Amazon’s New Patent Infringement Mediation Service: What Sellers and Brands Need to Know

Infringement of patents

Amazon Could Do More Against Bogus IP Complaints

Infringement complaints inflict a lot of pain, suffering and expense on the seller community.  It is hard enough when the complaints are legitimate, but horrible when they are bogus, and Amazon isn’t listening. This week I look at Amazon’s new Patent Infringement Mediation Service to determine if it is good or bad for sellers.

I have been critical of Amazon recently because I believe it could stop a lot of bad actor behavior if it cared to do so. See Amazon Project Zero and Dirty Seller Tricks for my complaints about the company over varying issues. My frustration is that Amazon itself has created many of these seller troubles through its policies and its tools. These have left sellers and brands open to abuse — a sore point ever since Brand Registry launched roughly two years ago.

eGrowth Partners sees the widespread pain this causes every single day. We see the sellers who have been taken down unfairly. We also see brands trying to enforce their rights against counterfeiters, scammers and black hat artists without support from Amazon, either. Everybody loses except the cheats and liars. 

Every month I hear from a client or friend that they are leaving online selling for good.  The risks are too high, and Amazon doesn’t have their back.  Their perception is that Amazon is doing nothing about the cheaters and that pretty soon, only counterfeit crap will be sold on the platform.  Amazon is turning into Alibaba, and that’s not a good thing.

Amazon’s “Utility Patent Neutral Evaluation” process won’t fix the entire problem, but it does fix one particular area of bad actor behavior: abuse of utility patents. I don’t know if this is going to apply to design patents. I am hoping it will, eventually. We’ve seen quite a few black hat tricks around both design and utility patents.

Hands-Off Approach Doesn’t Help Sellers

In the cases I’m discussing, these patents are fraudulent. I’m not talking about legit situations – they will definitely be improved by this new service. One of the beta users of this program had taken down 170+ infringers this way.  NOT ONE of the accused infringers disputed the claim.  His sales rocketed.  For sellers like him, I’m thrilled about this program.

What we see at eGrowth is when the bad actors file on something that cannot or should not be patented. Usually that’s because it is a process, technology or design that has been in use for a long time and is not new or unique to the bad actor.

Today Amazon accepts their bogus patent at face value and acts on it. The company’s position is, Go fight amongst yourselves. If you’re unfairly taken down for something, you’re not going to get a lot of support from Amazon. This is just going to direct you back to the rights owner. If you’re the rights owner and you’re trying to enforce your patent, you’re not going to get a lot of support either.

For example, Amazon may do the take down for you through Brand Registry, but then these bad actors claim, Hey! No, they’re wrong. I own this patent utility, or I buy from the real patent holder and this is totally bogus. Then they’ll provide a (possibly forged) legal letter, or they’ll show that they have a patent – even if it is not related to the takedown. Seemingly any patent will do.  Amazon then comes back against the brand who filed the complaint and takes away their privileges and/or suspends them.

Frankly, the team at Amazon reviewing these issues is not qualified to tell. The entire field of patent law is tricky. It’s not even really fair or right to ask them to be the ones to decide, Oh, wait. You’re wrong. You’re right. This complexity is why federal courts are filled with infringement cases.

In this new service, Amazon is going to provide a neutral third-party lawyer qualified to review the disputes, look at everything, and make a decision.

I think this is a great step forward if it works as intended.  Filing a case in federal court can cost thousands of dollars just to file, and then there’s the expensive lawsuit itself.  By capping the cost at $4,000.00, Amazon is providing a huge benefit to sellers and brands.  Most utility patent lawsuits take years to resolve and can cost hundreds of thousands of dollars.

Here’s how it works:

  1. Seller/brand claims utility patent infringement and deposits $4,000.
  2. If the accused party doesn’t respond, his/her product will be removed from Amazon and the seller/brand gets his/her money back.
  3. If the accused merchant thinks the case is bogus, s/he puts up $4,000.
  4. The lawyer makes his/her decision and collects $4,000 from the loser.  The winner gets his/her money back.  The loser’s listings are taken down.

So why is Cynthia still not happy?  For one thing, it will take time, just like any other legal process.  The articles said four months.  That’s time that an innocent party is potentially not selling.  In addition, it’s only utility patents.  Where I’m seeing the bad activity lately is design patents. Next, while your mediation fees are capped at $4,000, there’s no telling what you will have to spend with your IP attorney to get through this.  Believe me, you don’t want to go into an IP situation without an IP attorney at your side…and they better be a legal ninja to boot.

My concern is that bad actors will use this as a way to take out competitors.  They’ll bank on the accused not responding which means they (the bad actors) win by default and your listings will go away permanently if you don’t respond.

Amazon Mediation for Sellers – 80% Ready?

I see Amazon’s patent mediation service as good news potentially for sellers. Amazon launches so many programs that have serious glitches right out of the starting gate. Amazon’s own policy is to launch things about 80 percent ready and then let machine learning sort out mistakes over time. They value speed over quality and sellers get to suffer the consequences of not quite ready for prime time, so to speak.

On behalf of sellers and brands that feel Amazon hasn’t been acting fast enough, I am glad to see this new program. I hope that if it succeeds, Amazon might apply it to some of the other infringement cases on the platform, like bogus design patents and trademark infringement.

Design Patents: Easy to File, Hard to Remedy

Design patents are fairly easy to file and they’re not that expensive. It’s not the same as a utility patent which can be very expensive. Design patents are just like they sound. They contain designs and cover how a product looks. If you’ve ever read a design patent, you’ll know that it has pictures and images. Legal Zoom will do one for you for around $1000 plus filing fees, just to give you an idea.

eGrowth Partners has seen an uptick in design patent claims lately. Bad actors file design patents on products that already exist and get the patent. They then create their own products that are virtual duplicates of existing products that may have been around for a long time, but the owners did not get a design patent for them. The bad actors then take out these competitors and claim their spot on the platform.

Not surprisingly, the original product owner is often a No. 1 product in its category or subcategory. These poor guys are now suddenly being taken down for a product they’ve sold for years by somebody who noticed their success and decided to go and file a design patent and take it away from them.  There are “gurus” on Facebook who tout this tactic to their followers and think they are smart.  I think they are crooks.  They know they didn’t create the design but are happy to steal it from the person who did.

I don’t know if this is illegal or not, but it’s unethical. The company that originally designed the product has to fight to get its rights back, and to assert that the patent never should have been approved. It’s expensive to do this. It costs a lot to fight, and you have to do it off platform. More on this topic in a later blog post.

Share Your Utility Patent Mediation Experiences

For now, it looks like Amazon is taking notice of at least some of this mess and is actually taking action to try to help sellers resolve some of these difficult cases quickly. And for a fixed fee, which is really good news.

Let’s see how it works. If any of you have gone through this program – I know it’s been in beta test for a while—I would love to hear about your experiences with it. Did it work as promised? Do you feel it was fair or not? What was the process like? Smooth or bumpy? Please, let me know.


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