In Patent Feud, MoFo Goes on the Attack
Opening a new front in a heated patent war, Palo Alto Networks and its lawyers at Morrison & Foerster sued Juniper Networks in Santa Clara County Superior Court this week, seeking to upend a settled doctrine of patent law.
The two network security firms have been embroiled in litigation in Delaware since 2011 when Sunnyvale-based Juniper Networks sued Palo Alto Networks for stepping on a half-dozen key patents related to firewall technology.
But this week Palo Alto Networks fired back with its own patent suit in the Northern District of California as well as with an unusual state court action arguing the so-called assignor estoppel doctrine, which says a patent's former owner cannot later challenge its validity, violates California's expansive non-compete laws.
"To my knowledge, there has been no case like this before," said IP litigator Sasha Rao, a partner at Bingham McCutcheon. "It seems like a novel use of the California Business and Professions Code."
Palo Alto Networks, or PAN, was founded by Juniper's former chief security technologist, making fights over assignor estoppel a key issue in the Delaware case.
PAN founder Nir Zuk worked at Juniper for roughly a year after the company acquired his employer NetScreen Technologies Inc. in 2004. Zuk then left Juniper in early 2005 and started his own company. Yuming Mao, another NetScreen veteran, joined Zuk at PAN the following year.
By 2007, their new company based in Santa Clara released its first products that directly competed against Juniper.
For each patent Juniper is asserting in the Delaware litigation, either Zuk, Mao or both is named as an inventor and, in all but one case, assigned "the entire right, title and interest" of each invention over the company, according to court filings in the case. On that basis, Juniper has moved aggressively to knock out any invalidity defense under the assignor estoppel doctrine, which prevents an individual with rights to a patent from later asserting invalidity. The same bar applies to a corporation later founded by the assignor.
Juniper is represented by Irell & Manella partners Morgan Chu, Jonathan Kagan, Lisa Glasser and David McPhie as well as Jack Blumenfeld and Jennifer Ying of Morris, Nichols, Arsht & Tunnell in Wilmington.
So far, U.S. District Judge Susan Robinson in Delaware has ruled on just one patent, concluding it fell squarely within the doctrine as defined by the U.S. Court of Appeals for the Federal Circuit. And in a pending motion for summary judgment, Juniper seeks the same determination as to all the patents in suit.
For one patent, Zuk never officially signed over his rights as an inventor, according to court records. But Juniper's lawyers argue Zuk was already planning to leave Juniper and purposefully evaded signing in order to impede the patent application.
"It would be the epitome of inequity to permit Zuk to interfere with the filing of a patent as he was plotting his exit strategy" and then use it to get around the estoppel doctrine, Juniper's lawyers stated.
In their state court suit, attorneys representing Zuk and Palo Alto Networks argue that Juniper's reliance on assignor estoppel to short circuit a patent suit stifles employee mobility in violation of state law, which favors free competition.
"Juniper's invocation of assignor estoppel violates California law against restraints on competition," the complaint states.
The MoFo team includes Harold McElhinny and Michael Jacobs, who led Apple's trial team in last year's showdown with Samsung, as well as partners Matthew Kreeger and Richard Hung. MoFo replaced Durie Tangri earlier this year as lead counsel to Palo Alto Networks.
Juniper's motive, the lawyers contend, is to quash an upstart competitor.
In essence, the assignment agreements signed by Zuk amount to a covenant not to compete, according to the suit, which would restrain him "from practicing his profession in the network security industry years after he left Juniper's employ."
"They are invalid, the assignments are unenforceable, null, and void, and ownership of the resulting patents must revert to Mr. Zuk," the suit states.
To Bingham's Rao, the overriding question is whether a court considers this "a federal cause of action or a state law cause of action with underlying patent law issues."
The U.S. Supreme Court's 2013 decision in Gunn v. Minton established that a legal malpractice suit with underlying patent law issues could be tried in state court, she noted. That, Rao said, could benefit PAN.