June 17, 2020

The Federal Circuit extends the Kessler Doctrine to Dismissals with Prejudice

In In re PersonalWeb Technologies LLC, [2019-1918] (June 17, 2020), the Federal Circuit affirmed the dismissal of PersonalWeb’s suits against Amazon customers because they were barred as a result of a prior lawsuit brought by PersonalWeb against Amazon that was dismissed with prejudice.

The district court held that claim preclusion barred PersonalWeb’s claims regarding acts of infringement occurring prior to the final judgment in the Amazon action, and that the Kessler Doctrine barred PersonalWeb’s claims of infringement after the final judgment in the Amazon action.

The Kessler Doctrine resulted from the Supreme Court’s decision in Kessler v. Eldred, 206 U.S. 285 (1907) to fill the gap left by claim preclusion and issue preclusion. Claim preclusion does not apply to acts of alleged infringement that occur after a final judgment in an earlier suit. Issue preclusion does not apply unless there is (1) a final judgment on the merits, (2) privity of parties, and (3) identity of issues. When neither claim preclusion nor issue preclusion apply, the Kessler Doctrine may protect an adjudged non-infringer from repeated harassment for continuing its business.

The Kessler Doctrine had previously only been applied to issues that were actually litigated, but the Federal Circuit expanded the doctrine to include an earlier dismissal with prejudice, which it termed an abandonment of PersonalWeb’s claims without reservation and therefore stands as an adjudication that Amazon was not liable for infringement:

The scope of that right is not limited to cases involving a finding of non-infringement that was necessary to the resolution of an earlier lawsuit, but extends to protect any products as to which the manufacturer established a right not to be sued for infringement.