For years, eCommerce platforms have been a safe haven for the sale of knock-off products and utility patent infringement. While you could file an intellectual property complaint, the eCommerce platforms felt they could not take sides, effectively forcing patent owners to court when their rights were otherwise clear.
Meanwhile, Aftermarket Patent Owners watched with frustration as knock-off products filled up the virtual shelves on Amazon, eBay, and other eCommerce platforms. Even with a utility patent in hand, companies could not stop infringement without wasting all of the product’s good years and revenue in court against an overseas company that would not pay in the end. Aftermarket Patent Owners were left wondering why they had secured the utility patent in the first place.
Amazon has taken a major step toward resolving this fundamental problem. The Utility Patent Neutral Evaluation program provides a cost-effective and fast way for a patent owner to remove infringers from the Amazon Marketplace. It is important to know about this program and to use it when it makes sense.
Utility Patent Owners may initiate the Neutral Evaluation Program by filing a one-page complaint identifying the patent claim and the ASIN numbers for the products that infringe the patent. This process should be used when infringement is certain, i.e., that the knock-off literally infringes every aspect of one claim of your patent. Following receipt of the complaint, Amazon verifies ownership of the patent and the rights to assert it. Once confirmed, Amazon notifies the seller of the accused products of the claim of infringement. The seller is notified that they can contest the claim by signing an arbitration agreement and paying a $4,000 retainer.
Here is the real benefit of the program. The seller can opt-out of the Neutral Evaluation Program by failing to return the signed Arbitration Agreement. Many may opt-out as $4,000 is more than what they are willing to pay to field a losing argument. If they opt-out, the product is removed immediately by Amazon. In cases of clear infringement, you may very well successfully enforce your utility patent inside of three weeks against a large number of knock-offs.
If sellers opt-in, both parties are required to pay the Neutral Arbitrator a $4,000 retainer. The Neutral will then set a briefing schedule. The schedule is very short–approximately two months total. The Patent Owner will be asked to submit a 10-page opening brief with exhibits and the Seller will be asked to submit a 10-page response. The Patent Owner will be afforded a short Reply. That is it! Amazon largely limits the issues to whether the product infringes on one claim of the asserted patent. Amazon allows a very limited invalidity defense: proof of sales of the product before the patent was filed. The entire process wraps up in 90 days with the Neutral Arbitrator advising Amazon either (1) there is a likelihood that the Patent Owner will prevail on claims of infringement or (2) there is a likelihood that the Seller will prevail on its defenses. Regardless of the outcome, you will know whether your patent is enforceable against these knock-offs inside of 90 days—and for the cost of a retainer for the typical patent infringement case filed in Federal Court.
It is important to note at this point that Amazon does not award damages. Rather, the Neutral Evaluation Process creates a way for you to clean up the competition so that you make more money in sales of the genuine article: your patented product.
If you are having issues with patents, product packaging, false infringement accusations, or other related matters, the Aftermarket Law team is here for you. We have extensive experience in these areas, especially for auto parts, and are eager to work with you. Contact us today!
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