Do you sell products in an online marketplace? Are you interested in applying for patent protection but not sure if your products justify the time and costs associated with obtaining a patent? Many small (and large) business owners struggle with this decision. Recent shifts in the online marketplace show that patent protection is becoming more important than ever to protect business interests and stop competitors from copying successful products. We encourage any business debating whether to obtain patent protection to consider the advantages of having such protection when it comes to selling on Amazon. Amazon enforces the rights of utility and design patent owners without the need for costly litigation.
The impact of Amazon (amazon.com) on commerce and direct product sales to consumers cannot be understated. Now more than ever, consumers use Amazon to select and purchase products. Amazon itself has an inventory of 12 million items that expands to 350 million items taking into account all the marketplace sellers. Over 100 million Amazon Prime members spend, on average, $1000 or more per year. The Amazon platform conducts $283,000 of sales per minute or $17,000,000 per hour. (repricerexpress.com/amazon-statistics) With numbers like these, every company offering consumer products likely does business through Amazon or, at a minimum, is impacted by competitors selling on the platform.
Amazon also affords patent owners the ability to enforce their patent rights to limit infringement and penalize infringers. The enforcement process on Amazon may be preferable to typical patent litigation options. Traditionally, a patent owner sends cease and desist letters, threatens a potential lawsuit, or files a lawsuit in a U.S. District Court if the infringement does not stop. These actions may not feasible against a foreign company selling their products online, which merely takes down the infringing products then relists them under another name. Foreign sellers will rarely respond to letters or even lawsuits. The costs for these actions also may be prohibitive to small businesses that cannot afford to litigate against dozens of potential infringers.
Instead, patent owners can use the Amazon IP enforcement processes to prevent infringement of their patent rights without spending the money associated with typical patent litigation costs. Further, the enforcement measures reduce the time from reporting the infringement to remove infringing products from months to weeks. The recommended Amazon IP enforcement processes are discussed below.
A patent owner may file a complaint through Amazon using a Report Infringement Form. A Report Infringement Form may be submitted through a seller’s regular Amazon account. This form lists infringing products by Amazon Standard Identification Numbers (ASINs) and is limited to 1000 characters without the ability to attach supporting documents. The infringing products associated with the ASINs are removed without the need for the patent owner to directly communicate with the infringers. The patent owner receives a decision in about a week but is limited on tracking progress or escalating an unfavorable decision. Yet, the process is straight-forward and quick.
A better way to report patent infringement using online forms is through a seller’s Brand Registry Account. Most active sellers on Amazon should have such an account for trademark and copyright registration enforcement in addition to patent enforcement. The patent owner submits a form listing the infringing ASINs but may use up to 3000 characters to make arguments, which is helpful for utility patent enforcement. The submission also may attach claim charts and other documentation to show infringement. The submission is tracked and may be escalated if not successful in the removal of infringing products from Amazon.
In 2019, Amazon introduced its Neutral Patent Evaluation Procedure (NEP) to better serve its sellers experiencing potential patent infringement. In a sense, the NEP process resembles a patent mediation process in that the patent owner submits arguments and evidence of infringement. The accused infringer is provided an opportunity to rebut the allegations. The NEP process may be available if the complaint under the Brand Registry is not accepted. Patent owners may invoke the NEP process for utility and design patents, as of 2021. We summarize the NEP process here but encourage patent owners to discuss a potential NEP action with us before taking any action. It should be noted that the NEP process is not available against products sold by Amazon itself.
To initiate the NEP process, the patent owner submits a complaint through Amazon much like the processes listed above along with an agreement to participate in the NEP process. An infringer (or infringers if the complaint includes multiple listings) receives notice of the complaint along with its accused ASINs and the agreement to also participate in the NEP process. If the infringer does not return the signed agreement then Amazon removes the accused products. If the infringer does agree to participate, then Amazon selects a neutral evaluator to determine whether the accused products infringe the patent. The neutral evaluator is a patent attorney in private practice and is not an employee of Amazon.
The patent owner and accused infringer each pay $4000 to participate in the NEP process. Using a set schedule, the patent owner submits its initial arguments, preferably using claim charts and pictures to show infringement in detail. The assertion is limited to one claim. Further, the initial submission is limited in length to 20 pages including charts. The accused infringer receives the initial arguments and rebuts with its own arguments and evidence to show non-infringement. The NEP process limits the rebuttal to 14 pages. If the accused infringer does not respond, then the patent owner wins by default and the accused products are removed. The patent owner is allowed to file a reply to counter the accused infringer’s arguments but it is not required. Within a couple weeks, the neutral evaluator provides a decision whether the accused products are likely to infringe the claim. Amazon then removes the accused products if the decision supports a likelihood of infringement. The neutral evaluator returns the $4000 fee to the prevailing party. There are no appeals within the NEP process for a decision.
The above summary is meant to provide basic information to help patent owners make decisions whether to use the enforcement venues available on Amazon to resolve potential infringement in a quick and cost-effective manner. If Amazon still does not agree with the patent owner, then the traditional options of patent enforcement are still available.
Please look for a subsequent article on defending against a patent infringement complaint using the Amazon processes discussed above.
Before enforcing patent rights on Amazon, an infringement opinion must be conducted using qualified U.S. patent attorneys and agents. Repeated baseless infringement complaints will result in action taken against the patent owner which limits its ability to conduct business on Amazon. Further, many submissions in the NEP process lose the evaluation based on poor quality submissions and misunderstanding of U.S. patent law. Thus, patent owners need to be careful and certain when submitting a complaint. The attorneys and agents at MWZB specialize in these opinions and IP enforcement on Amazon. We are happy to discuss your matter in detail to provide the best options to enforce your intellectual property. Please contact William Nixon (firstname.lastname@example.org) or Wan-Ching “Christin” Montfort (email@example.com). Ms. Montfort is fluent in Chinese.