In re PersonalWeb Technologies LLC, No. 2019-1918 (Fed. Cir. (N.D. Cal.) June 17, 2020). Opinion by Bryson, joined by Wallach and Taranto.
PersonalWeb initially sued Amazon and one of its customers for infringement of several patents related to creating “substantially unique” identifiers for data items. After the district court issued its claim construction order, PersonalWeb stipulated to a dismissal with prejudice.
Later, PersonalWeb filed dozens of new lawsuits against website operators, many of which were Amazon customers, for infringement of the same patents. Amazon intervened in the actions against its customers and also filed a declaratory judgment action seeking an order declaring that PersonalWeb’s lawsuits against those customers were barred as a result of the prior action that had been dismissed with prejudice. The district court agreed with Amazon, holding that claim preclusion barred PersonalWeb’s claims regarding acts of infringement occurring prior to the final judgment in the prior action, and that the Kessler doctrine barred PersonalWeb’s claims directed to later acts of infringement. PersonalWeb appealed.
On appeal, PersonalWeb argued that claim preclusion does not apply because the prior action involved a different system feature, and therefore a different cause of action, than the feature at issue in the new cases. The Federal Circuit disagreed, explaining that a “party must raise in a single lawsuit all the grounds of recovery arising from a particular transaction” and that, regardless of the theories pursued in the prior action, PersonalWeb’s complaints in both actions related to the same set of transactions.
PersonalWeb also argued that the with-prejudice dismissal of the prior action did not constitute an adjudication of noninfringement and is therefore insufficient to trigger the Kessler doctrine. The Federal Circuit again disagreed. PersonalWeb “abandoned its claims against Amazon without reservation, explicit or implicit,” and the dismissal “resolved the dispute about liability” thus operating “as an adjudication of non-liability for infringement for purposes of invoking the Kessler doctrine.”