Amazon’s Private Patent Proceedings

Amazon’s Private Patent Proceedings

One can find nearly anything for purchase online today—as online retailers continue to stretch the bounds of the online marketplace and supplant brick-and-mortar alternatives. At the forefront, Amazon has led the charge, stocking their online marketplace with everything from books and electronics to groceries and even health care services. It should come as no surprise, then, that Amazon is now entering the legal services market.

Amazon recently revealed a program that provides an alternative to long and drawn out patent infringement battles. Conceivably, the program could help online retailers, prospective defendants, and of course Amazon shorten the headache, expense, and nuisance which are often the result of an infringement dispute. Patent owners can now petition for Amazon to remove infringing products from the site, and the web-based retailer has designed a program to facilitate this process.

The “Neutral Patent Evaluation” process begins with the patentee sending a formal written evaluation request to Amazon. The alleged infringer is allowed a 15-page response, and the accuser may respond once more. Amazon then assigns an attorney with patent litigation experience to the case, and that attorney acts as a neutral in deciding if infringement has occurred. If infringement is found, Amazon removes the products from its site. Likewise, the products are taken down immediately if the accused infringer declines to take part in the program. Vendors listing products on Amazon are automatically enrolled in the program and may opt out at will.

The entire process, taking place entirely in writing (in lieu of having formal hearings), can last up to four months, costs around $4,000 per party, and is paid by the losing side once a ‘verdict’ is rendered (either by the infringer if infringement is found or by the petitioning party if it is not)—quite quick and cost effective compared to lengthier and more costly legal proceedings one might find in federal court and/or at the Patent Trial & Appeal Board where disputes can last years and costs millions. Individual patent holders who may not have the financial resources to pursue an infringement claim or defense via the traditional route could conceivably benefit from this new service—presuming it is fair and balanced. By the same token, if a merchant believes they were wrongly accused and chooses to argue that their products should remain, they may pay the $4,000 fee and defend (opting into the program apparently does not prevent the parties from also pursuing formal legal proceedings against one another).

In Amazon’s program, a mediating attorney acts as an investigative magistrate of sorts, taking an active role in the process rather than being a more passive umpire. The effect is that nonlawyers who may not be aware of the assorted patent doctrines and exceptions present in the patent system, may make their own arguments and infringement contentions, trusting that their ‘judge’ will correct them if they make a mistake.

The program thus far seems to have an equivalent effect to that of a successful cease-and-desist letter, although it does not provide inventors with any other recourse in the event that they were actually damaged. Further, the $4,000 will only cover one patent claim and only applies to utility patents. Design patent holders or patentees wanting to argue infringement of multiple claims are presently out of luck.

Another issue that Amazon has yet to address is that a single appointed lawyer may handle infringement cases of various backgrounds which conceivably require different skill-sets to properly analyze. The PTO employs roughly 6,000-8,000 examiners of different backgrounds, so whatever the field, an examiner will have the requisite level of expertise. This is not the case with Amazon, so it is possible that the neutral and detached ‘judge’ may make infringement decisions about a patent in an unfamiliar field (a mechanical engineer deciding a case about chemistry, etc.). Additionally, the arguments permitted are limited–the accused may not argue invalidity as is a typical defense in regular proceedings, and the costs only cover infringement contentions for a single claim.

The program provides a quick, cost-effective, but limited solution to the problem of alleged infringing sellers infiltrating the online retail market. Patentees with the financial resources should not rule out pursuing infringement claims with firms simply because Amazon offers a cheaper option. Retaining a firm probably provides a higher likelihood of obtaining a comprehensive result and damages if necessary.

Despite this new, innovative solution Amazon has created, nothing prevents vendors from pursuing patent infringement claims via the traditional process in federal court as the decision rendered by the Amazon attorney is only binding as to the product’s presence on Amazon’s site. Thus, participation in the program does not appear to serve as a waiver for further injunctive relief or damages awarded by the courts. While the Neutral Evaluation process could benefit both those owning infringing products as well as the wrongly accused, it does appear that one major purpose of the program may be to deflect attention or operate to protect Amazon from claims of infringement. Whether Amazon is itself a maker, user, or seller of alleged infringing products is another question entirely.

Buche & Associates, P.C. is a firm handling intellectual property matters that include patent litigation. The firm has patent attorneys in Houston, Texas and in Southern California.

©2018 Buche & Associates, P.C., article by Mike Jones, J.D. candidate 2020.