Patent Owner Enforcement Perspective: Amazon Utility Patent Neutral Evaluation Procedure

This is the second post in Aftermarket Law’s series on Amazon’s new Utility Patent Neutral Evaluation Procedure.  For the first post in the series, click here

This post discusses the general advantages of the Amazon Utility Patent Neutral Evaluation Procedure and then presents a case study of one of our recent proceedings.  Every case is different, and previous results are no guarantee of future performance.  But we think case studies help to convey how Aftermarket Law fights for its clients’ success.

Amazon’s Utility Patent Neutral Evaluation Procedure presents significant advantages for patent owners over other potential ways to fight knockoffs and other infringing products.  First, is speed.  A complete proceeding can be accomplished in approximately three months from the filing the initial agreement, which identifies accused products by ASIN, to the final decision, which results in removal of all products found infringing from Amazon.  In contrast, a patent infringement case filed in federal district court can take several years.  The second advantage is cost.  Although the $4,000 fee to start the proceedings is more than other filing fees, the shorter streamlined procedure is less expensive to prosecute both because it takes less time and because the issues are limited.  A third advantage is low risk.  The seller cannot challenge the validity of your patent in the Amazon Procedure, so there is not a chance of losing your patent.

These advantages come with attendant downsides.  The main disadvantage of using the Amazon Procedure is that you cannot win money.  What you win is the removal of infringing listings.  As Amazon sellers will know, this can nonetheless be a huge boost to your own competing listing and a large blow to the infringing seller—who loses their listing and is left with stock they cannot sell through Amazon.  A victory, therefore, puts you in a very strong bargaining position, if you even want to deal.  Another benefit is that the win before the neutral could help with future litigation.  If you have to follow up by filing a lawsuit in court, you can point out that a neutral professional has already decided that you are likely to win and that they infringe your patent.  Of course, if you lose, your competitor would be able to do the opposite, making later litigation more difficult.

We recently represented a client specializing in automotive aftermarket products as the patent owner in an Amazon Utility Patent Neutral Evaluation Procedure.  The client invented important safety technology for a class of product, but the client had been essentially driven out of the market by knock-offs that copied its patented safety features.

Prior to litigation, we contacted the manufacturer, but they were unwilling to negotiate a license.  We challenged fourteen products sold under two brands in a single proceeding.  The challenged products included the top selling product in the category.  The manufacturer stepped forward to defend the case.  Notably, the manufacturer is a foreign entity that would have been difficult to personally serve with process, as is required to start a traditional lawsuit.  

The process moved fast, but it was very focused on the one issue the client cared about—whether the products infringe our invention.  With a very short deadline to make our complete case in our first filing, we contracted with a subject matter expert to help provide a more detailed technical analysis.   The infringing manufacturer did likewise and presented both technical and legal responses to our case.  Ultimately, the neutral evaluator decided the dispute in favor of our client for all fourteen products.  This has proved to be a significant victory for our client, drastically changing the licensing negotiations to a place where they are likely to bear fruit.

Several aspects of the proceeding were surprising.  At the beginning, Amazon consolidated the products of multiple sellers into one proceeding, even before the manufacturer stepped forward to represent both.  This saved our client one $4,000 fee and simplified the process to a single filing for us at each stage.  At the end, the neutral evaluators decision is not a reasoned opinion like you would receive from a court.  It is more like a summary verdict—yes, you win, or no, you lose.  Because of this, it is hard to know why we won or what parts of our strategy proved effective.  Finally, after the decision, another surprise—Amazon notified us that we could, in the future, use its more streamlined infringement reporting process at https://www.amazon.com/report/infringement to challenge similar products.  Normally, Amazon requires a court order to remove listing using this system.  However, Amazon appears to treat its neutral evaluators’ decisions as equivalent to a court order, such that similar products to those shown infringing can be removed without having to initiate another an Amazon Utility Patent Neutral Evaluation Procedure.

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.  Contactus today!

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