By Brian Craig, J.D.
Patent owner PersonalWeb’s suit against Amazon and its customers was barred by claim preclusion and the Kessler doctrine based on a stipulated dismissal with prejudice in a prior action.
The federal district court in San Jose, California, correctly concluded that PersonalWeb’s infringement suit against Amazon and its customers, to the extent it involved ETags for webpage asset files generated by S3 web servers, was barred by the Kessler doctrine and claim preclusion, the U.S. Court of Appeals for the Federal Circuit has held. The Federal Circuit concluded that a stipulated dismissal with prejudice in a prior litigation in the federal district court in Texas operated as a final judgment involving essentially the same parties and the same claims (In re PersonalWeb Technologies LLC, June 17, 2020, Bryson, W.).
PersonalWeb holds several patents that address the problem of how to efficiently name and identify files on a computer network. The common specification for the patents describes how the patent addresses file naming problems. The specification notes that the same file name in different folders may refer to different items, whereas different file names in the same folder may refer to the same item. The patents involve using a cryptographic hash function to produce a content-based "True Name" identifier for a file, which fixes this problem.
PersonalWeb’s infringement allegations involve website cache management. Cached files help individuals load webpages more quickly and help web servers save bandwidth by not delivering the same data repeatedly. Website operators, however, want these individuals to stop using cached files once a file has changed. Therefore, it is important to be able to tell a browser when the file has changed so that the browser knows to download a new version of the file. PersonalWeb claims that its "True Name" accomplishes this task. Amazon’s Simple Storage Service (S3) provides web-based storage. S3 generates "ETag" headers for the objects that it stores. These ETags are comparable to True Name in that extra bits of information are used to describe a file. For most objects, S3 generates the ETag using the MD5 hash algorithm. This ensures that when a file’s contents change, the ETag also changes. Similar to TrueName, clients can use ETag for cache management.
PersonalWeb previously sued Amazon in federal district court in Texas, alleging infringement of eight related patents by Amazon’s S3 service. This suit was eventually dismissed by stipulation with prejudice. Subsequently, PersonalWeb sued Amazon in the Northern District of California involving the patents that had been the subject of the Texas suit. The suit filed in California involved the use of ETags for cache management. The California court granted Amazon’s motion for summary judgment on the basis of claim preclusion and the Kessler doctrine, concluding that the Texas dismissal with prejudice was a final judgment on the merits. PersonalWeb appealed.
Claim preclusion. The Federal Circuit first concluded that the district court properly ruled that claim preclusion principles barred Personal Web from pursuing infringement claims in the eight customer cases for actions predating the judgment in the Texas case. Under the doctrine of claim preclusion, a judgment on the merits in a prior suit bars a second suit involving the same parties or their privies based on the same cause of action. Claim preclusion bars both those claims that were brought as well as those that could have been brought in the earlier lawsuit.
The sole basis for PersonalWeb’s challenge to the district court’s finding on claim preclusion was its contention that the Texas action and the customer suits involved different causes of action. PersonalWeb asserted that in the Texas case, it accused only the multipart upload functionality of Amazon’s S3 system. In the customer cases before the California court, PersonalWeb contended it had accused the "cache control" functionality, an entirely different feature of Amazon’s S3 system. The Federal Circuit found that the complaints in the customer cases and the complaint in the Texas case related to the same set of transactions. In the Texas case, PersonalWeb alleged that it had been injured by acts of infringement consisting of the manufacture, use, sale, importation, and/or offer for sale of the Amazon S3 product. Every alleged act of infringement in the eight customer cases brought in California likewise were based on the use of the same Amazon S3 product. At most, PersonalWeb showed that it emphasized different facts in support of a different theory of infringement in the prior case. But that was not enough to avoid claim preclusion, the Federal Circuit found.
Kessler doctrine. The Federal Circuit also concluded that the Kessler doctrine, which helps fill the gap left by claim and issue preclusion, also barred the claims. The Kessler doctrine was first adopted by the U.S. Supreme Court in Kessler v. Eldred, 206 U.S. 285 (1907) by allowing an adjudged non-infringer to avoid repeated harassment for continuing its business as usual post-final judgment in a patent action where circumstances justify that result. The Federal Circuit has generally held that claim preclusion cannot apply to acts of alleged infringement that occur after the final judgment in the earlier suit. The Kessler doctrine bars all claims that were brought or "could have been brought" in the prior action.
The policy that drove the Supreme Court’s decision in Kessler would be ill-served by adopting the rule proposed by PersonalWeb. The Federal Circuit has characterized the Kessler doctrine as granting a "limited trade right" that attaches to the product itself. The scope of that right is not limited to cases involving a finding of non-infringement that was necessary to the resolution of an earlier lawsuit, but extends to protect any products as to which the manufacturer established a right not to be sued for infringement. For that reason, the judgment in the Texas case, pursuant to a with-prejudice dismissal, protected Amazon’s S3 product from subsequent infringement challenges, even when those challenges were directed at Amazon’s customers rather than at Amazon itself.
The Federal Circuit rejected PersonalWeb’s contention that the issue of non-infringement must be "actually litigated" in order to invoke the Kessler doctrine. PersonalWeb’s stipulated dismissal with prejudice in the Texas case operated as an adjudication on the merits for claim preclusion purposes. Therefore, the Federal Circuit affirmed the decision of the district court.
This case is No. 19-1918.
Attorneys: Michael Amory Sherman (Stubbs Alderton & Markiles LLP) for PersonalWeb Technologies, LLC. J. David Hadden (Fenwick & West, LLP) and Benjamin J. Byer (Davis Wright Tremaine LLP) for Patreon, Inc. and Vox Media, Inc.
Companies: PersonalWeb Technologies, LLC; Patreon, Inc.; Vox Media, Inc.
MainStory: TopStory Patent TechnologyInternet GCNNews FedCirNews
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