Second Infringement Action Against Customers of Earlier Defendant Barred by Claim Preclusion

In In re: PersonalWeb Techs., LLC, No. 2019-1918 (Fed. Cir. June 17, 2020), the Federal Circuit affirmed the district court’s ruling that a dismissal with prejudice in an earlier case against Amazon barred PersonalWeb’s later infringement actions against Amazon’s customers.

PersonalWeb asserted five patents against multiple Amazon customers in the EDTX. Amazon intervened, undertaking the defense of its customers. It pursued a declaratory judgment against PersonalWeb to bar the current action based on a prior litigation against Amazon asserting the same patents and accusing the same technology, which was dismissed with prejudice following a stipulation. Amazon moved for summary judgement, and it was granted in part, holding that PersonalWeb’s claims against Amazon’s customers were barred by claim preclusion.

PersonalWeb appealed, first arguing that the prior action was different because it accused a different feature of the accused technology. The Federal Circuit disagreed because the overall system was the same and the purportedly newly accused feature was acknowledged in the infringement contentions of the earlier case. PersonalWeb next challenged the dismissal under the Kessler doctrine, arguing that because “no issues” were litigated before dismissal, the Kessler doctrine is not appropriate, and Amazon cannot be an “adjudged non-infringer.” The Federal Circuit again disagreed holding that litigation is not a prerequisite to the Kessler doctrine.