The United States Court of Appeals for the Ninth Circuit recently affirmed a California federal district court’s dismissal of a shareholder’s securities fraud complaint against cybersecurity technology company Finjan Holdings, Inc. In re Finjan Holdings, Inc., No. 21-16702, 2023 WL 329413 (9th Cir. Jan. 20, 2023). While the ruling is a win for Finjan, it continues the Ninth Circuit’s minority view on the ease with which shareholders can initiate securities law claims arising from tender offers.
Case Background
Finjan develops security technologies for mobile devices and invests in intellectual property related to mobile and computer security. 2023 WL 329413, at *3. While it holds itself out as a cybersecurity company, most of Finjan’s revenue comes from (1) lawsuits accusing others of violating its IP or (2) threatening patent infringement lawsuits to extract licenses for the use of its IP. Id. As a non-practicing entity, Finjan has litigated against many cybersecurity technology software providers, achieving several settlements and multi-million dollar verdicts.
In the summer of 2020, Finjan was sold to Fortress Investment Group, LLC (“Fortress”) after a strategic review process Finjan conducted with the help of Atlas Technology Group LLC (“Atlas”), beginning in 2018. Id. at *2-3. The share price for Finjan, which went public in 2013, was $3.94 on Nasdaq on the day it announced it had hired Atlas for the strategic review in 2018, and early parties’ offers expressing...
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