Fenwick & West partners J. David Hadden, left, and Saina Shamilov, right.

Amazon.com and Fenwick & West have cemented the first half of a win in multidistrict patent infringement litigation over cloud computing technology.

The U.S. Court of Appeals for the Federal Circuit handed Amazon a sweeping win against nonpracticing entity PersonalWeb Technologies. The court agreed with U.S. District Judge Beth Labson Freeman of the Northern District of California that PersonalWeb's suit against 80 Amazon customers was precluded by earlier litigation between Amazon and PersonalWeb, and by the Kessler doctrine. Kessler is a 1907 U.S. Supreme Court decision holding that a patent owner who loses a case against a supplier can't then assert the same patents against the supplier's customers.

The decision knocks out most of PersonalWeb's case and adds momentum to Amazon as it gears up to argue in August for $6 million in exceptional case attorneys fees. Fenwick partner J. David Hadden argued the appeal for Amazon and several co-defendants, with help from partners Saina Shamilov and Todd Gregorian and associate Ravi Ranganath.

PersonalWeb had argued that Kessler doesn't apply when patent owners voluntarily dismiss their claims with prejudice, as opposed to fully litigating them. A Federal Circuit panel led by Judge William Bryson disagreed. "Such a proposition would leave the patentee free to engage in the same type of harassment that the Supreme Court sought to prevent in Kessler, a result that would be inconsistent both with Kessler itself and with this court's cases interpreting Kessler," he wrote in In re PersonalWeb Technologies.

PersonalWeb sued Amazon in the U.S. District Court for the Eastern District of Texas in 2011, accusing it of violating its "true name" patents for reliably identifying and accessing files or data. PersonalWeb primarily accused Amazon Web Services' Simple Storage Service (S3) of infringing. PersonalWeb dismissed the case in 2014 with prejudice, without Amazon taking a license.

Then in 2018, PersonalWeb asserted the same family of patents against 80 Amazon Web Services customers such as Airbnb, Reddit and Square that use S3 and other Amazon functionality. The suits were spread out across at least six different jurisdictions and prompted Amazon to sue for a declaratory judgment of noninfringement in San Jose.

All of the cases were rolled into a multidistrict litigation before Freeman. She ruled last year that most infringing conduct that predated the Texas judgment was barred by claim preclusion, and that most that came after was barred by Kessler. Earlier this year, she dismissed PersonalWeb's remaining claims on summary judgment, which are now being briefed on appeal.

In the appeal decided Wednesday, PersonalWeb had argued the Texas judgment shouldn't bar its new suits, because the Texas claims weren't fully litigated and, although they targeted the same products, they focused on different functionality.

Bryson disagreed on both counts. "At most, PersonalWeb has shown that it emphasized different facts in support of a different theory of infringement in the prior case," Bryson wrote. "But that is not enough to avoid claim preclusion."

As for Kessler, the court rejected the notion that a previous case must be fully litigated for the doctrine to apply. "Contrary to PersonalWeb's assertions, the rule we apply here will not interfere with the ability of parties to resolve patent disputes," Bryson wrote. "To the extent that a plaintiff wishes to settle an infringement action while preserving its rights to sue the same or other parties in the future, it can do so by framing the dismissal agreement to preserve any such rights that the defendant is willing to agree to."

Judges Evan Wallach and Richard Taranto concurred.

PersonalWeb was represented by Stubbs Alderton & Markiles.