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