By way of background, PersonalWeb was the owner by assignment of five patents directed to methods and systems for identifying data and naming files in computer systems.
PersonalWeb originally sued Amazon and one customer for patent infringement in the
Where a user requests a file for a second time, S3 compares the ETag for the file stored in the user's cache to the file stored on S3. If the ETags are identical, S3 responds with a status code indicating that the user's computer already has a copy of the file, and further download is not needed. If S3 does not contain a file with the same ETag, that indicates that the contents of the file have been changed. In that event, S3 sends the user's browser the file containing the updated version of the file. This is referred to as a "conditional get request" and helps avoid unnecessary downloads, saving time and network bandwidth.
In the
Following the district court's claim construction order, PersonalWeb stipulated to the dismissal of all its claims against Amazon with prejudice. The district court subsequently issued an order dismissing all claims against Amazon with prejudice and entered final judgment against PersonalWeb.
Beginning almost four years later, PersonalWeb filed dozens of new lawsuits in various districts against website operators, many of which were Amazon's customers. PersonalWeb alleged that by using S3, Amazon's customers had infringed the above-referenced patents. Amazon intervened in the customer suits. Amazon also filed a declaratory judgment complaint against PersonalWeb, seeking an order barring PersonalWeb's infringement actions against Amazon and its customers in light of the prior action against Amazon in the
In its counterclaim against Amazon in the declaratory judgment action, PersonalWeb alleged that S3 infringed the asserted patents by using ETags to perform conditional operations. PersonalWeb made similar allegations against Amazon's customers.
Amazon moved for summary judgment in its declaratory judgment action and partial summary judgment in the customer suit. Amazon argued that dismissal with prejudice of PersonalWeb's action against Amazon in
The district court granted Amazon's motion in part, holding that claim preclusion barred PersonalWeb's claims regarding acts of infringement occurring prior to the final judgment in the
On claim preclusion, the district court determined that: (i) the with-prejudice dismissal in the
As to the Kessler doctrine, the district court held that the judgment in the
Finally, the district court determined that its summary judgment ruling also disposed of the eight customer lawsuits in which PersonalWeb alleged infringement based solely on the customer's use of Amazon's S3 system. The court dismissed those cases.
On appeal, the Federal Circuit rejected PersonalWeb's two primary challenges to the district court's decision, viz., that claim preclusion was inapplicable to the customer actions because the
On claim preclusion, the Court rejected PersonalWeb's sole argument, that the
The Court said, "In any event, regardless of the breadth of the specific infringement theories PersonalWeb pursued in the
With respect to the Kessler doctrine, the Court rejected PersonalWeb's contention that the doctrine did not apply here because Amazon was not an "adjudged non-infringer." Citing its own precedent, the Court held that nothing limits application of the Kessler doctrine to cases where issues of noninfringement or invalidity were "actually litigated." The Court held that PersonalWeb abandoned its claims against Amazon in
The Court noted that it had previously 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." Per the Court, for that reason, "the judgment in the
The Court expressly rejected PersonalWeb's narrower construction of the Kessler doctrine, under which a final, adverse disposition of a patentee's claims against the manufacturer of a particular product would not give the manufacturer protection from infringement actions against its customers for the use of the same product, unless the adverse decision was accompanied by a specific, contested adjudication of non-infringement. Per the Court, "[s]uch a proposition would leave the patentee free to engage in the same type of harassment that the Supreme Court sought to prevent in Kessler, a result that would be inconsistent both with Kessler itself and with this court's cases interpreting Kessler."
The Court also rejected PersonalWeb's contention that applying Kessler to voluntary dismissals with prejudice would contravene the public interest in the settlement of patent litigation. The Court said, "To the extent that a plaintiff wishes to settle an infringement action while preserving its rights to sue the same or other parties in the future, it can do so by framing the dismissal agreement to preserve any such rights that the defendant is willing to agree to."
Originally published
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