Fed Circuit blocks patent suits against Amazon customers
Amazon has successfully intervened in a patent infringement case against its corporate customers, including Vice and Buzzfeed, and had the claims thrown out.
In a precedential decision issued yesterday, June 17, the US Court of Appeals for the Federal Circuit ruled that PersonalWeb Technologies’ claims were barred under the doctrine of claim preclusion.
That’s because they were the same issues litigated in a previous case against Amazon itself, which was dismissed with prejudice, meaning they couldn’t be litigated again.
The claims relate to Amazon’s S3 web storage system. S3 allows companies to store data, like pictures, which can be downloaded by individual users when they visit those companies’ websites.
PersonalWeb sued Amazon in 2011 at the US District Court for the Eastern District of Texas, accusing it of infringing patents for a proprietary data-tagging system known as TrueName.
According to PersonalWeb, S3 uses features covered by the TrueName patents to identify unique pieces of data.
But the Eastern Texas court dismissed PersonalWeb’s suit against Amazon with prejudice in June 2014, meaning PersonalWeb couldn’t raise the claims again.
Then, in 2018, PersonalWeb hit eight of Amazon’s customers with lawsuits accusing them of infringing the TrueName patents through their use of the S3 system.
Amazon intervened on behalf of its customers, and asked the US District Court for the Northern District of California to declare that its customers hadn’t infringed the S3 patents.
The Northern California court ruled in favour of Amazon, finding PersonalWeb was barred from raising the claims again after they were dismissed with prejudice more than four years previously by the Eastern Texas court.
PersonalWeb appealed to the Federal Circuit, arguing that although the claims in both rounds of litigation related to S3, they dealt with different features.
But the appeals court was unmoved, and backed the California court’s previous ruling. Writing on behalf of a three-judge panel, Circuit Judge William Bryson said it was “clear that the complaints in the customer cases and the complaint in the Texas case relate to the same set of transactions”.
“At most, PersonalWeb has shown that it emphasised different facts in support of a different theory of infringement in the prior case. But that is not enough to avoid claim preclusion,” Bryson added.
Kessler doctrine
The Federal Circuit panel also rejected another argument raised by PersonalWeb, which relied on a “less frequently invoked doctrine” stemming from the US Supreme Court’s 1907 Kessler ruling.
PersonalWeb argued that the Kessler doctrine, which forbids follow-up suits against an ‘adjudged non-infringer’s’ customers, did not apply in this case. That’s because, PersonalWeb argued, its lawsuit against Amazon was voluntarily dismissed with prejudice, meaning the e-commerce company was not an “adjudged non-infringer”.
But according to the Federal Circuit, the “policy that drove the Supreme Court’s decision in Kessler would be ill-served by adopting the rule proposed by PersonalWeb”.
“The court in Kessler recognized that even if a manufacturer of goods were to prevail in a patent infringement suit, the manufacturer could be deprived of the benefits of its victory if the patentee were free to sue the manufacturer’s customers,” Bryson wrote.
Allowing PersonalWeb to pursue follow-up lawsuits against Amazon’s customers would defeat the purpose of settling patent litigation, the panel agreed.
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