Many of our clients have achieved great financial success selling their patented inventions on Amazon. This is not surprising, considering that Amazon is the most prominent online marketplace in the United States. Amazon-based businesses have become even more lucrative when the COVID-19 pandemic shut down most brick-and-mortar retailers, shifting consumer demand online. However, although Amazon offers a great business platform, there is one huge downside–the knockoffs.
Amazon “pirates” search the marketplace for emerging products that generate significant demand. Then, these pirates manufacture a nearly identical product overseas–usually in China–and flood Amazon with knockoffs, often at much lower prices than the authentic product. As a result, the market share of the original seller declines and profits dwindle. Indeed, knockoffs are a major reason why many rising Amazon businesses fail prematurely. So, is there a way to protect your business against such an anguishing demise? Yes, by securing a utility patent and enforcing it using Amazon’s Neutral Patent Evaluation Process.
Outline of Amazon’s Neutral Patent Evaluation
In 2019, Amazon gave its sellers a very powerful weapon against the onslaught of knockoffs. Recognizing that district court patent litigation is an extremely expensive and prolonged process, Amazon created its own version of patent infringement dispute resolution. The process is simple and effective.
Step 1: Identify the infringed patent claim and formulate the infringement case
First, the patent holder initiates the process by sending an email to Amazon’s legal department identifying its utility patent and the products infringing one specific claim of that patent. The patent holder must provide a detailed explanation articulating how the accused product infringes the asserted patent claim. An efficient way of establishing a strong infringement case is through a patent claim chart.
Step 2: Work with the infringers to reach an agreement
Next, Amazon sends an email to the accused pirates letting them know about the patent infringement complaint filed against them. The email urges the patent infringers to reach out to the patent owner to amicably resolve the issue. A threat of patent infringement is often sufficient to ward off some pirates, causing them to seek easier prey. However, some infringers might simply ignore Amazon’s warning. In that case, the patent owner sends a follow-up email to Amazon requesting to move forward with the Neutral Patent Evaluation Process.
Step 3: If the infringer does not put up $4,000, Amazon shuts it down
Next, Amazon sends its Neutral Patent Evaluation agreement to both the patent owner and the accused pirate. Both parties have 21 days to agree to participate in the process by signing the agreement and sending $4,000 to Amazon. If the pirate does not cooperate, Amazon will simply shut down its listing.
This happens quite often, especially when the patent owner’s infringement case is well-formulated by an experienced attorney. The goal is to get the pirate to recognize its imminent loss, which will discourage the pirate from risking the $4,000. Many Amazon patent infringement disputes end in a victory for the patent owner at this stage.
Step 4: The actual patent evaluation process
If both parties agree to participate in Amazon’s Neutral Patent Evaluation Process and deposit the required $4,000, the process moves into the actual patent evaluation stage. Both parties file their arguments establishing why each party believes it should prevail. The patent owner gets the first and the last words–which gives the patent owner a big advantage. There is no discovery, expert testimony, or invalidity contentions–only legal arguments explaining each side’s position with respect to patent infringement.
After both parties present their case, a patent attorney Amazon selected to be a neutral patent evaluator decides whether the patent owner has established that the accused product infringes its patent. If the patent owner prevails, Amazon refunds the $4,000 to the patent owner and takes down the infringing listing. Also, the loser forfeits its $4,000.
With the emergence of Amazon’s Neutral Patent Evaluation Process, inventors looking to build a successful Amazon business have a compelling reason to apply for United States utility patents. A utility patent can protect your market share and help you take down free-riders looking to make an easy profit off your hard work.