What Could Go Wrong for Patent Owners in Amazon APEX?
Amazon APEX has leveled the playing field for utility patent owners. Patent owners are no longer limited to prohibitively expensive infringement lawsuits in federal court to enforce their rights. A final decision can be reached in an APEX evaluation for a fraction of the cost. For many patent owners, APEX has made enforcement a reality. So what are unexpected risks for patent owners who desire to pursue an Amazon APEX case?
When APEX Is Not Offered
Recognize that you are not entitled to APEX simply because you believe Amazon sellers are infringing your patent. Your request for an evaluation may be denied.
It helps to own a family of utility patents. It would not be uncommon, for example, for a parent patent to be rejected while a child patent is accepted for an APEX evaluation.
Design patents are ineligible for APEX.
The Risks of Amazon Sellers Choosing to Fight APEX
While official statistics have not been released, our anecdotal observation is that most accused sellers do not choose to proceed with APEX. High legal costs relative to product sales may be a major factor.
Each accused seller must pay an evaluator deposit, which is currently $4,000 as of the date of this post. The evaluator deposit will be refunded to the winning party. Moreover, legal fees in defending an APEX case can easily cost tens of thousands.
As a result, only serious Amazon sellers with enough at stake will choose to proceed with APEX. They might have had a patent attorney assess the risks of losing an Amazon APEX case, and then decided to move forward based on what they believe to be a strong noninfringement argument.
The Risks of Amazon Sellers Challenging Your Patent at the USPTO
APEX has a peculiar rule regarding patent invalidity. Sellers may only use their own product sales over one year before the patent priority date in order to challenge the validity of the asserted claim. Accused infringers may not use third party products or prior art to invalidate the patent.
Accused sellers may, therefore, seek to invalidate the asserted patent by filing a reexamination request with the USPTO. If a reexamination request is granted by the USPTO, the patent owner will now need to go back-and-forth with the US Patent Office to defend the validity of its claims.
This process may involve prior art rejections, claim amendments and arguments, all of which will lead to an outcome. The patent owner will need to spend thousands of dollars and potentially a year or so to reach a result.
In many cases, patents that survive reexamination may have claims different than those originally granted. Patent owners will then need to reassess whether the claims in a reexamined patent will still cover the competitors’ products.
The Risks of Amazon Sellers Filing a Declaratory Judgment Lawsuit
Accused sellers with more significant financial resources may want to fight the patent battle elsewhere. Filing a lawsuit in federal court for declaratory judgment (DJ) of noninfringement will put substantially greater financial pressure on the patent owner.
Accused infringers who choose this tactic will notify Amazon and request that their product listings stay active while the DJ lawsuit is pending.
In a patent DJ lawsuit, the tables are turned. The plaintiff is the accused seller whereas the defendant is the patent owner. In our experience, we see this reversed approach in situations where the patent owner may appear to have less financial resources than those of the accused sellers.
In other words, the patent owner might be a smaller player than the accused seller. Patent owners, therefore, should exercise caution and carefully choose particular sellers if they wish to reduce the risks of a DJ lawsuit.
A Wise Patent Enforcement Strategy Against Amazon Sellers
APEX can be a great tool for patent owners, but reaching the desired result is anything but simple. The merits are important. You want to have a high conviction that the accused products infringe your chosen independent claim.
Yet, the merits are not the only factor. You also need to choose the right sellers to pursue. Otherwise, initiating an APEX battle may lead to an outright war that many patent owners are unprepared to face.
Need to enforce your patent against Amazon sellers? Contact US patent attorney Vic Lin at vlin@icaplaw.com to explore how we can help develop and enforce a wise patent enforcement strategy against infringing competitors.
