`___________________
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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`___________________
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`PAYPAL, INC.
`UPWORK GLOBAL INC.
`SHOPIFY, INC.
`SHOPIFY (USA), INC.
`STRAVA, INC.
`VALASSIS COMMUNICATIONS, INC.
`RETAILMENOT, INC.
`DOLLAR SHAVE CLUB, INC.
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`Petitioners,
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`v.
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`PERSONALWEB TECHNOLOGIES LLC
`LEVEL 3 COMMUNICATIONS, LLC,
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`Patent Owners.
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`___________________
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`IPR2019-01111
`Patent 7,802,310
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`PETITIONERS’ REPLY TO PATENT OWNER’S
`PRELIMINARY RESPONSE
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`Mail Stop PATENT BOARD
`Patent Trial and Appeal Board
`U.S. Patent & Trademark Office
`P.O. Box 1450
`Alexandria, VA 22313–1450
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`I.
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`INTRODUCTION
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`The district court’s finding of “privity,” relating to PersonalWeb’s claims
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`against Amazon, is irrelevant to this proceeding. Petitioners possessed unique
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`motivations for filing this Petition that were (and are) wholly independent of
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`Amazon’s dispute with PersonalWeb. It is undisputed that PersonalWeb’s claims
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`against Petitioners cannot be resolved by Amazon. This was known before this
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`Petition was filed—indeed, it is the very reason Petitioners filed in the first place.
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`Meanwhile, PersonalWeb made arguments in its POPR that are directly contrary to
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`what it told the court. Against the complete record, PersonalWeb’s RPI and privy
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`allegations cannot stand.
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`II. THE PETITION IS NOT TIME-BARRED
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`A.
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`PersonalWeb Mischaracterizes the Record
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`A full recitation of relevant events not only reveals stark differences between
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`Amazon and the Petitioners, it defangs PersonalWeb’s claims. It is not surprising,
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`then, that PersonalWeb neglects to address these facts in its POPR.
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`PersonalWeb sued Amazon in 2011 relating to S3 technology. Ex. 2008.
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`PersonalWeb later dismissed that complaint with prejudice. Ex. 2009. Starting in
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`January 2018, PersonalWeb sued various entities alleging infringement for using the
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`“Amazon S3 hosting system.” See, e.g., Ex. 1013 (PersonalWeb Techs. LLC v.
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`Airbnb, Inc., Case No. 5:18-cv-149-BLD (N.D. Cal.) at Dkt. 1 at ¶¶ 22, 56, 64, 66,
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`74). The next month, Amazon filed a complaint for declaratory judgment of claim
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`preclusion and noninfringement. Ex. 2011. In response, PersonalWeb amended its
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`complaints to add non-S3 allegations. See, e.g., Exs. 1014, 1015 (PersonalWeb
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`Techs. LLC v. Airbnb, Inc., Case No. 5:18-cv-149-BLD (N.D. Cal.) at Dkts. 34, 45).
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`In September 2018, PersonalWeb told the Northern District of California
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`(“court”) that its infringement allegations against all defendants fell into four
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`categories. Ex. 1016 (In re PersonalWeb Techs. LLC, 5:18-md-2834 (N.D. Cal.) at
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`Dkt. 121 at 18). See also Ex. 1017 (id. at Dkt. 295 (delineating the four categories
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`by defendant)). Three categories had nothing to do with Amazon’s products or
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`services. Ex. 1024 at 59-60; Ex. 1025 at 2-4 (categories 1, 2 and 4 labeled “no S3”
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`or “Outside S3”). Only one category involved Amazon S3. Ex. 2014 at 59-60; Ex.
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`2015 at 2-4 (category 3 labeled “in S3”). Given the limited scope of Amazon’s
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`involvement, the court found in November 2018 that Amazon could not adequately
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`represent the defendants’ interests, as “a verdict against Amazon in the Amazon DJ
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`Action may leave unresolved issues as to the liability of the defendants in the
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`customer cases.” Ex. 1018 (In re PersonalWeb Techs. LLC, 5:18-md-2834 (N.D.
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`Cal.) at Dkt. 313 at 1).
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`Amazon moved for summary judgment only that allegations related to S3
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`were barred by estoppel. Ex. 2014. PersonalWeb argued in its opposition that
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`Amazon’s motion did not impact its infringement allegations related to non-Amazon
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`products. Ex. 1019 (In re PersonalWeb Techs. LLC, 5:18-md-2834 (N.D. Cal.) at
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`Dkt. 334 at 2). The court agreed on both fronts. Ex. 2012 at 26-27. As a result, the
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`court’s finding of “privity … for the specific purpose of determining the preclusive
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`effect of the first judgment” was limited only to allegations related to S3. Id.
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`Following the court’s ruling, PersonalWeb entered two critical stipulations
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`impacting the Petitioners: (i) the Shopify and Dollar Shave Club cases “do not allege
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`any claim of patent infringement based solely on the customer’s use of Amazon S3,”
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`and (ii) “the Order fully adjudicates all claims alleging patent infringement based
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`solely on the customer’s use of Amazon S3” in the Venmo,1 Strava, Valassis,
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`Upwork and RetailMeNot cases. Ex. 2013.
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`None of
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`the
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`foregoing—Amazon’s motion,
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`the court’s order or
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`PersonalWeb’s stipulation—affected
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`the non-S3
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`infringement claims
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`that
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`Petitioners still faced at that point, and still face today. And all of these events
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`occurred prior to the filing of the instant Petition.
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`B. Amazon is Not a Privy of Petitioners
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`i. PersonalWeb’s current “privity” claim directly contradicts what it
`argued to the court.
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`In response to Amazon’s motion for summary judgment, PersonalWeb
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`argued: “The Website Operators Are Not Legal Privies of Amazon.” Ex. 1019
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`at 7 (emphasis and capitalization in original). PersonalWeb failed to cite this
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`1 The Venmo case was refiled naming PayPal, Inc. as the proper defendant.
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`document in its POPR. Even setting aside the requirements of 37 C.F.R. §
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`42.51(b)(1)(iii) to cite inconsistent evidence, PersonalWeb is trying to have it both
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`ways. The law does not permit parties to switch horses for the sake of opportunism.
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`Either you believe privity exists in a certain situation or you don’t.
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`ii. The Board is not bound by the court’s finding of “privity.”
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`Notwithstanding PersonalWeb’s lack of credibility on this issue, the court’s
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`finding was “for the specific purpose of determining the preclusive effect of the first
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`judgment” only as it related to allegations involving S3. The court did not examine
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`whether Amazon was a “privy” under 35 U.S.C. § 315(a)—instead it examined
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`under Ninth Circuit law whether privity existed to resolve a discrete issue of
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`collateral estoppel.
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`PersonalWeb argues that the court’s ruling is “dispositive,” but cites nothing
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`in support. Paper 14 at 19. There is a good reason for this: privity is not a
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`bidirectional, much less a universal, concept. Instead, privity is a highly fact-specific
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`inquiry made in accordance with the principles of equity. WesternGeco LLC v. ION
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`Geophysical Corp., 889 F.3d 1308, 1318–19 (Fed. Cir. 2018); Applications in
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`Internet Time, LLC v. RPX Corp., 897 F.3d 1336, 1349 (Fed. Cir. 2018) (“AIT”).
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`Like the PersonalWeb court, courts examine privity for specific purposes, and not
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`in a binary or absolute matter. See, e.g., Chase Manhattan Bank, N.A. v. Celotex
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`Corp., 56 F.3d 343, 346 (2d Cir. 1995) (“Privity may exist for the purpose of
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`determining one legal question but not another depending on the circumstances and
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`legal doctrines at issue. Whether there is privity between a party against whom claim
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`preclusion is asserted and a party to prior litigation is a functional inquiry in which
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`the formalities of legal relationships provide clues but not solutions. … In the instant
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`matter, Chase and NYPBC, as buyer and seller, are no doubt in privity for many
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`purposes. However, the precise issue is whether NYPBC’s incentives to pursue its
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`lawsuit were substantially similar to Chase’s. The answer is that clearly they were
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`not.”); Manning v. S.C. Dep’t of Highway & Pub. Transp., 914 F.2d 44, 48 (4th Cir.
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`1990) (“‘Privity’ as used in the context of res judicata or collateral estoppel, does
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`not embrace relationships between persons or entities, but rather it deals with a
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`person’s relationship to the subject matter of the litigation.”).
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`The court’s finding of “privity” revolved around estoppel issues resulting
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`from PersonalWeb’s prior dismissal of Amazon with prejudice when Amazon’s S3
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`product was at issue. Ex. 2012 at 26-27. It had nothing to do with the Petitioners’
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`ability to independently defend themselves in the PTAB due to non-S3 allegations.
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`iii. Petitioners never had a previous opportunity
`PersonalWeb’s patents in litigation.
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`No Petitioner was ever implicated in a prior PersonalWeb litigation, including
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`to challenge
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`the Amazon case filed in 2011. No Petitioner ever had a reason before now to file
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`the instant Petition. Paper 1 at 19. As a result, the primary concern of privity under
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`§ 315(b)—to “prevent successive challenges to a patent by those who previously
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`have had the opportunity to make such challenges in prior litigation”—is
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`inapplicable. WesternGeco, 889 F.3d at 1319.
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`The fact that Amazon offered to indemnify the Petitioners does not make the
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`entities privies for purposes of filing the instant Petition. Amazon’s indemnity only
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`extends to the Petitioner’s use of Amazon products. Ex. 1021 (In re PersonalWeb
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`Techs. LLC, 5:18-md-2834 (N.D. Cal.) at Dkt. 350 at 7). As discussed above, the
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`court barred PersonalWeb “from asserting any patent infringement claim against …
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`an Amazon customer in which a feature or operation of S3 is alleged to infringe any
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`claim of the patents-in-suit.” Ex. 2012 at 27. Accordingly, at the time the instant
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`Petition was filed, the lasting effect of Amazon’s indemnity was limited at best.
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`Meanwhile, Petitioners are left to defend against PersonalWeb’s remaining
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`infringement allegations
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`that were untouched by
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`the court’s order and
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`PersonalWeb’s stipulation—which, according to PersonalWeb, is most of them. Ex.
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`1017 (In re PersonalWeb Techs. LLC, 5:18-md-2834 (N.D. Cal.) at Dkt. 295).
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`PersonalWeb does not even attempt to argue, nor can it, that the Petitioners ever had
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`a prior opportunity (or even motivation) to challenge a PersonalWeb patent in view
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`of these infringement allegations. Yet at the time this Petition was filed, these
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`allegations were all that remained.
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`To be sure, any “successive challenges” to the validity of PersonalWeb’s
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`patents are self-inflicted. It was PersonalWeb that chose to engage in serial litigation
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`over the course of many years. Equity demands that Petitioners should not be
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`punished because of PersonalWeb’s tactics.
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`iv. The Taylor factors resolve in Petitioners’ favor.
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`Set against a backdrop of the full facts, each category articulated in Taylor v.
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`Sturgell indicates a finding of no privity. 553 U.S. 880 (2008).
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`1. There is no agreement to be bound.
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`It is undisputed that PersonalWeb’s non-S3 infringement allegations exist
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`separately from the allegations in the Amazon case. As set forth above, Amazon’s
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`indemnity only extends to Amazon products. No matter how the Amazon case
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`resolves, claims against the Petitioners will remain.
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`2. Any pre-existing relationship is limited to Amazon products.
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`Petitioners and Amazon have no pre-existing relationship relating to the
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`infringement allegations remaining in PersonalWeb’s cases against the Petitioners.
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`The only salient relationship between Amazon and Petitioners relates to claims that
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`the court barred prior to the filing of this Petition. Ex. 2012 at 26-27.
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`3. Amazon cannot adequately represent the Petitioners.
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`It is axiomatic that Amazon cannot adequately defend Petitioners in litigation
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`on non-Amazon products. In fact, realizing that it has nothing left to gain with
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`Amazon before the district court, PersonalWeb offered to dismiss Amazon from the
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`litigation completely. Ex. 1020 (In re PersonalWeb Techs. LLC, 5:18-md-2834
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`(N.D. Cal.) at Dkt. 507-3).
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`4. Petitioners had zero control over the prior Amazon case.
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`No credible allegation is made that Petitioners had any ability to control the
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`prior Amazon case. Some Petitioners did not even exist until 2011. See
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`WesternGeco, 889 F.3d at 1320-21 (finding no privity where “[Petitioner] lacked
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`any substantive involvement in the [indemnitor’s] litigation.”).
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`5. Petitioners are not acting as Amazon’s proxy.
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`PersonalWeb makes no claim, nor can it, that Amazon contributed to,
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`controlled or funded the present IPR. The present facts are unlike those in AIT.
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`There, RPX stepped in with IPRs after its customer Salesforce failed with its
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`CBMRs. Here, Amazon never challenged PersonalWeb’s patents before the PTAB.
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`Petitioners are not a proxy for Amazon to challenge PersonalWeb’s patents after
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`Amazon’s statutory period ran. Instead, Petitioners identified allegations untouched
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`by Amazon’s case, and “filed [their] IPRs as a defensive measure in response to
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`PersonalWeb’s lawsuit against [Petitioners], rather than at [Amazon’s] instruction.”
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`WesternGeco, 889 F.3d at 1320.
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`6. There is no applicable special statutory scheme.
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`There is no statutory convention supporting a finding of privity. At best, there
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`is a standard indemnity provision that only extends to the Petitioner’s use of Amazon
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`products. Ex. 1021 (In re PersonalWeb Techs. LLC, 5:18-md-2834 (N.D. Cal.) at
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`Dkt. 350 at 7).
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`C. Amazon is Not a Real Party in Interest
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`Like the privity inquiry, the RPI question is fact-intensive and takes into
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`account “both equitable and practical considerations.” AIT, 897 F.3d at 1351. The
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`facts presented above show that Amazon is not an RPI in this Petition, namely: (i)
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`Petitioners did not file this Petition by proxy on Amazon’s behalf, (ii) Petitioners
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`have their own independent disputes with PersonalWeb apart from the Amazon case,
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`and (iii) this Petition was prepared and filed without any support, funding or
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`approval from Amazon. This is not a case where Amazon is operating behind the
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`scenes. Instead, Amazon and Petitioners are on separate tracks fighting different
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`infringement allegations.
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`PersonalWeb argues that Amazon is an RPI because it will “benefit” from
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`Petitioners’ IPRs. Paper 14 at 16. PersonalWeb miscomprehends the caselaw on
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`this topic. A mere observance of a general benefit is not enough. See Unified
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`Patents, Inc. v. Realtime Adaptive Streaming, LLC, IPR2018-00883, Paper 36 at 14-
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`15 (PTAB Oct. 11, 2018). Instead, in cases where a probative benefit is found, it is
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`predicated on a “preexisting, established relationship” rendering the non-party a
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`“clear beneficiary” of the petition. AIT, 897 F.3d at 1351.
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`Here, any preexisting relationship between Amazon and Petitioners was
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`mooted by the court’s order barring PersonalWeb from pursuing its S3 claims
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`against the Petitioners. Amazon and Petitioners have no relationship at all regarding
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`the non-Amazon allegations. Cf. Ventex Co., Ltd., v. Columbia Sportswear N.A.,
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`Inc., IPR2017-00651, Paper 148 at 8-9 (PTAB Jan. 24, 2019) (supplier filed IPR on
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`customer’s behalf where parties had an exclusive manufacturing agreement). If a
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`“benefit” is found here, it will run afoul of the PTAB’s admonition not to
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`“overextend[] the reasoning in AIT.” Unified, IPR2018-00883, Paper 36 at 14-15.
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`D.
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`Section 315(a)(1) is Not Applicable
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`Amazon’s complaint for declaratory judgment did not challenge the validity
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`of any PersonalWeb patent. Ex. 2011 (Amazon.com v. PersonalWeb Techs. LLC,
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`Case No. 5:18-cv-767 (N.D. Cal.) at Dkt. 1). Amazon only raised invalidity as a
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`defense in a later pleading. Ex. 1022 (Id. at Dkt. 67 at 12). As a result, even if
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`Amazon was an RPI or privy, § 315(a)(1) is not applicable to the instant Petition.
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`III. CONCLUSION
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`Because Amazon is neither a privy nor RPI, this Petition is not time-barred.
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`Respectfully submitted,
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` KING & SPALDING LLP
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`/ Brent P. Ray /
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`Brent P. Ray
`Lead Counsel for Petitioners
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`Date: October 1, 2019
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`KING & SPALDING LLP
` 353 N Clark Street, 12th Floor
`Chicago, IL 60654
` (312) 995-6333 (reception)
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`CERTIFICATE OF SERVICE
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`The undersigned hereby certifies that the foregoing PETITIONERS’
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`REPLY TO PATENT OWNERS’ PRELIMINARY RESPONSE, were served
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`via electronic mail on October 1, 2019, in its entirety at the email addresses listed
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`below:
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`Joseph A. Rhoa
`Jonathan A. Roberts
`Mark H. Henderson III
`NIXON & VANDERHYE P.C.
`901 N. Glebe Road, 11th Floor
`Arlington, VA 22203-1808
`Email: jar@nixonvan.com
`Email: jr@nixonvan.com
`Email: mhenderson@nixonvan.com
`Email: lmm@nixonvan.com
`Tel.: (703) 816-4043
`Fax: (703) 816-4100
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`KING & SPALDING LLP
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`/ Brent P. Ray /
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`Brent P. Ray
`Reg. No. 54,390
`Attorney for Petitioner
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`KING & SPALDING LLP
`353 N Clark Street, 12th Floor
`Chicago, IL 60654
`(312) 995-6333 (reception)
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