Case 5:18-md-02834-BLF Document 268 Filed 10/25/18 Page 1 of 9
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`
`BRENT P. RAY (pro hac vice)
`brent.ray@kirkland.com
`RYAN M. HUBBARD (pro hac vice)
`ryan.hubbard@kirkland.com
`KIRKLAND & ELLIS LLP
`300 N. LaSalle
`Chicago, IL 60654
`Telephone: (312) 862-2000
`Facsimile: (312) 862-2200
`
`Attorneys for Defendant
`PAYPAL, INC.
`
`
`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF CALIFORNIA
`SAN JOSE DIVISION
`
`
`
`IN RE PERSONALWEB TECHNOLOGIES,
`LLC, ET AL., PATENT LITIGATION
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`
`
`
`
`PERSONALWEB TECHNOLOGIES, LLC, a
`Texas limited liability company, and LEVEL 3
`COMMUNICATION, LLC, a Delaware limited
`liability company
`
`Plaintiffs,
`
`v.
`
`
`
`PAYPAL, INC., a Delaware corporation,
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`
`
`
`
`
`
`Defendant.
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`
`
`Case No. 5:18-md-02834-BLF
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`DEFENDANT PAYPAL, INC.’S
`OPPOSITION TO PLAINTIFFS
`PERSONALWEB TECHNOLOGIES, LLC
`AND LEVEL 3 COMMUNICATION, LLC’S
`MOTION FOR LEAVE TO EXTEND
`PERIOD OF SERVICE TO DEFENDANTS
`NUNC PRO TUNC
`
`Case No. 5:18-cv-00177-BLF
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`DEFENDANT PAYPAL, INC.’S OPP. TO MOTION
`FOR LEAVE TO EXTEND PERIOD OF SERVICE
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`
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`5:18-cv-00177-BLF
`5:18-md-05373-BLF
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`Case 5:18-md-02834-BLF Document 268 Filed 10/25/18 Page 2 of 9
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`Since January 2018, PersonalWeb filed dozens of cases across the country in an attempt to
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`monetize its long-expired patents, and it has stated that it will file dozens more before the end of the
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`year. But in its haste to target even more companies for litigation, PersonalWeb neglected many of the
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`cases that are already pending.
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`PersonalWeb filed this case against Venmo, Inc. (“Venmo”) on January 8, 2018. Per the Federal
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`Rules of Civil Procedure, PersonalWeb had until April 9, 2018 to effect service. Fed. R. Civ. P. 4(m). It
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`failed to do so. Instead, PersonalWeb now requests that the Court grant it a new 90-day window for
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`service to cover for the fact that it neglected to serve the correct defendant, PayPal, Inc. (“PayPal”), until
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`October 16, 2018, 190 days after the initial 90-day window expired.1 As a result of PersonalWeb’s
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`delay, PayPal was not served until after this Court held motion hearings and case management
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`conferences.
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` “If a defendant is not served within 90 days after the complaint is filed, the court—on motion or
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`on its own after notice to the plaintiff—must dismiss the action without prejudice against that defendant
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`or order that service be made within a specified time.” Fed. R. Civ. P. 4(m). Only if the plaintiff is able
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`to show “good cause” for its failure to effect service must the court “extend the time for service for an
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`appropriate period.” Id. In its Motion for Leave to Extend Period of Service, PersonalWeb points to the
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`July 13, 2018 stay as the reason it could not amend its complaint to name PayPal as the defendant and,
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`therefore, could not timely serve PayPal. This excuse ignores the fact that the stay was instituted 95
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`days after the April 9, 2018 deadline for service. PersonalWeb also ignores the fact that it could have
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`avoided needing such an amendment in the first place. PersonalWeb’s Motion provides no excuse,
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`much less good cause, for its failure to timely serve PayPal. Ensuring PersonalWeb’s compliance with
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`the Federal Rules will not prejudice PersonalWeb, who could refile their case, but it will prevent
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`PersonalWeb from retaining the benefit of an extended damages period despite untimely service to
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`PayPal. PersonalWeb’s Motion should be denied, and the Court should dismiss the action under Rule
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`4(m).
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`1 PayPal objects to this service as untimely under Fed. R. Civ. P. 4(m) and reserves its right to seek
`dismissal under Fed. R. Civ. P. 12(b)(5). PayPal makes a limited appearance for the purposes of
`addressing PersonalWeb’s motion.
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`DEFENDANT PAYPAL, INC.’S OPP. TO MOTION
`FOR LEAVE TO EXTEND PERIOD OF SERVICE
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`1
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`5:18-cv-00177-BLF
`5:18-md-05373-BLF
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`

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`Case 5:18-md-02834-BLF Document 268 Filed 10/25/18 Page 3 of 9
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`I.
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`FACTUAL BACKGROUND
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`PersonalWeb filed this case against Venmo on January 8, 2018 in the Northern District of
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`California. At the time, Venmo did not exist as a corporate entity and had relinquished the right to
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`conduct business in California several years prior. Ex. 1 (“Certificate of Surrender of Right to Transact
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`Intrastate Business”). On the same day, PersonalWeb requested that the Court issue a summons to
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`“Venmo/PayPal, Inc.” Dkt. 4 (“Proposed Summons”). There is no evidence that PersonalWeb ever
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`attempted to serve Venmo, and Venmo never appeared in this case or filed a motion to stay.
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`On March 1, 2018 (with 39 days remaining for service), PersonalWeb was notified that it had
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`incorrectly named a defendant in another action filed on January 8, 2018, and on April 6 (with 3 days
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`remaining), PersonalWeb promised to amend that complaint. Mot. at 2–3. PersonalWeb states that it
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`became aware “[d]uring this time” “that PayPal, Inc., and not the entity sued … was the true and correct
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`owner and operator of the [allegedly] infringing website venmo.com.” Id. at 3. Yet PersonalWeb did
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`not amend its complaint or serve a new summons on PayPal at that time.
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`On April 27, 2018, eighteen days after PersonalWeb’s deadline to serve the complaint in this
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`case expired, the Court held a hearing on motions to stay filed by other defendants and stayed those
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`fourteen underlying actions. Order Regarding Stay, PersonalWeb Technologies, LLC., et al. v.
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`Atlassian, Inc., Case No. 18-cv-00154-BLF, (N.D. Cal. Apr. 27, 2018) (Dkt. 42); see also Mot. at 3.
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`PersonalWeb admits that this case was not stayed until July 13, 2018, 95 days after service was due.
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`Mot. at 3 (stating that, by joint stipulation filed July 13, 2018, “the parties agreed to stay all of the
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`actions pending against the website operator defendants”).
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`PersonalWeb finally amended its complaint to name PayPal as a defendant on October 4, 2018.
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`PersonalWeb served PayPal on October 16, 2018, over nine months after originally filing its complaint
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`against Venmo and 190 days after the deadline for service.
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`II.
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`PERSONALWEB HAD NO GOOD CAUSE FOR ITS BELATED SERVICE
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`PersonalWeb never sets forth any good cause for why it could not have amended its complaint
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`and served PayPal within the time allotted by Rule 4(m). “In the Ninth Circuit, at a minimum, ‘good
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`cause’ means excusable neglect” (AF Holdings LLC v. Does 1-135, 2012 WL 1038671, at *3 (N.D. Cal.
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`Mar. 27, 2012) (quoting In re Sheehan, 253 F.3d 507, 512 (9th Cir. 2001) (internal quotation marks
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`DEFENDANT PAYPAL, INC.’S OPP. TO MOTION
`FOR LEAVE TO EXTEND PERIOD OF SERVICE
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`2
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`5:18-cv-00177-BLF
`5:18-md-05373-BLF
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`Case 5:18-md-02834-BLF Document 268 Filed 10/25/18 Page 4 of 9
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`omitted)), and “[t]he burden of showing good cause is on the Plaintiff.” Crowley v. Factor 5, Inc., 2014
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`WL 1868851, at *2 (N.D. Cal. May 7, 2014) (citing Wei v. State of Hawaii, 763 F.2d 370, 372 (9th Cir.
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`1985)). “The ‘good cause’ exception to Rule 4(m) applies ‘only in limited circumstances’ and is not
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`satisfied by ‘inadvertent error or ignorance of the governing rules.’” Id. (quoting Hamilton v. Endell,
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`981 F.2d 1062, 1065 (9th Cir. 1992)).
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`PersonalWeb does not allege that it attempted, but failed to complete, service to PayPal; that it
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`was “confused about the requirements of service”; or that PayPal evaded service. Cf. AF Holdings,
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`2012 WL 1038671, at *3 (listing situations that give rise to good cause). Indeed, the facts above suggest
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`the opposite. At best, PersonalWeb attempts to argue that “due to the litigation stay then in place,”
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`“PersonalWeb was unable to file amended complaints needed to serve the[] Defendants,” including
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`PayPal. Mot. at 1. As an initial matter, a plaintiff’s “desire to amend his complaint before effecting
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`service does not constitute good cause.” Wei v. State of Hawaii, 763 F.2d 370, 372 (9th Cir. 1985).
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`Moreover, the aforementioned stay would not have prevented PersonalWeb from amending its
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`complaint had PersonalWeb acted promptly and diligently after learning of its mistake. PersonalWeb
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`also could have avoided an amendment in the first place had it exercised diligence when searching
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`publicly available information for the identity of the proper defendant. There is no reason for the Court
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`to exercise its discretion to allow PersonalWeb more time for service.
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`A.
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`PersonalWeb Could and Should Have Amended Its Complaint Prior to Any Stay
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`PersonalWeb knew months before the July 13, 2018 stay that it had sued the incorrect entity
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`(Venmo), as well as the identity of the correct entity (PayPal). By its own admission, on March 1,
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`2018—over a month from the 90-day deadline for service—PersonalWeb was on notice that it had
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`named an incorrect defendant in another case that was also filed on January 8, 2018, and thereafter
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`began to investigate Venmo. Mot. at 2–3. According to PersonalWeb’s own narrative, it knew prior to
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`the July 13, 2018 stay that PayPal, not Venmo, was the correct defendant and that it would need to file
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`an amended complaint and issue a new summons to PayPal.
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`PersonalWeb could have (and should have) sought leave from the Court to file an amended
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`complaint and, if necessary, a motion to extend time for service before the institution of the July 13,
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`2018 stay. It did not, even though “[p]laintiffs are responsible for diligently prosecuting their case,
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`DEFENDANT PAYPAL, INC.’S OPP. TO MOTION
`FOR LEAVE TO EXTEND PERIOD OF SERVICE
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`3
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`5:18-cv-00177-BLF
`5:18-md-05373-BLF
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`Case 5:18-md-02834-BLF Document 268 Filed 10/25/18 Page 5 of 9
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`including taking reasonable steps to ensure that service is timely.” Crowley, 2014 WL 1868851, at *3.
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`As such, PersonalWeb’s “attempt to insulate [itself] from responsibility for [its] lack of diligence in
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`complying with Rule 4(m) is completely unavailing.” Id. PersonalWeb cannot now use the July 13,
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`2018 stay2 as an excuse for its failure to “diligently prosecut[e]” its case. See id. (finding no good cause
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`where, inter alia, plaintiffs did not “promptly move to request an extension of the Rule 4(m) deadline or
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`diligently attempt to effect service after” receiving notice of its oversight).
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`B.
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`PersonalWeb Should Have Known the Correct Party Prior to Filing Suit
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`Contrary to PersonalWeb’s claim, no new facts “emerged post-filing,” Mot. at 2, that
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`PersonalWeb could not have discovered from even a minimal pre-suit investigation. Simply visiting the
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`accused website, venmo.com, in the months before and after the filing of the complaint would have
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`notified PersonalWeb that PayPal is the operator of the website. Ex. 2 (“Wayback Machine Capture of
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`Venmo, Oct. 1, 2017) (“Venmo is a service of PayPal, Inc., a licensed provider of money transfer
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`services. . . . All money transmission is provided by PayPal, Inc.”); Ex. 3 (“Wayback Machine Capture
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`of Venmo, Apr. 6, 2018”) (same).
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`A free search of the California Secretary of State website shows that Venmo surrendered its right
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`to do business in the State on July 7, 2014, three-and-a-half years before PersonalWeb filed its
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`complaint. Ex. 1 (“Certificate of Surrender of Right to Transact Intrastate Business”). For
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`confirmation, a search of the public records of Delaware’s Department of State for “Venmo, Inc.”
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`reveals that Venmo ceased to exist as of May 15, 2014 due to a merger. Ex. 4 (“Venmo, Inc. Status
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`Report”) at 1. Even a simple visit to the Wikipedia entry for “Venmo” would have informed
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`PersonalWeb that Braintree acquired Venmo in 2012 and that PayPal acquired Braintree in 2013. Ex. 5
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`(“Wayback Machine Capture of Wikipedia, Dec. 24, 2017) at 1; Ex. 6 (“Wayback Machine Capture of
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`Wikipedia, Mar. 29, 2018”) at 2.
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`“Mere attorney inadvertence … does not qualify as good cause” (AF Holdings, 2012 WL
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`1038671, at *3 (citing Wei, 763 F.2d at 372)), nor does a lack of diligence. See, e.g., Johnson v. Mao Ge
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`2 The April 27, 2018 stay is further irrelevant here because, as PersonalWeb notes, it pertained only to
`the “fourteen (14) underlying actions in which the defendant filed a motion to stay.” Mot. at 3
`(emphasis added).
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`DEFENDANT PAYPAL, INC.’S OPP. TO MOTION
`FOR LEAVE TO EXTEND PERIOD OF SERVICE
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`4
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`5:18-cv-00177-BLF
`5:18-md-05373-BLF
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`Case 5:18-md-02834-BLF Document 268 Filed 10/25/18 Page 6 of 9
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`Bascom LLC, 2017 WL 2572593, at *2 (N.D. Cal. June 14, 2017) (“Courts have dismissed suits for
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`insufficient service of process where the party defending service was not diligent, even after learning of
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`the defective service.”); Crowley, 2014 WL 1868851, at *3 (finding no good cause where plaintiffs were
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`not diligent in complying with Rule 4(m)). PersonalWeb’s failure to use publicly available resources to
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`discover the correct identity of venmo.com’s operator, as well as its failure to timely request leave to
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`amend the complaint, cannot give rise to good cause.
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`C.
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`There Is No Reason for the Court to Exercise Its Discretion to Permit Late Service
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`PersonalWeb “does not argue … that any of the traditional factors—statute of limitations bars,
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`prejudice to the defendant, actual notice of a lawsuit, and eventual service—militate in favor of
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`extending the time to serve” PayPal. AF Holdings, 2012 WL 1038671, at *6. Indeed, because
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`PersonalWeb served PayPal over ninth months after the original complaint was filed, PayPal was denied
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`the chance to participate in the scheduling conferences, hearings, and motion practice that have occurred
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`thus far. PersonalWeb has also provided no evidence that it attempted to serve PayPal or that PayPal
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`“evaded service or concealed a defect in attempted service.” Crowley, 2014 WL 1868851, at *4 (noting
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`absence of such arguments and ultimately declining to exercise discretion to extend time for service).
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`Nor has PersonalWeb “shown that [it] will suffer prejudice if” this action is dismissed. Id.
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`PersonalWeb’s claim of patent infringement will not be barred wholesale by any statute of limitations.
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`Cf. AF Holdings, 2012 WL 1038671, at *3 (noting that “[i]n making extension decisions under Rule
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`4(m), a district court may consider factors like a statute of limitations bar”).
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`Forcing PersonalWeb to refile its complaint against the correct defendant would merely reduce
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`the potential damages period. See 35 U.S.C. § 286. After waiting for more than a year after its patents
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`expired to bring suit, PersonalWeb cannot now complain that a loss of damages would be prejudicial.
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`See Bender v. LG Elecs. U.S.A., Inc., 2009 WL 4730900, at *3 (N.D. Cal. Dec. 7, 2009) (dismissing
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`action without prejudice where plaintiff failed to serve defendant within the Rule 4(m) deadline and
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`noting “because Plaintiff waited until the last months of his patent’s validity to bring suit, he cannot be
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`heard to complain that he is severely prejudiced when a dismissal without prejudice results in a slight
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`reduction in his potential damages”). Granting PersonalWeb’s motion would allow PersonalWeb to
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`DEFENDANT PAYPAL, INC.’S OPP. TO MOTION
`FOR LEAVE TO EXTEND PERIOD OF SERVICE
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`5
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`5:18-cv-00177-BLF
`5:18-md-05373-BLF
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`Case 5:18-md-02834-BLF Document 268 Filed 10/25/18 Page 7 of 9
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`retain the benefit of an extended damages period even though it delayed service until after this Court
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`conducted motion hearings and case management conferences without PayPal’s participation.
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`More importantly, “Rule 4(m)’s deadline for service is designed to force parties and their
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`attorneys to be diligent in prosecuting their cause of action.” Crowley, 2014 WL 1868851, at *2 (citing
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`Fimbres v. United States, 833 F.2d 138, 139 (9th Cir. 1987)). As discussed above, PersonalWeb’s
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`conduct in prosecuting this action was the opposite of diligent. “To grant [PersonalWeb] an extension
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`of time for service would defeat Rule 4(m)’s purpose … and would reward dilatory conduct.” Id. at *4.
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`Particularly in view of the numerous actions that PersonalWeb is attempting to prosecute simultaneously
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`and the procedural complexity of this multi-district litigation, PersonalWeb’s delays and lack of
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`diligence will only lead to further disorganization among the parties.
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`III. CONCLUSION
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`PersonalWeb has no good cause for its failure to review publicly available information to
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`identify PayPal. Nor does PersonalWeb have good cause for failing to timely correct its error once it
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`became apparent. The loss of PersonalWeb’s January 8, 2018 filing date for PersonalWeb’s complaint
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`is an appropriate remedy to encourage PersonalWeb to exercise greater diligence in this procedurally
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`complicated case. The Court should dismiss the complaint against PayPal under Rule 4(m).
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`DEFENDANT PAYPAL, INC.’S OPP. TO MOTION
`FOR LEAVE TO EXTEND PERIOD OF SERVICE
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`5:18-cv-00177-BLF
`5:18-md-05373-BLF
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`Case 5:18-md-02834-BLF Document 268 Filed 10/25/18 Page 8 of 9
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`Respectfully submitted,
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`Dated: October 25, 2018
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`KIRKLAND & ELLIS LLP
`
`/s/ Ryan M. Hubbard
`BRENT P. RAY (pro hac vice)
`brent.ray@kirkland.com
`RYAN M. HUBBARD (pro hac vice)
`ryan.hubbard@kirkland.com
`KIRKLAND & ELLIS LLP
`300 N. LaSalle
`Chicago, IL 60654
`Telephone: (312) 862-2000
`Facsimile: (312) 862-2200
`
`
`Attorneys for Defendant
`PAYPAL, INC.
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`DEFENDANT PAYPAL, INC.’S OPP. TO MOTION
`FOR LEAVE TO EXTEND PERIOD OF SERVICE
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`7
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`5:18-cv-00177-BLF
`5:18-md-05373-BLF
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`Case 5:18-md-02834-BLF Document 268 Filed 10/25/18 Page 9 of 9
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`CERTIFICATE OF SERVICE
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`This is to certify that all counsel of record who are deemed to have consented to electronic service
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`are being served with a copy of this document via the Court's CM/ECF system per Local Rule CV-5(a)(3)
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`on this the 25th day of October 2018.
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`
`
` /s/ Ryan M. Hubbard
`
`Ryan Hubbard
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`DEFENDANT PAYPAL, INC.’S ____________
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`
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`5:18-cv-00177-BLF
`5:18-md-05373-BLF
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`KE 57564788.2
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