By Thomas Kohler
Tom Kohler is an experienced, registered patent attorney who has worked with individuals, start-ups, and Fortune 100 companies in diverse technology areas including medical devices, renewable energy and electric power generation, consumer products, Internet and computer products, semiconductor fabrication, and telecommunications.
While Amazon.com has long had procedures to address infringement of IP rights by sellers; it has been largely ineffective for resolving cases of patent infringement. This was not necessarily surprising, given the complexity of judging patent infringement. But it also left patent owners without any practical remedy for patent infringement occurring on Amazon because patent litigation in Federal court can be an expensive and lengthy process. Cases typically require more 1-3 years to resolve and, even for cases in which less than $1M is at risk, a party’s legal fees can be in the range of $700K on average (see, AIPLA Report of the Economic Survey 2019, p. 50.2) Given the nature of Amazon, where many small sellers entire annual revenue is far less than $700K, and many infringing sellers are outside the US and can change identity or switch products easily, the time and expense of Federal court patent litigation made that option a non-starter for most.
To fill this patent enforcement gap, in 2019 Amazon introduced the Amazon Utility Patent Neutral Evaluation Procedure (“UPNEP”). The purpose of the UPNEP, according to Amazon’s own difficult to find documentation,3 is “to efficiently resolve claims that third-party product listings infringe utility patents.” An important caveat there is that you cannot use this process if you believe Amazon itself is selling an infringing product; for that you still need to go to court. Again, according to the documentation, the UPNEP offers a simple, low-cost procedure, which is voluntary, confidential, and allows owners of U.S. utility patents to obtain a fast evaluation of patent claims against products identified by Amazon Standard Evaluation Number (ASIN).
To meet the objectives of the program, the UPNEP employs an extremely streamlined procedure allowing assertion of a single claim from one utility patent and almost no defenses other than arguing non-infringement. There is no discovery, no depositions and generally speaking the rules of civil procedure and evidence do not apply. There is much to be criticized from a legal process standpoint – and plenty has been written about that subject4 – but for better or worse it does achieve its stated goals, resolution of the claims in 2-3 months and, in many cases, with legal fees only around $10K.5
The UPNEP uses evaluators, unaffiliated with Amazon, who are patent attorneys with relevant technical and patent experience. Based on briefs filed by the parties, the evaluator makes a determination as to whether or not the patent owner would be likely to prevail on an infringement claim in Federal court. If the evaluator judges it to be likely, then the patent owner prevails and the subject ASIN is delisted. The only defense, other than arguing non-infringement, is to show a prior sale6 of the same or an identical product via self-authenticating evidence, of which just two examples are given: date of sale on Amazon or a webpage obtained from the Wayback Machine.7 In spite of the highly abbreviated procedure, so far, it does seem to be working and generally fair results achieved (fair meaning there does not seem to be a bias towards patent owner or accused sellers, or based on location in or out of the US, and the decisions in general reasonably based).
For a patent owner, the process begins by contacting Amazon to request participation. All that is needed at this stage is an email to the UPNEP staff identifying the patent by number, the claim to be asserted and a single ASIN that is believed to infringe. This high-level screening is presumably to ensure the patent is appropriate for the abbreviated procedure. (It appears that claims based on method patents will be screened out, and possibly things like chemical or biotech patents for which resolution may be difficult without expert testimony). But if the patent covers a general consumer product of the type commonly sold on Amazon.com, it is likely to be accepted.
Once accepted, the patent owner must return an UPNEP Agreement form acknowledging the procedure and, among other things, agreeing not to sue Amazon (big surprise). The patent owner at this stage also may list up to 20 accused ASINs. Each of the sellers of the accused ASINs are then informed and have three weeks to submit a similar Agreement form stating an intent to oppose the claim. Sellers who do not return an Agreement within that time have their listings taken down.
If at least one seller responds, then Amazon selects a neutral evaluator and informs the parties. At that point, Amazon takes itself out of the process and correspondence is direct with the evaluator. Each party then has two weeks to make a $4,000 deposit into a trust account held by the evaluator. Sellers who do not make the deposit have their listings taken down. If no sellers make that deposit, the patent owner’s deposit is returned and that is the end of the matter.
Assuming both the patent owner and at least one seller makes the deposit, the evaluator sets a briefing schedule, which is very much like a summary judgment briefing schedule – opening brief, opposition brief and reply brief. There are strict page limits and evidentiary limits as mentioned above. The evaluator typically renders an opinion within about a week of the final brief being submitted. The prevailing party gets their $4000 deposit back and the evaluator retains the losing party’s deposit as his/her fee. (Things get bit complicated with multiple responding sellers, but the principle is the same, except the evaluator does not get to keep more than $4K total. Losing parties, however, don’t get back the difference; it is donated to charity).
Key take aways:
- For patent owners: An enforcement option that makes patents more valuable to small businesses that face competition from sellers on Amazon
- For sellers: Don’t blindly accept assurances about non-infringement from suppliers or you could end up with a lot unsellable inventory
- For both: Get a patent attorney; this is still a patent proceeding judged by patent attorneys and subject to the peculiarities of patent law
- Amazon IP policy: https://sellercentral.amazon.com/gp/help/external/201361070; Amazon IP infringement report form: https://www.amazon.com/report/infringement
2.https://www.aipla.org/detail/journal-issue/2019-report-of-the-economic-survey (membership or fee required).
- No original Amazon source on-line has been identified for the Amazon UPNEP documentation. A copy of the procedure, as it existed in March 2021, can be obtained from the author at tkohler@drm.com upon request.
- See, e.g., Emerson, From Amazon’s Domination of E-Commerce to Its Foray into Patent Litigation: Will Amazon Succeed as “The District of Amazon Federal Court”?, 21 N.C. J.L. & TECH. 71 (2019). Available at: https://scholarship.law.unc.edu/ncjolt/vol21/iss2/4.
- At small firm/sole practitioner billing rates outside of places like Boston or NYC.
- Prior meaning more than one year before the earliest effective filing date of the subject patent per 35 U.S.C. ¶ 102.
- Wayback Machine – Internet Archive, at https://archive.org/web/.
Tom Kohler is an experienced, registered patent attorney who has worked with individuals, start-ups, and Fortune 100 companies in diverse technology areas including medical devices, renewable energy and electric power generation, consumer products, Internet and computer products, semiconductor fabrication, and telecommunications. Prior to joining Downs Rachlin Martin, Tom was a partner in a leading IP boutique firm in New York City. He can be reached at (802) 863-2375.