Amazon Utility Patent Neutral Evaluation Procedure
You are the proud owner of U.S. Registered Patent Number 100,000,000 (not a real patent number…yet). This patent protects an invention that you have spent years perfecting. With the issued patent in your back-pocket and with your business booming in leaps and bounds, you begin to look for additional ways to grow your business and maximize profit. You know that many people shop on-line, and decide to look at Amazon.com (“Amazon”) as a potential platform on which to sell your invention. After a quick search on Amazon, you discover, to your horror, pages of vendors selling products that are substantially similar to your invention in look and functionality. You thought that registering a patent would prevent this from happening, and are upset that unrelated third parties are profiting off your hard work. Caught in a state of shock and anger, you are at a temporary loss as to what to do next.
The situation described above is unfortunately one that many utility patent holders find themselves in. Thankfully, Amazon offers a Utility Patent Neutral Evaluation Procedure (“Evaluation”) designed to address precisely these types of situations. Amazon’s Evaluation provides holders of U.S. utility patents with a fast and cost-efficient means of addressing patent infringement claims. The following will serve as a guide for how to successfully navigate the Evaluation Procedure.
Step 1: Begin the Evaluation
Evaluations begin with the utility patent holder (“Patent Holder”) submitting an Amazon Utility Patent Evaluation Agreement (“Agreement”) to Amazon. The Agreement contains information including the patent number subject to evaluation, as well as a list of all sellers allegedly infringing on the patent (“Participating Sellers”). The transacted items alleged to infringe on the patent are each identified by an Amazon Standard Identification Number (“ASINs”). The Patent Holder is permitted to list up to 50 ASINs when submitting the Agreement. If more than 50 ASINs are included in the Agreement, then Amazon may, in its discretion, reduce the submitted number of ASINs to 50.
Once the Patent Holder has submitted an Agreement, Amazon will contact each Participating Seller and provide them with the option of either: (i) completing and returning the Agreement form within three weeks; or (ii) removing the listings alleged to infringe on the utility patent. Participating Sellers who fail to respond to the Agreement can expect to have their listing removed from Amazon. If one or more of the Participating Sellers responds to the Agreement, then Amazon will select a neutral third party with experience in patent disputes (“Evaluator”) to conduct the Evaluation. If none of the Participating Sellers respond to the Application, then all of the allegedly infringing products (“Accused Products”) will have their listings removed from Amazon.
Step 2: Submit Payment
After an Evaluator is selected, Amazon will instruct the Patent Holder and each individual Participating Seller to each wire a $4,000 deposit (each a “Deposit”) to the Evaluator within two weeks for the purposes of furthering the Evaluation. If the Patent Holder fails to wire the Deposit in a timely manner, then the Evaluation will be terminated. Any Participating Sellers who fail to wire the Deposit in a timely manner will have their Accused Product listings removed from Amazon.
Step 3: Submit Written Arguments
After receiving Deposits from the Patent Owner and relevant Participating Sellers, the Evaluator will establish a schedule for the submission of written arguments (“Schedule”). The standard form schedule adopted by the Evaluator provides: (i) the Patent Owner with 21 days to submit their initial arguments; (ii) the Participating Seller with 14 days to respond; and (iii) the Patent Owner with 7 days to reply.
In order to ensure the Evaluation meets the objectives of timeliness and cost-efficiency, no modifications to the Schedule are permitted once set by the Evaluator. Furthermore, the Patent Owner’s initial submission and subsequent response must not collectively exceed 20 double spaced pages. A similar cap is imposed on Participating Sellers who are limited to a maximum of 15 double spaced pages in their responses.
Step 4: The Evaluation
The Evaluator will review the written arguments and determine whether the Accused Products infringe on the patent listed in the Agreement. In rendering a decision, an Evaluator will at least give consideration to the following factors:
- Procedural Limitations – The Participating Seller may overcome the alleged infringement if one of the following scenarios are applicable. First, if the patent listed in the Agreement is anything other than a non-expired U.S. Utility Patent, then the evaluation will be terminated in favour of all Participating Sellers. Second, if an Accused Product clearly does not fall within the scope of protection afforded by the patent, or is not “physically identical” to the product associated with the patent, then it may be excluded from the Evaluation. If a Participating Seller associated with an excluded Accused Product is not also associated with a non-excluded Accused Product, then that Participating Seller is excluded from the Evaluation entirely. Third, only products sold solely by third-party sellers on Amazon are eligible for evaluation. A Participating Seller may overcome the alleged infringement by establishing the applicability of any one of these procedural limitations.
- Patent is Invalid or Unenforceable – In addition to the procedural limitations discussed above, Participating Sellers may also defend against an infringement claim by establishing that the asserted patent is invalid or unenforceable. There are two ways in which the Participating Sellers may show the patent to be invalid/unenforceable:
- Declaration of Invalidity/ Unenforceability – The Evaluation will be decided in favour of the Participating Sellers if the patent listed in the Agreement has been declared invalid or unenforceable by: (i) a court of competent jurisdiction; (ii) the U.S. Patent Office; or (iii) U.S. International Trade Commission. The Participating Sellers must produce an official order from one of these bodies verifying the patent associated with the Agreement has been declared invalid or unenforceable. Other evidence will not be considered by the Evaluator in regard to this issue;
- Sold Prior to the Earliest Effective Date – A Participating Seller may establish the invalidity/unenforceability of the asserted patent by proving the Accused Product(s) were being sold one year or more prior to the earliest filing date of the patent. This defence requires credible and independently verifiable evidence, such as date of first sale on Amazon.
Step 5: The Outcome
The Evaluator will render their decision within 14 days of the Patent Holder submitting their final reply. The outcome of the decision will be one of the following: (i) Patent Holder is likely to prove all of the Accused Product(s) infringe on their utility patent; (ii) the Patent Holder is not likely to prove any of the Accused Product(s) infringe on their utility patent; or (iii) Patent Holder is likely to prove that some, but not all of the Accused Product(s) infringe on their utility patent.
Neither the Patent Holder nor the Participating Sellers are permitted to contact the Evaluator regarding the decision, nor can the decision be appealed.
- Likely to Prove Infringement for All Accused Product(s) – If the Evaluator determines that it is likely the Patent Holder will prove infringement for all of the Accused Products, then Amazon will remove those product from their website. Furthermore, the Evaluator will: (i) return the Patent Holder’s Deposit; and (ii) retain a total of $4,000 equally divided among the Deposits of Participating Sellers, or if there is more than one Participating Seller found to infringe the Patent Holder’s patent, then any Deposit money exceeding $4,000 will be donated to an Amazon Smile charity selected by the Patent Holder.
- Not Likely to Prove Infringement for Any Accused Product(s) – If the Evaluator determines that it is not likely the Patent Holder will prove infringement for any of the Accused Products, then Amazon will not remove any of the Accused Products and will have no obligation to take any further action. Furthermore, the Evaluator will: (i) return the relevant Deposits to all Participating Sellers; and (ii) retain the Patent Holder’s Deposit.
- Likely to Prove Infringement for only some Accused Products – If the Evaluator determines it is likely the Patent Holder will prove infringement for some, but not all of the Accused Products, then Amazon will only remove from its website those Accused Products likely to constitute an infringement. Furthermore, the Evaluator will: (i) retain $2,000 of the Patent Holder’s Deposit and return the remainder; (ii) return the full Deposits of Participating Sellers of Accused Products found not to infringe; (ii) retain a total of $2,000 divided equally from the Deposits of Participating Sellers of Accused Products found to infringe the Patent Holder’s patent; and (iv) donate any excess money from the Deposits of Participating Sellers of Accused Products found to infringe the Patent Holder’s patent to an Amazon Smile charity selected by the Patent Holder.
Conclusion and Takeaways
The Utility Patent Neutral Evaluation Procedure is available to you to address issues of patent infringement occurring on Amazon. Below are a few practical tips to keep in mind as you take your business onto Amazon:
- Regularly Check Amazon — If you are the registered own of a utility patent associated with a consumer good, then you are encouraged to monitor Amazon to ensure no unauthorized third-parties are selling your good.
- Do not panic — If you encounter an Amazon seller who you believe is infringing on your patent, consider whether the Evaluation is the appropriate mechanism for you. The Evaluation provides you with a quick and effective way to remove infringing products from Amazon.
- Increase your odds with legal advice — A lawyers can assist by organizing and presenting your submissions in a clear and persuasive manner. Legal advice can also be helpful for navigating the intricacies of patent prosecution.
If you have any questions regarding your intellectual property, please reach out to any member of Startups @ McMillan. We are dedicated to helping you realize your business goals and protect your rights.
Please note that this article is intended to be an overview only and neither constitutes legal advice nor a detailed description of the subject matter.
 “invention” — as such term is understood under the Patent Act RSC 1985, c P-4.