Vir2us, Inc. v. Sophos Inc.

Court of Appeals for the Fourth Circuit·Decided June 23, 2026·No. 25-1158·Unpublished

Opinion

UNPUBLISHED

UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

No. 25-1158

VIR2US, INC., Plaintiff – Appellee,

v.

SOPHOS INC.; INVINCEA, INC., Defendants – Appellants,

and

SOPHOS LIMITED; SOPHOS GROUP PLC, Defendants.

Appeal from the United States District Court for the Eastern District of Virginia, at Norfolk. Jamar Kentrell Walker, District Judge. (2:19-cv-00018-JKW-RJK)

Argued: May 7, 2026 Decided: June 23, 2026

Before KING, AGEE, and HEYTENS, Circuit Judges.

Affirmed by unpublished per curiam opinion.

ARGUED: Jeffrey A. Lamken, MOLOLAMKEN, LLP, Washington, D.C., for Appellant. Kevin P. Martin, GOODWIN PROCTER LLP, Boston, Massachusetts, for Appellees. ON BRIEF: Lauren F. Dayton, New York, New York, Lucas M. Walker, Washington, D.C.,

Bonnie K. St. Charles, MOLOLAMKEN LLP, Chicago, Illinois; Brian A. E. Smith, BARTKO PAVIA LLP, San Francisco, California, for Appellant. Wendy Leben, New York, New York, Douglas J. Kline, Boston, Massachusetts, Rohiniyurie Tashima, GOODWIN PROCTER LLP, Washington, D.C., for Appellees.

Unpublished opinions are not binding precedent in this circuit.

PER CURIAM:

This case involves the proper interpretation of the royalty provision of a patent license agreement under Virginia law. In a prior appeal, we held that one part of the salient definition meant that royalties were not due on the sales of certain of Defendants’ products. After rejecting the district court’s contrary conclusion, we remanded for that court to address whether another part of the definition applied to those products. On remand, the district court relied on a plain-language analysis to conclude that the second part of the definition did not apply to the products at issue, leading it to deny summary judgment to Plaintiff and award summary judgment to Defendants.

Plaintiff appeals, arguing that the definition’s plain language supports its interpretation, meaning that it should have been awarded summary judgment. In the alternative, Plaintiff argues that the provision is ambiguous and summary judgment should not have been granted at all. Finding no error in the grant of summary judgment to Defendants, we affirm the judgment of the district court.

I.

This case involves competing corporations that design and sell computer-security software. 1 Plaintiff Vir2us, Inc., is a California corporation that, among other things,

1

When reciting the underlying facts, we draw liberally from our prior decision’s account. Vir2us, Inc. v. Sophos Inc., 2023 WL 2136379 (4th Cir. Feb. 21, 2023) (per curiam).

developed and patented antivirus software that uses a process called “containerization” to isolate and then test potentially malicious files in a virtual safe room.

Defendant Invincea, Inc., is a Delaware corporation that sells antivirus software, including a line of products called “X by Invincea.” Some products in this line employ containerization, while others employ a different type of antivirus technology called “machine learning.” At all times relevant to this appeal, X by Invincea products used the same underlying source code regardless of which type of technology the individual product employed. Invincea then activated (or left deactivated) the specific portions of source code for the product a purchaser licensed: containerization, machine learning, or both.

After Vir2us sued Invincea for allegedly selling software that infringed Vir2us’s patented containerization technology, the parties entered into a settlement agreement (“the Agreement”). One part of the July 2016 Agreement granted Invincea a “worldwide license” to use “all patents and patent applications owned by Vir2us.” S.J.A. 717, 718. Another provision bound Invincea to a number of conditions, including that it would (1) deliver quarterly reports to Vir2us containing specific information regarding certain of its sales, and (2) pay Vir2us a royalty for certain other sales. While both of these obligations are relevant here, the second obligation—the royalty provision—is the focal point of the parties’ dispute.

The reporting and royalty provisions require Invincea to report how many of certain products are sold and then pay a royalty only “for each Container Products and Services Sold.” S.J.A. 719. (We will shorthand this label to “Container Products.”) The Agreement defines Container Products as “the accused container products currently called Invincea X

Endpoint – Spearphish Protection and formerly known as Invincea FreeSpace, Invincea Enterprise, and Invincea Advanced Endpoint Protection, as well as natural evolutions and derivations of these products.” S.J.A. 717. 2 The first part of the definition thus identifies four specific products by name, while the second clause extends the definition to “natural evolutions and derivations” of those listed products. Id.

The year after the Agreement was executed, Invincea became a wholly-owned subsidiary of Defendant Sophos, Inc., which is also a computer-security software company. Before acquiring Invincea, Sophos developed and marketed its own software, including Sophos Intercept X, Sophos Intercept X for Server, and Sophos Sandstorm. Sophos acquired Invincea to access its machine-learning technology, and, consistent with that objective, Sophos integrated Invincea’s source code into its own software and activated only its machine-learning technology (i.e., Cynomix files). It’s undisputed that none of Sophos’s products employ containerization technology. Put differently, some of Sophos’s post-acquisition products contain source code that is also found in X by Invincea products, but none of Sophos’s products employ X by Invincea’s containerization technology.

After acquiring Invincea, Sophos undertook Invincea’s reporting and royalty obligations for X by Invincea products, but it did not pay royalties on sales for any of its

2

The accused container product Invincea X Endpoint – Spearphish Protection activates containerization-enabling files in the source code and, although it has source code (including the files identified as Cynomix.cpp and Cynomix.h) related to machine-learning processes, those files are deactivated.

own products. And approximately a year later, Sophos announced an immediate end to its sale of all X by Invincea products.

The following year (2019), Vir2us invoked the federal courts’ diversity jurisdiction to sue Invincea and Sophos for breach of contract (the Agreement) under Virginia law. 3 Vir2us alleged, among other things, that Invincea and Sophos (1) failed to provide accurate quarterly reports (Count I), and (2) owed it more money under the royalty provision (Count II). Relevant to this appeal, Vir2us asserted that post-acquisition versions of some Sophos products (including Sophos Intercept X and Sandstorm, but collectively, “the disputed Sophos products”) were actually Container Products subject to the Agreement’s royalty provision. Invincea and Sophos denied these allegations, and Invincea filed a counterclaim alleging that Vir2us breached the Agreement by failing to comply with another of its provisions, which is not at issue in this appeal.

An earlier summary judgment order and appeal centered around the first part of the Container Products’ definition—the exhaustive list of specific products that fall within its scope—while this appeal concerns the last part of the definition—“as well as natural evolutions and derivations of those products.” S.J.A. 717. While different parts of the definition are at issue now than were before, we must interpret this language in light of our prior holding and understanding of the Agreement. Accordingly, we briefly recount the

Complete diversity between the parties exists and the dispute involves more than

3

$75,000. See 28 U.S.C. § 1332.

The Agreement contains a choice-of-law clause that provides for application of Virginia law; moreover, throughout the proceedings, the parties have represented that Virginia law applies. The district court used Virginia law, and we do also.

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