed. Cir. 1990).......................................................................................... 9, 13 Sun Microsystems, Inc. v. Versata Enterprises, Inc., 630 F. Supp. 2d 395 (D. Del. 2009) ................................................................................... 2, 8 Westinghouse Elec. & Mfg. Co. v. Formica Insulation Co., 266 U.S. 342 (1924) ............................................................................................................ 10 STATUTES AND RULES Federal Rule of Civil Procedure 12.................................................................................. 1, 2, 3, 8 Federal Rule of Civil Procedure 16.............................................................................................. 3

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I.

INTRODUCTION Assignor estoppel prevents an assignor from asserting that its own patent, for which it

may have received value upon assignment, is invalid and worthless. Pandrol USA, LP v. Airboss Ry. Prods., 424 F.3d 1161, 1167 (Fed. Cir. 2005). In this case, Yuming Mao and Nir Zuk, the co-founders of defendant Palo Alto Networks (PAN), are named inventors of the patents-in-suit. While employed by Juniper and a Juniper predecessor, Mao and Zuk assigned their interests in the patents-in-suit and executed, under penalty of perjury, inventors oaths declaring themselves the first and original inventors. Mao and Zuk then left Juniper to co-found PAN and to serve as its senior technology officers. In an attempt to escape liability for its subsequent infringement of the patents-in-suit, PAN now contends that these patentsconceived by its own foundersare invalid. Because the doctrine of assignor estoppel is squarely

applicable to these facts, plaintiff Juniper Networks, Inc. (Juniper) moves pursuant to Federal Rule of Civil Procedure 12(f) to strike PANs affirmative defense of invalidity. The Federal Circuit adopted the doctrine of assignor estoppel in Diamond Scientific Co. v. Ambico, Inc., 848 F.2d 1220, 1224 (Fed. Cir. 1988), which involved facts strikingly similar to this case. There, the Federal Circuit applied assignor estoppel to both the inventor-assignee and his new company based upon three dispositive findings: 1. The named inventor of the patent-in-suit had assigned his patent rights (in

the form of pending patent applications) for valuable consideration; 2. The inventor-assignor had executed an inventors oath in connection with

the prosecution of the patent averring that he was the first and true inventor; and 3. The defendant corporation was founded by the assignor, and thus, was

in privity with the inventor-assignor for purposes of assignor estoppel.

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Id. at 1224-26. See also Carroll Touch, Inc. v. Electro Mech. Sys., Inc., 15 F.3d 1573, 1581 (Fed. Cir. 1993) (district court abused its discretion by failing to apply assignor estoppel where a co-inventor of the patent-in-suit assigned it to the plaintiff and signed an inventors oath, and then resigned to form the defendant corporation). The three dispositive facts present in Diamond and its progeny also are present here: 1. As in Diamond, the named inventors Yuming Mao and Nir Zuk assigned

for value their rights to the patents-in-suit while they were pending patent applications. 2. As in Diamond, Mao and Zuk submitted inventors oaths to the United

States Patent & Trademark Office (PTO) in connection with the prosecution of the patents-insuit averring that they were the true and first inventors. 3. As in Diamond, defendant PAN is a corporation founded by the

assignor[s]. Specifically, Mao and Zuk are PANs co-founders. Pursuant to Diamond, PAN is therefore estopped from attempting to invalidate the patents-in-suit, rendering its purported defense of invalidity insufficient as a matter of law. FED. R. CIV. P. 12(f). Striking PANs insufficient defense of invalidity will significantly streamline the litigation, and permit the parties to focus on the infringement and damages issues to be tried. See Sun Microsystems, Inc. v. Versata Enterprises, Inc., 630 F. Supp. 2d 395, 402 (D. Del. 2009) (Motions to strike serve to clean up the pleadings, streamline litigation, and avoid unnecessary forays into immaterial matters.) (internal quotation marks omitted). Juniper respectfully

requests that this Court strike PANs affirmative defense of invalidity as to each of the patentsin-suit. II. NATURE AND STAGE OF THE PROCEEDINGS Juniper filed this patent infringement action against PAN on December 19, 2011. D.I. 1. Junipers complaint alleges that PAN infringes six Juniper patents: U.S. Patent Nos. 8,077,723 2

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(the 723 patent); 7,779,459 (the 459 patent); 7,650,634 (the 634 patent); 7,302,700 (the 700 patent); 7,093,280 (the 280 patent); and 6,772,347 (the 347 patent) (collectively, the patents-in-suit). See D.I. 1 at 2, Exs. A-F. PAN answered Junipers complaint on February 9, 2012. D.I. 9. As its Second

Affirmative Defense, PAN alleged that: Each and every claim of the patents-in-suit is invalid for failing to satisfy one or more of the conditions for patentability specified in Title 35 of the United States Code, including without limitation Sections 101, 102, 103, and 112. Id. at p. 7. The Rule 16 scheduling conference is scheduled for March 12, 2012. D.I. 11. Pursuant to Federal Rule of Civil Procedure 12(f), Juniper has moved to strike PANs Second Affirmative Defense of invalidity on the ground that PAN is barred from asserting invalidity of the patents-in-suit as a result of assignor estoppel. This is Junipers opening brief in support of that motion. III. SUMMARY OF ARGUMENT The doctrine of assignor estoppel bars PAN from seeking to invalidate the patents-in-suit. Yuming Mao and Nir Zuk are named inventors of the patents-in-suit. Mao and Zuk executed oaths attesting that they are the first and original inventors of the patents-in-suit. And, Mao and Zuk assigned their interests in the patents-in-suit for value. Mao and Zuk then left Juniper to cofound PAN. Mao and Zuk presently serve as PANs Chief Architect and Chief Technology Officer, respectively. Together, Mao and Zuk control the design and direction of PANs

technology and exert substantial control over PANs operations. PAN, thus, is in privity with Mao and Zuk for purposes of assignor estoppel. Diamond, 848 F.2d at 1224 ([E]stoppel also operates to bar other parties in privity with the assignor, such as a corporation founded by the assignor); see also Mentor Graphics Corp. v. Quickturn Design Sys., Inc., 150 F.3d 1374, 1379 (Fed. Cir. 1998) (Assignor estoppel also prevents parties in privity with an estopped assignor 3

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from challenging the validity of the patent.). Therefore, because all of the requirements of assignor estoppel have been satisfied and PAN is in privity with Mao and Zuk, PANs invalidity defense is barred as a matter of law, and should be stricken. IV. STATEMENT OF FACTS A. The Parties

As set forth in its complaint, plaintiff Juniper is a leading manufacturer of computer networking technology, including firewalls. D.I. 1 at 1. Firewalls are designed to permit or deny network transmissions, typically based upon a set of rules, and are frequently used to protect networks from unauthorized access while permitting legitimate communications to pass. D.I. 9 at 1. As such, firewalls are important for running a secure network. Id. Juniper and its predecessors developed and own the rights to many core aspects of firewall technology, including the six patents-in-suit. See id. at Exs. A-F. PAN is acutely aware of the patents-in-suit and their significance to firewall technology, because PANs co-founders, Yuming Mao and Nir Zuk, invented and assigned the subject matter recited in the patents-in-suit. Specifically, Mao and Zuk are the named co-inventors of the 723 patent, Mao is a named inventor of the 459, 700, 280, and 347 patents, and Zuk is the named inventor of the 634 patent. See D.I. 1 at Exs. A-F.; see also Glasser Decl. Ex. A (inventors oath and declaration for the 723 patent); Ex. C (same for the 459 patent); Ex. G (same for the 700 patent); Ex. I (same for the 280 patent); Ex. K (same for the 347 patent); Ex. E (same for the 634 patent). B. Mao and Zuk Are Inventors Of The Patents-in-Suit

Maos and Zuks work on the innovations of the patents-in-suit took place while they were executives at Juniper and its predecessor-in-interest, NetScreen Technologies, Inc. (NetScreen). Zuk was the Chief Technology Officer at NetScreen, and Mao was an

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Engineering Architect. D.I. 9 at 13. As set forth in the judicially-noticeable records of the United States Patent and Trademark Office, Mao or Zuk assigned interests in each of the patentsin-suit to Juniper, either directly or through Junipers predecessor-in-interest, NetScreen. See Glasser Decl. Ex. L (Mao assignment of U.S. Patent Application No. 09/525,369, which issued as the 347 patent); Ex. J (Mao assignment of U.S. Patent Application No. 09/967,893, which issued as the 280 patent); Ex. H (Mao assignment of U.S. Patent Application No. 09/967,878, which issued as the 700 patent); Ex. F (Zuk assignment of U.S. Patent Application No. 10/402,920, which issued as the 634 patent); Ex. D (Mao assignment of U.S. Patent Application No. 09/967,878, the continuation of which issued as the 459 patent); Ex. B (Mao assignment of U.S. Patent Application No. 11/338,732, the continuation of which issued as the 723 patent).1 These assignments were executed while the applications for the patents-in-suit were pending, and all conveyed the entire right, title and interest to, among other things, the respective application itself, as well the inventions and improvements set forth therein. For example, the 347 assignment conveyed the entire right, title and interest to and under the said invention, and the said United States application and all divisions, renewals and continuations thereof. Glasser Decl. Ex. L. The 347 assignment further provided that Mao would generally do everything possible to aid the said ASSIGNEE, its successors, legal interests, and assigns, to obtain and enforce proper protection for said invention in all countries. Glasser Decl. Ex. L. The 723 assignment similarly conveys our entire right, title, and interest in and to this invention and this application, and including any previously filed or subsequently filed provisional applications, all divisions, continuations, and continuations in part thereof, and
1

It is appropriate for the Court to take judicial notice of the public records of the U.S. Patent and Trademark Office. Kos Pharms., Inc. v. Andrx Corp., 369 F.3d 700, 705 n.5 (3d Cir. 2004) (citing Hoganas AB v. Dresser Indus., Inc., 9 F.3d 948, 954 n.27 (Fed. Cir. 1993) (noting that it is appropriate to take judicial notice of the PTOs public records)). 5

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provides that the inventors will generally do everything possible to aid assignee, its successors or assigns, to obtain and enforce proper protection for this invention. Glasser Decl. Ex. B. Likewise, the 280, 700, 459, and 634 assignments conveyed the entire right, title and interest throughout the world in the inventions and improvements for each respective patent application. Glasser Decl. Ex. J (for the 280 patent); Ex. H (for the 700 patent); Ex. D (for the 459 patent); Ex. F (for the 634 patent). Each of the assignments expressly provides that it was made in exchange for valuable consideration. Glasser Decl. Ex. B (for the 723 patent); Ex. J (for the 280 patent); Ex. L (for the 347 patent); Ex. H (for the 700 patent); Ex. D (for the 459 patent); Ex. F (for the 634 patent). In addition to assigning the patent applications and all related rights for valuable consideration, Mao and Zuk also executed inventors oaths averring under penalty of perjury that they were the original and first inventors of the subject matter claimed therein. Glasser Decl. Ex. A (for the 723 patent); Ex. C (for the 459 patent); Ex. E (for the 634 patent); Ex. G (for the 700 patent); Ex. I (for the 280 patent); Ex. J (for the 347 patent). C. Mao and Zuk Leave Juniper To Form PAN

In 2004, Juniper made the largest acquisition in its history, paying approximately $4 billion to acquire NetScreen and NetScreens intellectual property. D.I. 1 at 4, D.I. 9 at 14; see also Glasser Decl. Exs. D, F, H, J, L (NetScreen assignments to Juniper of the rights to the patents-in-suit). After Junipers acquisition of NetScreen, Mao served as Junipers Chief

Architect of security products, and Zuk served as Junipers Chief Security Technologist. D.I. 9 at 14. By 2006, however, Mao and Zuk left Juniper to start PAN, a competing firewall manufacturer. PANs website identifies Zuk and Mao as two of PANs three co-founders, as 6

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well as PANs most senior technology executives controlling PANs product designs. Specifically, PANs website states that Zuk is PANs Founder and CTO and a member of its Board of Directors, and that Mao is PANs Founder and Chief Architect. Glasser Decl. Ex. M (describing PANs Management Team); Ex. N (PANs press releases stating that Nir Zuk is a Board Director).2 PANs website prominently touts Zuk and Mao as former Juniper

employees. Id. PANs website also states that Zuk brings a wealth of network security expertise and industry experience to PAN, and that Mao brings to [PAN] an extensive knowledge of platform architecture. Id. There is no question that PAN relies heavily on knowledge and experience from Juniper. PANs third founder, Rajit Batra, also came from Juniper. See Glasser Decl. Ex. M. Indeed, more than half of PANs Management Team, including all of the members of PANs Management Team who are responsible for technology, previously worked for Juniper. Glasser Decl. Ex. M (explaining that Mao, Zuk, Batra, Eldridge, Klarich, and Link all worked for Juniper). Juniper initiated this lawsuit after discovering that a substantial part of what Mao and Zuk brought to PAN when they founded it was the very same technology that they had previously developed and then assigned to NetScreen and Juniper during their employment. In this lawsuit,
2

It is appropriate to take judicial notice of information publicly announced on a partys website, as long as the websites authenticity is not in dispute and it is capable of accurate and ready determination. Doron Precision Sys., Inc. v. FAAC, Inc., 423 F. Supp. 2d 173, 179 (S.D.N.Y. 2006) (internal citations omitted); see also Fteja v. Facebook, Inc., C.A. No. 11-918 (RJH), 2012 WL 183896, at *5 (S.D.N.Y. Jan. 24, 2012) (taking judicial notice of facts of Facebooks operation as ascertained by its website); Rearden LLC v. Rearden Commerce, Inc., 597 F. Supp. 2d 1006, 1013 (N.D. Cal. 2009) (taking judicial notice of basic facts about a company, such as location of offices and size of staff, through the website); Hendrickson v. eBay, Inc., 165 F. Supp. 2d 1082, 1084 (C.D. Cal. 2001) (taking judicial notice of facts of eBays operation as ascertained by its website). The authenticity of PANs website is not in dispute and the information proffered is easily verifiable simply by accessing PANs website. See Glasser Decl. Ex. O (Whois.net, Domain Lookup for www.paloaltonetworks.com, stating that the domain is owned by Palo Alto Networks and is administrated by Nir Zuk).

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PAN now attempts to defend its infringement of Junipers patents by arguing that the patents for which its own founders and chief technology executives signed inventors oaths and assigned for value are invalid. As discussed below, firmly established precedent bars PAN from doing so. V. ARGUMENT A. The Applicable Legal Standards

Federal Rule of Civil Procedure 12(f) states that [a] court may order stricken from any pleading any insufficient defense or any redundant, immaterial, impertinent, or scandalous matter. FED. R. CIV. P. 12(f). Motions to strike serve to clean up the pleadings, streamline litigation, and avoid unnecessary forays into immaterial matters. Sun Microsystems, 630 F. Supp. 2d at 402 (internal citations omitted). When ruling on a motion to strike, the [c]ourt must construe all facts in favor of the nonmoving party and deny the motion if the defense is sufficient under law. Procter & Gamble Co. v. Nabisco Brands, Inc., 697 F. Supp. 1360, 1362 (D. Del. 1988) (internal citations omitted). A motion to strike a defense is appropriate when the

insufficiency of the defense is clearly apparent. Cipollone v. Liggett Group, Inc., 789 F.2d 181, 188 (3d Cir. 1986), revd on other grounds, 505 U.S. 504 (1992) (internal citations omitted). In ruling on a motion to strike, the pleadings themselves and the judicially-noticeable facts are properly considered. Johnson v. Anhorn, 334 F. Supp. 2d 802, 809 (E.D. Pa. 2004); see also Buck v. Hampton Twp. Sch. Dist., 452 F.3d 256, 260 (3d Cir. 2006) (in the parallel Rule 12(b)(6) context, holding that items subject to judicial notice, matters of public record, orders, [and] items appearing in the record of the case are properly considered); Diamond, 848 F.2d at 1227 (consideration of documents outside the complaint, such as documents relating to patent prosecution, permitted in view of the equitable nature of the estoppel doctrine).

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As the Federal Circuit recognized in the seminal case of Diamond Scientific Co. v. Ambico, Inc., invalidity defenses should be stricken pursuant to Rule 12(f) where a person or entity, or that persons or entitys privies, had previously assigned the patent for value. 848 F.2d at 1224, 1227. In affirming the district courts grant of a motion to strike, the Federal Circuit held: Assignor estoppel is an equitable doctrine that prevents one who has assigned the rights to a patent (or patent application) from later contending that what was assigned is a nullity. The estoppel also operates to bar other parties in privity with the assignor, such as a corporation founded by the assignor. Id. at 1224. In Diamond, the Federal Circuit found that assignor estoppel barred the inventor-assignor from challenging validity based upon two determinative facts: the inventor-assignor (1) signed the [inventors oath], which attests to his belief in the validity of the patents, and (2) assigned the patent rights to another for valuable consideration. Id. at 1226. Although the plaintiff also submitted evidence that the inventor had been active in the patent prosecution process, the Federal Circuit specifically stated that such evidence was not necessary to its decision, as the fact of the assignment and of the oath alone are enough . . . to support application of the estoppel. Id. at 1227. Furthermore, assignor estoppel applied equally to the corporate

defendant because it was a corporation founded by the assignor. Id. at 1224, 1227; see also, e.g., Shamrock Techs., Inc. v. Medical Sterilization, Inc., 903 F.2d 789, 793-96 (Fed. Cir. 1990) (affirming finding of assignor estoppel based on privity between assignor and company that he later joined as Vice President of Operations); Carroll Touch, 15 F.3d at 1579-81 (Fed. Cir. 1993) (finding abuse of discretion in decision not to apply assignor estoppel where inventor assigned patent to plaintiff then founded the defendant corporation).

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Diamond involved the typical employer-inventor scenario in which the assignment of rights to the patent-in-suit occurred when the patent applications were pending. The Federal Circuit held that this distinction was irrelevant to the application of assignor estoppel, as the assignments encompassed all rights to the applications: That [assignee] Diamond may have later amended the claims in the application process (a very common occurrence in patent prosecutions), with or without [the inventors] assistance, does not give appellants arguments against estoppel any greater force. Our concern must be with the balance of the equities. The fact is that [the inventor] assigned the rights to his invention, irrespective of the particular language in the claims describing the inventions when the patents were ultimately granted. Diamond, 848 F.2d at 1226 (emphasis in original); see also Applied Materials, Inc. v. Negevtech, Inc., C.A. No. 04-03656 SI, 2005 WL 1656894, at *3-5 (N.D. Cal. July 14, 2005) (noting that the patents at issue in Diamond were continuations of the originally assigned application and holding that assignment of the entire rights, title, and interest to a pending application renders irrelevant any differences in claim language between the application and the issued patent).3 The rationale for the doctrine of assignor estoppel is the maxim that an assignor should not be permitted to sell something and later to assert that what was sold is worthless, all to the detriment of the assignee. See Diamond, 848 F.2d at 1224; see also Monsanto Co. v. Aventis Corpscience SA, 226 F. Supp. 2d 531 (D. Del. 2002) (Assignor estoppel prevents a party who assigns a patent to another from later challenging the validity of the patent . . . An assignment contains an implicit representation by the assignor that the patent rights that he is assigning

Citing the early Supreme Court case of Westinghouse Elec. & Mfg. Co. v. Formica Insulation Co., 266 U.S. 342 (1924), the Federal Circuit held that changes to claim language after assignment would be relevant, if at all, to claim construction: To the extent that Diamond may have broadened the claims in the patent applications (after the assignments) beyond what could be validly be claimed in light of the prior art, Westinghouse may allow appellants to introduce evidence of prior art to narrow the scope of the claims of the patents . . . . 848 F.2d at 1226. 10

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(presumably for value) are not worthless.). Thus, it is a firmly established rule of federal patent law that a corporation founded by a co-inventor who previously assigned his interest in the patent for value may not defend itself from charges of infringement by derogating the validity of a patent subject to the assignment. Carroll Touch, 15 F.3d at 1581 (district court abused its discretion by not applying assignor estoppel). As discussed below, this established rule is squarely applicable here. B. Assignor Estoppel Bars PANs Invalidity Defense

Application of the legal standard set forth in Diamond and its progeny to the facts of this case is straightforward because the relevant facts here so closely parallel those of Diamond. As in Diamond, PANs invalidity defense is barred by the doctrine of assignor estoppel. 1. Assignor Estoppel Applies to Mao and Zuk

As in Diamond, the two outcome-determinative facts are present: (1) Maos and Zuks assignments for value and (2) Maos and Zuks inventors oaths. As reflected in the PTO records, either Mao, Zuk, or both assigned each of the patents-insuit to Juniper or Junipers predecessor. Glasser Decl. Ex. A (for the 723 patent); Ex. C (for the 459 patent); Ex. E (for the 634 patent); Ex. G (for the 700 patent); Ex. I (for the 280 patent); Ex. K (for the 347 patent).4 Just as in Diamond, each of the assignments was made while the patent applications were pending, and each of the assignments conveyed the entire right, title,

Some of the assignments were to NetScreen, which later assigned them to Juniper when Juniper acquired NetScreen, while others were assigned directly to Juniper. Assignor estoppel applies equally to both situations, as Zuks and Maos assignments to NetScreen expressly extended to NetScreens successors. Moreover, courts routinely apply assignor estoppel to successors of the original assignee. See, e.g., Applied Materials, 2005 WL 1656894 (applying assignor estoppel where plaintiff Applied Materials, Inc. was successor of the original assignee Orbot Instruments); Saint-Gobain Performance Plastics Corp., HCM Div. v. Truseal USA, Inc., 351 F. Supp. 2d 290 (D.N.J. 2005) (applying assignor estoppel where plaintiff Saint-Gobain was successor of the original assignee Nalge Nunc International Corp.). 11

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and interest to the respective application and its contents. Glasser Decl. Ex. L (for the 347 patent); Ex. B (for the 723 patent); Ex. J (for the 280 patent); Ex. H (for the 700 patent); Ex. D (for the 459 patent); Ex. F (for the 634 patent). As in Diamond, the terms of each assignment expressly state that the assignment was made for valuable consideration. Glasser Decl. Ex. L (for the 347 patent); Ex. B (for the 723 patent); Ex. J (for the 280 patent); Ex. H (for the 700 patent); Ex. D (for the 459 patent); Ex. F (for the 634 patent). Moreover, in the assignor estoppel context, courts have made clear that continued employment, salary, bonuses, and other standard benefits attendant to the employment relationship constitute value. See, e.g., Carroll Touch, 15 F.3d at 1581 (classifying

employment, salary, and bonuses as consideration); Diamond, 848 F.2d at 1225 (describing consideration as one dollar or a salary or other employment benefits). Again as in Diamond, Mao and Zuk executed inventors oaths affirming, under penalty of perjury, that they are first and original inventors of the subject matter claimed in the patents. Diamond, 848 F.2d at 1225. Accordingly, because the facts of Maos and Zuks assignments and oaths are clearly established, assignor estoppel bars them from challenging the validity of the patents-in-suit. To allow Zuk and Mao to represent that their patent rights were not worthless at the time of assignment, and then now repudiate that representation, would work an injustice against the assignee, Juniper. See Diamond, 848 F.2d at 1224; Monsanto, 226 F. Supp. 2d at 540 (Assignor estoppel prevents a party who assigns a patent to another from later challenging the validity of the patent. . . . An assignment contains an implicit representation by the assignor that the patent rights that he is assigning (presumably for value) are not worthless.).

12

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2.

PAN is in Privity with Mao and Zuk

Mao and Zuks status as founders, officers, and technology leaders of PAN squarely establishes their privity with PAN for purposes of assignor estoppel. Indeed, the Federal Circuit has recognized that status as a founder alone establishes privity for purposes of assignor estoppel. Diamond, 848 F.2d at 1224 (assignor estoppel bars other parties in privity with the assignor, such as a corporation founded by the assignor) (emphasis added). As this Court observed in a prior case, applying assignor estoppel in situations such as Diamond prevents an assignor from perpetrating in a corporate guise the very injustice the doctrine precludes him from accomplishing in a personal capacity. Acushnet Co. v. Dunlop Maxfli Sports Corp., C. A. No. 98-717-SLR, 2000 WL 987979, at *3 (D. Del. June 29, 2000). As this Court has aptly noted, the logical principle that assignor estoppel extends to a corporation co-founded by an assignee has been recognized in federal courts for more than one hundred years. Id. at *2 (citing Mellor v. Carroll, 141 F. 992, 993-94 (C.C.D. Mass. 1905) (privity is properly found between assignor/other individuals and corporation founded by them to carry on a business which they would be restrained from carrying on as individuals.)). As discussed above, Mao is PANs Founder and Chief Architect. Zuk is PANs Founder and CTO as well as a member of its Board of Directors. Glasser Decl. Ex. M; Ex. N (containing press releases referring to Nir Zuk as Founder and Board Director). These are classic examples of facts that establish privity. Diamond, 848 F.2d at 1224 (founders are in privity with inventor-assignor for purposes of assignor estoppel); see also Shamrock Techs., Inc. v. Medical Sterilization, Inc., 903 F.2d 789, 793-96 (Fed. Cir. 1990) (affirming privity finding where assignor was Vice President and in charge of companys infringing operations); Acushnet, 2000 WL 987979, at *2-3 (finding no privity where inventor-assignee was not a founder, not a senior technology executive, and held no sway over defendants . . . strategic decisions). 13

Case 1:11-cv-01258-SLR Document 13 Filed 02/28/12 Page 18 of 19 PageID #: 170

As Diamond and its progeny establish, this is a classic situation in which assignor estoppel applies. Having assigned the subject of the patents-in-suit for value, Mao and Zuk are barred from derogating what they assigned by seeking to invalidate the patents-in-suit. The estoppel applies to Mao and Zuk as individuals and to PAN, the company that Mao and Zuk founded, and over which Mao and Zuk exert substantial control as Chief Technology Officer and Chief Architect, respectively. Accordingly, PAN is barred from asserting an invalidity defense based on assignor estoppel. Diamond, 848 F.2d at 1226-27. VI. CONCLUSION For the reasons set forth above, Juniper respectfully requests that the Court strike PANs Second Affirmative Defense of Invalidity with respect to each of the patents-in-suit. MORRIS, NICHOLS, ARSHT & TUNNELL LLP

/s/ Jennifer Ying

OF COUNSEL: Morgan Chu Jonathan S. Kagan IRELL & MANELLA LLP 1800 Avenue of the Stars Suite 900 Los Angeles, CA 90067-4276 (310) 277-1010 Lisa S. Glasser IRELL & MANELLA LLP 840 Newport Center Drive Suite 400 Newport Beach, CA 92660 (949) 760-0991 February 28, 2012
5777927

Jack B. Blumenfeld (#1014) Jennifer Ying (#5550) 1201 North Market Street P.O. Box 1347 Wilmington, DE 19801 (302) 658-9200 jblumenfeld@mnat.com jying@mnat.com Attorney for Plaintiff Juniper Networks, Inc.

14

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CERTIFICATE OF SERVICE I hereby certify that on February 28, 2012, I caused the foregoing to be electronically filed with the Clerk of the Court using CM/ECF, which will send notification of such filing to all registered participants. I further certify that I caused copies of the foregoing document to be served on February 28, 2012, upon the following in the manner indicated: Philip A. Rovner, Esquire Jonathan A. Choa, Esquire POTTER ANDERSON & CORROON LLP 1313 North Market Street Hercules Plaza Wilmington, DE 19801 Daralyn J. Durie, Esquire Ragesh K. Tangri, Esquire Ryan M. Kent, Esquire DURIE TANGRI LLP 217 Leidesdorff Street San Francisco, CA 94111 VIA ELECTRONIC MAIL

VIA ELECTRONIC MAIL

/s/ Jennifer Ying

Jennifer Ying (#5550)