Trials@uspto.gov
`571.272.7822
`
`
`
`
`
`
` Paper No. 31
`
` Entered: March 16, 2020
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`PAYPAL, INC.,
`UPWORK GLOBAL INC.,
`SHOPIFY, INC., SHOPIFY (USA), INC.,
`STRAVA, INC.,
`VALASSIS COMMUNICATIONS, INC.,
`RETAILMENOT, INC., and
`DOLLAR SHAVE CLUB, INC.,
`Petitioner,
`
`v.
`
`PERSONALWEB TECHNOLOGIES, LLC1
`Patent Owner.
`____________
`
`
`
`
`
`IPR2019-01111
`Patent 7,802,310 B2
`____________
`
`
`Before JONI Y. CHANG, MICHAEL R. ZECHER, and
`DAVID C. McKONE, Administrative Patent Judges.
`
`CHANG, Administrative Patent Judge.
`
`
`DECISION
`Denying Petitioner’s Request for Rehearing of Decision on Institution
`37 C.F.R. § 42.71(d)
`
`
`
`
`1 The caption of the Petition lists Level 3 Communications as a patent
`owner. Patent Owner’s Mandatory Notices indicates that PersonalWeb
`Technologies, LLC, is the patent owner, while Level 3 Communications,
`LLC, is a real party in interest. Paper 9, 1.
`
`
`
`
`571.272.7822
`
`
`
`
`
`
` Paper No. 31
`
` Entered: March 16, 2020
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`PAYPAL, INC.,
`UPWORK GLOBAL INC.,
`SHOPIFY, INC., SHOPIFY (USA), INC.,
`STRAVA, INC.,
`VALASSIS COMMUNICATIONS, INC.,
`RETAILMENOT, INC., and
`DOLLAR SHAVE CLUB, INC.,
`Petitioner,
`
`v.
`
`PERSONALWEB TECHNOLOGIES, LLC1
`Patent Owner.
`____________
`
`
`
`
`
`IPR2019-01111
`Patent 7,802,310 B2
`____________
`
`
`Before JONI Y. CHANG, MICHAEL R. ZECHER, and
`DAVID C. McKONE, Administrative Patent Judges.
`
`CHANG, Administrative Patent Judge.
`
`
`DECISION
`Denying Petitioner’s Request for Rehearing of Decision on Institution
`37 C.F.R. § 42.71(d)
`
`
`
`
`1 The caption of the Petition lists Level 3 Communications as a patent
`owner. Patent Owner’s Mandatory Notices indicates that PersonalWeb
`Technologies, LLC, is the patent owner, while Level 3 Communications,
`LLC, is a real party in interest. Paper 9, 1.
`
`
`
`
`
`IPR2019-01111
`Patent 7,802,310 B2
`
` INTRODUCTION
`PayPal, Inc., Upwork Global Inc., Shopify, Inc., Shopify (USA), Inc.,
`Strava, Inc., Valassis Communications, Inc., RetailMeNot, Inc., and Dollar
`Shave Club, Inc. (collectively, “Petitioner Entities”) filed a Petition
`requesting an inter partes review (“IPR”) of claims 20 and 69 of U.S. Patent
`No. 7,802,310 B2 (Ex. 1001, “the ’310 patent”). Paper 1 (“Pet.”).
`PersonalWeb Technologies, LLC (“Patent Owner”) filed a Preliminary
`Response. Paper 14 (“Prelim. Resp.”). Patent Owner argues, among other
`things, that the Petition is time-barred under 35 U.S.C. § 315(b) because the
`district court in the related litigation found that Petitioner Entities are in
`privity with Amazon.com, Inc., and Amazon Web Services, Inc.
`(collectively “Amazon”), and Amazon was served with a complaint alleging
`infringement of the ’310 patent more than seven years prior to the filing of
`the Petition. Id. at 15−23; Ex. 2008. Pursuant to our Order (Paper 23),
`Petitioner Entities filed a Reply (Paper 24) to address whether Amazon is a
`privy of Petitioner Entities, and Patent Owner also filed a Sur-reply
`(Paper 26). Upon consideration of the parties’ contentions and evidence, we
`determined that Amazon is a privy of Petitioner Entities and denied the
`Petition under 35 U.S.C. § 315(b). Paper 27 (“Decision” or “Dec.”).
`Several Petitioner Entities2 (“Requesters”) filed a Request for
`Rehearing (Paper 28, “Req.”) of our Decision Denying Institution, arguing
`that we deprived Requesters of their constitutional right to challenge the
`’310 patent in an inter partes review and overlooked instructive case law
`that should have led us to a different result on our privity determination.
`
`
`2 Petitioner Entities indicate that PayPal, Inc., does not join in requesting
`rehearing of our Decision. Req. 2.
`
`2
`
`
`
`IPR2019-01111
`Patent 7,802,310 B2
`Requesters also requested review by the Precedential Opinion Panel
`(“POP”). Req. 2; Paper 29; Ex. 3001. The request for POP review was
`denied on February 13, 2020. Paper 30. As a result, this Request for
`Rehearing now is before us for consideration.
`For the reasons set forth below, the Request is denied.
`
` STANDARD OF REVIEW
`A party requesting rehearing bears the burden of showing that the
`decision should be modified. See 37 C.F.R. § 42.71(d) (2018). The party
`must identify specifically all matters that we misapprehended or overlooked,
`and the place where each matter was previously addressed in a motion, an
`opposition, or a reply. Id. When reconsidering a decision on institution, we
`review the decision for an abuse of discretion. See 37 C.F.R. § 42.71(c).
`“An abuse of discretion may be determined if a decision is based on an
`erroneous interpretation of law, if a factual finding is not supported by
`substantial evidence, or if the decision represents an unreasonable judgment
`in weighing relevant factors.” Star Fruits S.N.C. v. U.S., 393 F.3d 1277,
`1281 (Fed. Cir. 2005); Arnold P’ship v. Dudas, 362 F.3d 1338, 1340 (Fed.
`Cir. 2004); In re Gartside, 203 F.3d 1305, 1315-16 (Fed. Cir. 2000).
`
` ANALYSIS
`Requesters contend that our Decision violates due process. Req. 2–7.
`Their main contention is that we did not discuss whether Petitioner Entities
`had a “full and fair” opportunity to challenge the ’310 patent in the Texas
`
`3
`
`
`
`IPR2019-01111
`Patent 7,802,310 B2
`Action3 to which the Petitioner Entities were not parties. Id. at 4–6.
`According to Requesters, “[t]he question is not whether the Petitioners and
`Amazon have a sufficiently close relationship in a present lawsuit. The
`inquiry instead focuses on whether in the prior lawsuit a sufficiently close
`relationship exists to foreclose present review.” Id. at 2–3.
`The Supreme Court of the United States has stated that “[t]he federal
`common law of preclusion is, of course, subject to due process limitations,”
`and that “[a] person who was not a party to a suit generally has not had a
`‘full and fair opportunity to litigate’ the claims and issues settled in that
`suit.” Taylor v. Sturgell, 533 U.S. 880, 891–92. Thus, “[a]s informed by
`Taylor and other cases, the standards for the privity inquiry must be
`grounded in due process.” WesternGeco LLC v. ION Geophysical Corp.,
`889 F.3d 1308, 1319 (Fed. Cir. 2018). According to the U.S. Court of
`Appeal for the Federal Circuit, “[b]ecause nonparty preclusion risks binding
`those who have not had a full and fair opportunity to litigate, the Supreme
`Court has cautioned that there is a general rule against nonparty preclusion,
`subject to certain exceptions.” Id. (emphasis added); accord Taylor, 533
`U.S. at 893 (“[T]he rule against nonparty preclusion is subject to
`exceptions.”). The Supreme Court in Taylor grouped such exceptions into
`six categories. In particular, the Supreme Court identified a non-exhaustive
`list of six categories under which nonparty preclusion based on a privity
`
`
`3 Patent Owner filed a complaint against Amazon on December 8, 2011, in
`the Eastern District of Texas (“the Texas Action”), alleging infringement of
`the ’310 patent based on Amazon’s Simple Storage Service (“S3”). Prelim.
`Resp. 15 (citing PersonalWeb Techs. LLC v. Amazon Web Servs. LLC, No.
`6:11-cv-00658 (E.D. Tex. dismissed on June 9, 2014); Ex. 2008 (Complaint
`in the Texas Action); Ex. 2009 (Order of Dismissal with Prejudice).
`
`4
`
`
`
`IPR2019-01111
`Patent 7,802,310 B2
`relationship may be found: (1) an agreement between the parties to be
`bound; (2) pre-existing substantive legal relationships between the parties;
`(3) adequate representation by the named party; (4) the nonparty’s control of
`the prior litigation; (5) where the nonparty acts as a proxy for the named
`party to re-litigate the same issues; and (6) where special statutory schemes
`foreclose successive litigation by the nonparty (e.g., bankruptcy or probate).
`Taylor, 553 U.S. at 893−95, 893 n.6. The Supreme Court noted that this list
`of the six “established grounds for nonparty preclusion” is “meant only to
`provide a framework . . . , not to establish a definitive taxonomy.” Id. at 893
`n.6. Each ground alone is sufficient to establish privity between a nonparty
`and a named party in the prior litigation. WesternGeco, 889 F.3d at
`1319−20.
`In our Decision, we addressed Petitioner Entities’ due process
`concerns by evaluating whether one or more of the Taylor’s categories
`apply. Dec. 18−36. We separately and expressly analyzed three grounds—
`namely, Taylor’s second, third, and fifth categories identified above. Id.
`For example, the third Taylor category, addressing due process concerns, is
`whether a party not involved in a lawsuit nevertheless was represented
`adequately by someone with the same interests who was a party to the
`lawsuit. See Taylor, 553 U.S. at 894; WesternGeco, 889 F.3d at 1319. We
`determined that Amazon is a privy of several Petitioner Entities under this
`ground, as well as two additional grounds. Dec. 18−36.
`
`5
`
`
`
`IPR2019-01111
`Patent 7,802,310 B2
`As we noted in our Decision, the District Court, in its decision on
`Amazon’s motion for summary judgment,4 expressly determined that “the
`defendants in the customer cases,” including at least some Petitioner
`Entities, “are in privity with Amazon because they share the same interest in
`the unfettered use of Amazon’s web services, and Amazon adequately
`represented this interest in the Texas Action.” Ex. 2012, 14 (emphases
`added), quoted in Dec. 13. The District Court granted Amazon’s motion
`with respect to allegations involving use of S3, barring Patent Owner from
`asserting any infringement claim against Amazon or its customer, including
`Petitioner Entities, based on use of S3. Id. at 26−27.
`This ruling directly relates to the Petitioner Entities, who do not
`appear to be arguing that this determination was incorrect—Petitioner
`Entities are the clear beneficiaries of the District Court’s ruling. In our
`Decision, we also noted that the District Court’s articulation “is very similar,
`if not identical, to the third Taylor category (adequate representation by the
`named party), where nonparty preclusion based on a privity relationship may
`be found.” Dec. 20. We agreed with the District Court’s determination and
`reached the same conclusion upon considering the evidence in the record of
`this proceeding. Id. at 18–20, 30−34. Therefore, our Decision denying the
`Petition is consistent with Taylor’s framework and grounded in due process,
`finding Amazon is a privy of several Petitioner Entities under Taylor’s third
`category.
`
`
`4 Amazon’s motion was filed in the Multidistrict Litigation, In re
`PersonalWeb Technologies, LLC et al. Patent Litigation, No. 5:18-md-
`028334-BLF (N.D. Cal. assigned June 7, 2018). Ex. 2012, 2; Dec. 5−7.
`
`6
`
`
`
`IPR2019-01111
`Patent 7,802,310 B2
`In additional, we also analyzed and concluded in our Decision that
`two other Taylor’s categories were met by the facts of this proceeding. Id. at
`20–30 (Taylor’s second category), 34–35 (Taylor’s fifth category).
`Requesters do not address our analysis and determination under the fifth
`Taylor category (Dec. 34–35) in its Request. See generally Req.
`As to the second Taylor category (preexisting legal relationship), the
`District Court found that “the indemnification agreement [between Amazon
`and at least some Petitioner Entities] provides an additional basis to find that
`there is privity between Amazon and its customers.” Ex. 2012, 15. We
`similarly found, after reviewing the evidence in this entire record, that the
`indemnification agreement between Amazon and some of Petitioner Entities,
`along with Amazon’s performance pursuant to the indemnity agreement,
`demonstrated the second Taylor category had been satisfied. Dec. 20–30.
`Once again, Petitioner Entities do not appear to be arguing that the District
`Court’s determination was incorrect—they are the clear beneficiaries of the
`District Court’s findings.
`Instead, Requester argue that “Amazon’s present indemnity of the
`Petitioners extends only to Amazon products . . . and . . . therefore, would
`not cover [Patent Owner’s] remaining, non-Amazon allegations against
`Petitioners in the pending lawsuits[.]” Req. 4; see also id. at 10 (“A critical
`finding underpinned each of the Board’s conclusions: the fact that
`PersonalWeb alleged that both Amazon and at least one Petitioner infringed
`using S3. As explained in detail above, privity does not flow to the current
`Petition because of this past, and now irrelevant, circumstance.”).
`Requesters cite Chase Manhattan Bank, N.A. v. Celotex Corp., 56 F.3d 343,
`346 (2d Cir. 1995), and Manning v. S.C. Department of Highway & Public
`Transportation, 914 F.2d 44, 48 (4th Cir. 1990), for this same issue, namely,
`
`7
`
`
`
`IPR2019-01111
`Patent 7,802,310 B2
`to show that a privity relationship (1) was limited to Amazon’s S3 (Req. 7)
`and (2) can change over time (see id. at 7–9). In a related argument,
`Requesters argue that our Decision runs counter to Power Integrations, Inc.
`v. Semiconductor Components Industries, LLC, 926 F.3d 1360 (Fed. Cir.
`2019), because we only evaluated whether privity existed in the past (at the
`time of the District Court’s summary judgment ruling) and did not address
`the issue of privity in the context of changing circumstances (the District
`Court’s dismissal of Patent Owner’s claims related to Amazon’s S3
`product). Req. 5–6. According to Requesters, the District Court’s dismissal
`was a final judgment that extinguished the shared interest (and privity)
`between Amazon and Petitioner Entities. Id. at 6.
`We already addressed these arguments in our Decision. Dec. 27–33.
`In particular, we explained that the District Court’s ruling is on appeal, and
`Amazon has intervened in the appeal to continue its defense of Petitioner
`Entities’ interests in Amazon’s products. Id. at 29−30; Ex. 2017 (Patent
`Owner’s Appeal Brief); Ex. 2018 (Amazon’s Motion to Intervene). Thus,
`we concluded that the circumstances present here, which include the
`above-noted preexisting legal relationship between Amazon and some of the
`Petitioner Entities, have not changed and that Amazon and Petitioner
`Entities remain in privity. Dec. 23−24, 27−30, 35.
`Regarding Petitioner Entities’ non-Amazon interests, we explained in
`our Decision that “in drafting § 315(b), Congress ‘chose language that bars
`petitions where proxies or privies would benefit from an instituted IPR, even
`where the petitioning party might separately have its own interest in
`initiating an IPR.’” Dec. 26 (quoting Power Integrations, 926 F.3d at 1316
`(further quoting Applications in Internet Time LLC v. RPX Corp., 897 F.3d
`1336, 1347 (Fed. Cir. 2018))). We also expressly considered Chase
`
`8
`
`
`
`IPR2019-01111
`Patent 7,802,310 B2
`Manhattan Bank and Manning (and Petitioner Entities’ arguments regarding
`those cases) and concluded that they were inapposite because the
`circumstances giving rise to privity have not changed. Id. at 28–30. Thus,
`we did not ignore or fail to address prevailing case law contrary to
`Requesters’ assertions. See, e.g., Req. 5–8.
`Requesters acknowledge that we found “that privity is alive and well
`because the MDL court’s dismissal of Amazon’s S3 product is on appeal,
`and ‘depending on the result of that appeal, Amazon may be called to defend
`its customers further concerning S3 products.’” Req. 6 (quoting Dec. 21–
`22). Requesters now contend, without support, that “[t]his is little more than
`a strawman argument.” Id. Requesters also argue that (1) the District
`Court’s dismissal of Patent Owner’s S3 claims was a final judgment, and
`(2) if Petitioner Entities would have to wait to see how the appeal is
`resolved, then they would be time-barred. Id. (citing Ex. 2012).
`Here, Requesters simply disagree with the way in which we resolved
`the disputed privity issue in our Decision. Mere disagreement with our
`Decision is not proper basis for rehearing when we had considered and
`addressed Petitioner Entities’ arguments in the Decision itself. Requesters
`do not show that we misapprehended or overlooked an argument that they
`made in the Petition or Reply. Moreover, Requesters have not identified
`persuasively in the Request an erroneous interpretation of the law or factual
`findings not supported by substantial evidence such that the Decision should
`be modified.
`For the reasons given above, and in our Decision, the instant Petition
`is time-barred under § 315(b) because Amazon is a privy of several
`Petitioner Entities and Amazon was served with a complaint alleging
`infringement of the ’310 patent in 2011.
`
`9
`
`
`
`IPR2019-01111
`Patent 7,802,310 B2
`
` CONCLUSION
`For the foregoing reasons, Requesters have not demonstrated that we
`misapprehended or overlooked Petitioner Entities’ arguments or abused our
`discretion in denying the Petition as time-barred under § 315(b).
`
` ORDER
`Accordingly, the Request for Rehearing is denied.
`
`
`PETITIONER:
`
`Brent P. Ray
`Lori A. Gordon
`KING & SPALDING LLP
`bray@kslaw.com
`lgordon@kslaw.com
`
`Kourtney N. Baltzer
`Nikhil R. Krishnan
`KIRKLAND & ELLIS LLP
`kourtney.baltzer@kirkland.com
`nikhil.krishnan@kirkland.com
`
`
`PATENT OWNER:
`
`Joseph A. Rhoa
`Jonathan A. Roberts
`Mark H. Henderson III
`NIXON & VANDERHYE P.C.
`jar@nixonvan.com
`jr@nixonvan.com
`mhh@nixonvan.com
`
`10
`
`
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