In re PersonalWeb Technologies LLC, Appeals Nos. 2021-1858, -1859, -1860 (Fed. Cir. Nov. 3, 2023)

In this appeal from the United States District Court for the Northern District of California, the question before the Federal Circuit was whether an award of approximately $5.1 million in attorneys’ fees under 35 U.S.C. § 285 was appropriate. The Federal Circuit affirmed the fee award, holding that the district court had not abused its discretion in finding the case exceptional or in calculating the total fees due.

This was the third appeal from multidistrict litigation involving PersonalWeb Technologies LLC (“PersonalWeb”). Litigation had commenced in 2011 when PersonalWeb sued Amazon.com, Inc. (“Amazon”) in the Eastern District of Texas for Amazon’s alleged infringement of certain patents (PersonalWeb’s “True Name Patents”). After claim construction, PersonalWeb dismissed its claims against Amazon with prejudice (the “Texas Action”). Then, in 2018, PersonalWeb brought claims against Amazon customers, again asserting the True Name Patents and alleging their use of an Amazon product, Amazon S3, infringed those patents. Amazon intervened and filed a motion for declaratory judgment barring PersonalWeb’s infringement actions against Amazon and its customers based on the Texas Action. The cases were consolidated. PersonalWeb counterclaimed against Amazon, alleging that two Amazon products infringed the True Name Patents: S3 and CloudFront. The district court granted partial summary judgment of non-infringement of the S3 product in favor of Amazon, which was affirmed by the Federal Circuit. Litigation continued with regard to CloudFront. Eventually, the district court granted summary judgment of non-infringement of the CloudFront product in favor of Amazon.

Following the district court’s grant of summary judgment, Amazon moved for attorneys’ fees and costs, contending the case was exception. The district court agreed, finding: (1) PersonalWeb’s infringement claims related to Amazon S3 were objectively baseless and not reasonable in light of the Texas action; (2) PersonalWeb frequently changed its infringement positions; (3) PersonalWeb unnecessarily prolonged the litigation after claim construction foreclosed its infringement theories; (4) PersonalWeb’s conduct and positions regarding the customer cases were unreasonable; and (5) PersonalWeb submitted declarations that it should have known were not accurate. The district court calculated an award of attorneys’ fees and costs that totaled $5,401,625.06, of which $5,187,203.99 was attorneys’ fees.

The Federal Circuit reviewed the district court’s exceptional case determination and award of fees for abuse of discretion. The Federal Circuit addressed each of the district court’s bases for finding the case exceptional.

First, the Federal Circuit found the district court did not err in finding that PersonalWeb’s infringement claims related to S3 were baseless. Relying on Federal Circuit and Supreme Court precedent, the Federal Circuit emphasized that patent infringement actions are barred against a customer of a seller who has previously prevailed against the patentee because of invalidity or non-infringement. Central to the Federal Circuit’s reasoning was the broad dismissal with prejudice of all claims against Amazon and the Amazon S3 product that led to the final judgment of non-infringement in the Texas Action.

Second, the Federal Circuit rejected PersonalWeb’s argument that its changes in position were nothing more than zealous advocacy. The Federal Circuit reasoned that zealous representation is the rule, not an exception, and that zealous representation must be tempered by the obligation of counsel to assist the court by fully and fairly presenting the legal issues relevant to the facts of the case.

Third, the Federal Circuit found the district court did not err in finding that PersonalWeb unnecessarily prolonged the litigation after claim construction foreclosed its infringement theories. The Federal Circuit rejected PersonalWeb’s argument that there existed ambiguity in the claim construction that warranted further litigation. Instead, the Federal Circuit found PersonalWeb’s actions to be nothing more than an attempt to re-litigate the district court’s unambiguous claim construction.

Fourth, the Federal Circuit rejected PersonalWeb’s argument that its conduct and positions regarding the customer cases were reasonable. The Federal Circuit focused on PersonalWeb’s representations as to a particular customer, Twitch. According to the Federal Circuit, PersonalWeb first represented to the district court that its claims against Twitch were representative of its claims against all customers and agreed that a non-infringement verdict in favor of Twitch would result in “none of the customer cases” being able to “go forward.” After the district court granted summary judgment, however, PersonalWeb argued that “not all grounds of the summary judgment order as it relates to Twitch” are “applicable to the remaining customer cases.” The district court found this to be unreasonable litigation conduct and the Federal Circuit agreed.

Finally, the Federal Circuit found the district court did not abuse its discretion in considering the inaccurate declarations filed by PersonalWeb’s attorney and executive. The Federal Circuit found PersonalWeb’s arguments on this point to be frivolous.

The Federal Circuit also reviewed the district court’s calculation of attorneys’ fees and found the court’s approach to be well-reasoned and thorough.

Judge Dyk dissented, arguing that PersonalWeb’s claims against the Amazon customers were not objectionably baseless in light of unsettled case law at the time PersonalWeb pursued the litigation.

The opinion can be found here.

By Mario E. Delegado

ALSO THIS WEEK

Malvern Panalytical Inc. v. TA Instruments-Waters LLC, Appeal No. 2022-1439 (Fed. Cir. Nov. 1, 2023)

Malvern appealed the District Court’s holding that defendant Waters had not infringed Malvern’s patents. The Federal Circuit vacated and remanded due to a claim construction error. Specifically, the parties disputed whether the claim phrase “pipette guiding mechanism” covered both manual and automatic guiding mechanisms, as argued by Malvern, or only manual pipette guiding, as argued by Waters.

The District Court had adopted Waters’ view that the claim phrase meant only manual guiding mechanisms because the District Court regarded the phrase as a coined term. Given that reading, the District Court limited its construction to the specification embodiments that described manual guiding mechanisms. The Federal Circuit overturned this interpretation, and held instead that the words within the claim phrase should be construed primarily on the plain meaning of words. The Federal Circuit cited precedent to the effect that if a patentee intends to deviate from the plain and ordinary meaning of a claim term, it must be explicit within the specification. In Malvern’s patents, there was nothing in the specifications that explicitly supported a presumption that the claim phrase was a coined term limited to only manual pipette guiding.

Another question the Federal Circuit considered here was whether the prosecution history of an unrelated patent, also owned by Malvern and involving similar technology, could be used in the present claim construction analysis or for prosecution disclaimer. Here, the Federal Circuit held that it could not, because the connection between the prosecution history and the claim phrase at hand was too tenuous and ambiguous.

The opinion can be found here.