The rise in pandemic entrepreneurs has led, unfortunately, to an increase in patent infringement. A recent program from Amazon is enabling patent holders to protect their intellectual property – and Warner has a new decision tree to make understanding that process even easier.
“Amazon’s online marketplace can be a real boon for entrepreneurs, giving them access to global customers without an extensive upfront investment,” says Warner partner Catherine Collins. “But online selling makes it easy and inexpensive for less-than-reputable companies to introduce knockoff products.
“Patent holders and small business owners don’t have the money to take every infringing company to court. It is simply too expensive. That’s where Amazon’s Neutral Patent Evaluation Process comes in.”
How Amazon’s Patent Evaluation Process Works
The process starts with an email to Amazon saying the patent holder wants to participate and provides the patent number and the Amazon Standard Identification Number, or ASIN, of the product or products in question. Amazon then reviews the claim and decides whether to invite the patent holder to participate.
If invited, the patent holder will be asked to sign an agreement identifying all the products of up to four sellers they believe infringe. The patent holder also agrees to keep confidential anything learned during the process, as well as waive their rights to sue Amazon. A seller who has been accused of infringing can either decide to participate, and sign the agreement, or have its accused product removed from Amazon’s listing.
If the seller or sellers agree to participate, a $4,000 deposit is required from each party; these fees go to a third-party patent evaluator hired by Amazon. So, for $4,000, a patent holder can possibly pursue removal of products from up to four potentially infringing sellers. If the seller decides to participate, the costs can be significantly higher, but a far cry from the cost of a lawsuit.
The evaluator then gives the patent holder 21 days to submit a brief arguing why they believe the products infringe. Collins recommends having a patent attorney involved upfront to draft an effective brief.
Sellers have a tighter turnaround – only 14 days – to respond. No discovery is involved in the process, with the evaluator deciding if the patent holder is likely to win or lose based on the submissions from the patent holder and seller(s).
A patent holder who prevails gets their deposit back, while the infringing sellers lose their deposits. If there are multiple sellers, anything above $4,000 is donated to charity. The evaluator is paid a maximum of $4,000 from one side or the other – or, in some split decisions, a portion from both. Patent holders usually receive the results in 30 days.
“While there are no damages involved, the process serves effectively like an injunction,” Collins explains. “If a particular seller gets accused by enough people, they may get knocked off Amazon. If you have multiple evaluations against you, you can be in trouble.”
Is the Patent Evaluation Process Right for Me?
The process is not without risks, Collins cautions. A patent holder who goes after a big enough player and loses could get dragged into court and face a declaratory judgment.
To help patent holders and business owners decide whether the process make sense, Collins has developed a decision tree that walks them through the steps so they can evaluate their particular situation and decide whether or not to move forward.
“This process a very good tool for small businesses to assert their patents against Amazon sellers, but it may not be right for everyone,” Collins says. “This is far cheaper and much faster than filing a lawsuit, although not entirely without risks. It’s good to consult with your attorney to see if this process is an option for you.”
About the authors: Catherine Collins can be reached at 616.752.2473 or ccollins@wnj.com. Brianna Loder can be reached at 248.784.5119 or bloder@wnj.com.
These materials are for education purposes only. This is not legal advice and does create an attorney client relationship.