Case 1:18-cv-12267-RA Document 90 Filed 01/13/20 Page 1 of 5
`USDC-SDNY
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
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`NETSOC, LLC,
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`DOCUMENT
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`ELECTRONICALLY FILED
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`DOC#:
`DATE FILED:
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`/ / 13/ Z ~ Lo
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`V.
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`V.
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`V.
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`CHEGGINC.,
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`NETSOC, LLC,
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`LINKEDIN CORP.,
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`NETSOC, LLC,
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`OATH INC.,
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`Plaintiff,
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`MEMORANDUM OPINION & ORDER
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`No. 18-CV-10262 (RA)
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`Defendant.
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`Plaintiff,
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`Defendant.
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`Plaintiff,
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`Defendant.
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`No. 18-CV-12215 (RA)
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`No. 18-CV-12267 (RA)
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`RONNIE ABRAMS, United States District Judge:
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`On November 5, 2018, PlaintiffNetSoc, LLC brought this patent infringement action
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`against Defendant Chegg Inc. Plaintiff owns U.S. Patent 9,978,107 (the "' 107 Patent"),
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`described generally as "a method and system for establishing and using a social network to
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`Case 1:18-cv-12267-RA Document 90 Filed 01/13/20 Page 2 of 5
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`facilitate people in life issues," by assignment. Dkt. 1, Compl. Jr 8. 1 It asserts that "Chegg
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`maintains, operates, and administers a website at www.chegg.com that infringes one or more
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`claims of the '107 patent." Id. Jr 9. On February 19, 2019, Chegg filed a motion to dismiss,
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`pursuant to Federal Rule of Civil Procedure 12(b)(6), based on several grounds, including that
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`"the asserted patent ... fails to claim patent-eligible subject matter under 35 U.S.C. § 101." Dkt.
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`25. On September 10, 2019, following a decision in the Northern District of Texas finding the
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`'107 Patent invalid under 35 U.S.C. § 101, Chegg filed a supplemental brief arguing that
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`Plaintiff is collaterally estopped from pursuing its patent infringement claims against Chegg. See
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`Dkt. 88. Plaintiff acknowledges as much and the Court agrees. Plaintiffs claims against Chegg
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`must thus be dismissed.
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`"Issue preclusion," or collateral estoppel, "prohibits a party from seeking another
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`determination of the litigated issue in [a] subsequent action." Soverain Software LLC v.
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`Victoria's Secret Direct Brand Mgmt., LLC, 778 F .3d 1311, 1315 (Fed. Cir. 2015). "The
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`purpose of the doctrine is to relieve parties of the cost and vexation of multiple lawsuits,
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`conserve judicial resources, and, by preventing inconsistent decisions, encourage reliance on
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`adjudication." Medino! Ltd v. Guidant Corp., 341 F. Supp. 2d 301,314 (S.D.N.Y. 2004)
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`(citation omitted). "Four elements must be met for collateral estoppel to apply: (1) the issues of
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`both proceedings must be identical, (2) the relevant issues were actually litigated and decided in
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`the prior proceeding, (3) there must have been 'full and fair opportunity' for the litigation of the
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`issues in the prior proceeding, and (4) the issues were necessary to support a valid and final
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`judgment on the merits." Cent. Hudson Gas & Elec. Corp. v. Empresa Naviera Santa S.A., 56
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`F.3d 359, 368 (2d Cir. 1995).
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`1 Throughout the opinion, the Court cites submissions filed on the docket in NetSoc, LLC v. Chegg Inc.,
`No. 18-CV-10262.
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`2
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`In patent cases, "(i]t is well established that 'once the claims of a patent are held invalid
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`in a suit involving one alleged infringer, an unrelated party who is sued for infringement of those
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`claims may reap the benefit of the invalidity decision under the principles of collateral
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`estoppel."' Purdue Pharma L.P. v. Teva Pharm. USA, Inc., Nos. 01-CV-8507 (SHS), 01-CV-
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`11212 (SHS), 03-CV-2312 (SHS), 2004 WL 1444883, at *2 (S.D.N.Y. June 28, 2004) (quoting
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`Pharmacia & Upjohn Co. v. Mylan Pharm., Inc., 170 F.3d 1373, 1379 (Fed. Cir. 1999)). "[T]he
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`Federal Circuit has 'established that issue preclusion applies even though the precluding
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`judgment ... comes into existence' after the initiation of 'the case as to which preclusion is
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`sought." Control v. Dig. Playground, Inc., Nos. 12-CV-6781 (RJS), 12-CV-7734 (RJS), 2016
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`WL 5793745, at *4 (S.D.N.Y. Sept. 30, 2016) (quoting Soverain Software LLC, 778 F.3d at
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`1315)).
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`This action against Chegg was just one of several filed by Plaintiff - both in and outside
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`of this district - in 2018. In addition to this case, which was consolidated with three others filed
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`in this district, see Dkt. 35, Plaintiff brought claims against Match Group, LLC in the Northern
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`District of Texas. Like its allegations against Chegg, Plaintiff asserted that Match Group, LLC
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`had infringed on the '107 Patent "by operating several different online platforms, including
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`Tinder and OkCupid." NetSoc, LLC v. Match Grp., LLC., No. 18-CV-1809, 2019 WL 3304704,
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`at* 1 (N.D. Tex. July 22, 2019). On July 22, 2019, the United States District Court of the
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`Northern District of Texas concluded that "PlaintiffNetSoc, LLC's ... patent claims are directed
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`to only ineligible subject matter under 35 U.S.C. § 101." Id It thus dismissed Plaintiffs claims
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`with prejudice, explaining that Plaintiffs "claims are directed to only patent ineligible abstract
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`ideas, and fail to articulate an inventive concept that transforms those ideas into patent eligible
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`subject matter." Id at *3 (holding that Plaintiffs claims fail the two-step test articulated in Alice
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`3
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`Case 1:18-cv-12267-RA Document 90 Filed 01/13/20 Page 4 of 5
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`Corp. Pty. Ltd. v. CLS Bank International, 573 U.S. 208 (2014), used to determine patent
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`eligibility under 35 U.S.C. § 101). After this decision, the Court requested supplemental briefing
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`as to "whether Plaintiffs claims against [Chegg] are barred by collateral estoppel" in this action.
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`Dkt. 74.
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`As an initial matter, Plaintiff does not dispute that its claims against Chegg are now
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`collaterally estopped. See Dkt. 94 ("Plaintiff agrees that collateral estoppel applies to assertions
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`of infringement of the '107 patent[.]"); Dkt. 104 ("A finding of collateral estoppel in light of the
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`Texas Decision is appropriate regardless of Plaintiffs pending appeal."). 2
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`Nonetheless, the Court must itselfreview the matter and decide whether the doctrine's
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`requisite elements are met. See Cent. Hudson Gas & Elec. Corp., 56 F.3d at 368. Here, all four
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`criteria for collateral estoppel are clearly satisfied. This action and the one brought in the
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`Northern District of Texas involve the same plaintiff, alleging infringement of the same '107
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`Patent. In both cases, the defendants challenged the validity of the '107 Patent under 35 U.S.C. §
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`101, arguing that the claims were directed to patent ineligible abstract ideas and lacked an
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`"inventive concept" that could otherwise transform the claims into patent eligible subject matter.
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`See Dkt. 25, at 11-14; Match Grp., LLC, 2019 WL 3304704, at *3. The Northern District of
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`Texas clearly resolved this issue with the benefit of full briefing and a hearing on this matter.
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`Notably, Plaintiff was represented by the same counsel in those proceedings as it is here.
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`Accordingly, there is no doubt that the issue was fully litigated before the Northern District of
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`2 Although it agreed that collateral estoppel applies, Plaintiff initially asked "the Court [to] delay
`deciding if collateral estoppel applies to the claims of the '107 patent until at least after the decision on
`the motion for a New Trial pending in the Northern District of Texas[.]" Dkt. 94. Since filing that brief
`on September 16, 2019, however, the Northern District of Texas denied Plaintiff's motion for a new trial.
`See Dkt. 102. The fact that the case is now on appeal to the Federal Circuit does not alter the collateral
`estoppel analysis. See Pharmacia & Up john Co., 170 F.3d at 1381 ("[T]he law is well settled that the
`pendency of an appeal has no effect on the finality or binding effect of a trial court's holding. That rule is
`applicable to holdings of patent invalidity as well." (internal citations omitted)).
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`4
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`Case 1:18-cv-12267-RA Document 90 Filed 01/13/20 Page 5 of 5
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`Texas and that "the patentee had both fair opportunity and incentive to litigate the validity issue
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`in the first litigation." DietGoal Innovations LLC v. Time, Inc., No. 13-CV-8381 (PAE), 2014
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`WL 3892965, at *I (S.D.N.Y. Aug. 8, 2014) (quoting Sampson v. Ampex Corp., 478 F.2d 339,
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`341 (2d Cir. 1973)). Finally, the Northern District of Texas's conclusion that Plaintiff's patent
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`claims were invalid under 35 U.S.C. § 101 was the basis - and, therefore, a necessary part of
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`the decision to dismiss Plaintiffs claims with prejudice. Chegg, therefore, "may reap the benefit
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`of th[is] invalidity decision under the principles of collateral estoppel." Purdue Pharma L.P.,
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`2004 WL 1444883, at *2.
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`For these reasons, Plaintiffs claims against Chegg are collaterally estopped and must be
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`dismissed. The Clerk of Court is respectfully directed to terminate the motion pending at docket
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`entry 24 and close the case number 18-CV-10262 against Chegg.
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`Dated:
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`January 13, 2020
`New York, New York
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`United States District Judge
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`5
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