Arbitration in the Age of Amazon

AuthorGaston Kroub
PositionGaston Kroub is a partner at Kroub, Silbersher & Kolmykov PLLC in New York City. A registered patent attorney, he specializes in intellectual property litigation. He can be reached at
Published in Landslide® magazine, Volume 12, Number 1, a publication of the ABA Section of Intellectual Property Law (ABA-IPL), ©2019 by the American Bar Association. Reproduced with permission. All rights reserved.
This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.
By Gaston Kroub
Shopping online has never been easier, or more
prevalent. Fueled by the rise of high-powered
smartphones that allow ordering products with
a few taps or swipes, e-commerce sites of all
stripes have enjoyed increased consumer
attention over the years. And more buyers have
brought more sellers, especially on “marketplace”
websites like Amazon and eBay, which host third-party sellers
from all over the world.
While these developments have been a boon for consumers,
in terms of increased choice and lower prices, they have also
increased the level of difculty for intellectual property (IP)
owners hoping to police infringement online. For one, there
has been an increased number of foreign-based sellers (many
China-based) offering their wares directly to American custom-
ers. Making matters worse, existing mechanisms for enlisting
the help of the e-commerce “host” of those foreign sellers are
at turns cumbersome and imprecise.
While nding a perfect solution for each e-commerce mar-
ketplace is an impossible task, there are existing procedures
in place at most of them that can be tweaked to create a fairer
and more reliable system for resolving IP disputes. In short, a
need exists for an improved approach to handling IP disputes
on e-commerce marketplaces—one that benets IP own-
ers, accused infringers, and the e-commerce marketplace host
itself. More than ever, streamlined arbitration procedures are
the tool of choice for meeting that need.
For purposes of the remainder of this article, Amazon will
provide our working example, since it is at the forefront of
using streamlined arbitration to resolve disputes on its plat-
form. First, we will look at how Amazon approaches IP issues
with respect to third-party sellers on its platform. Then, we will
consider how Amazon currently handles IP complaints directed
at those sellers by IP owners, including a look at the new
arbitration system it has put in place for utility patent-based
disputes. Finally, the benets of extending Amazon’s exist-
ing seller arbitration framework will be discussed, along with a
suggestion that arbitration of IP disputes could be an approach
adopted by other e-commerce marketplaces.
Amazon’s IP Policy for Third-Party Sellers
Amazon is not shy about setting out expectations for third-party
sellers offering goods on its platform. Sellers must abide with a
comprehensive IP policy, which makes clear that Amazon does
not allow listings that violate the IP rights of rights owners.1 Rec-
ognizing that not all third-party sellers are familiar with IP laws,
Amazon’s policy sets out denitions and examples of the vari-
ous types of IP protection (copyright, trademark, and patent)
that could be applied to goods offered by those sellers. More-
over, Amazon recommends that sellers who are unfamiliar with
IP laws, or who have questions about offering certain products,
consult with counsel before listing products for sale.
In addition to dening the applicable types of IP for third-
party sellers, Amazon’s policy also sets forth the consequences
of failing to abide with Amazon’s rules as they relate to post-
ing infringing products. Sellers are warned that Amazon could
act against them even for infringing on someone’s IP without
knowledge, with penalties including removal of product list-
ings or even account suspension. In response to Amazon’s action
Age of
Published in Landslide® magazine, Volume 12, Number 1, a publication of the ABA Section of Intellectual Property Law (ABA-IPL), ©2019 by the American Bar Association. Reproduced with permission. All rights reserved.
This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.
Utility Patent-Based Complaints Provide a Sterner
Utility patent-based complaints, however, are more challeng-
ing for Amazon to deal with. Such complaints require Amazon
to undertake a more involved analysis in order to determine
whether action against the seller is justied. Unsurprisingly,
Amazon is less likely to institute immediate (or any) action
against the seller in response to a utility patent-based com-
plaint, absent some evidence of default judgment against the
seller by a court. Thus, for IP owners with utility patents, a
streamlined arbitration system administered by Amazon could
be of great help. Amazon sellers, as well as Amazon itself,
would benet from a solution to the challenges that utility
patent-based complaints against third-party sellers create. Rec-
ognizing that need, Amazon recently unveiled a pilot procedure
(discussed below) directed to neutral evaluation of utility pat-
ent complaints against third-party sellers.
Amazon’s Utility Patent Neutral Evaluation Offers
an Arbitration Proceeding
Amazon’s Utility Patent Neutral Evaluation (UPNE) is a pilot
program developed by Amazon “for owners of United States
utility patents to obtain an evaluation of their patent infringe-
ment claims against products offered by third-party sellers
on”5 While participation at this stage is by invi-
tation only, the UPNE allows patent owners to identify for
Amazon a patent they own, as well as Amazon listings by
third-party sellers (not products offered by Amazon itself)
that they contend contain infringing products. Once identi-
ed, the third-party sellers have the option of joining in the
UPNE or conceding the matter (with Amazon taking down
the offending listings if they concede).
Assuming both sides of the dispute agree to the UPNE,
Amazon requires that all parties treat the proceedings as con-
dential. Further, the participants must agree not to seek
discovery relating to the UPNE in any later legal proceed-
ing, while also agreeing to waive any other claim that could
arise out of the UPNE proceeding against Amazon, the eval-
uator (the neutral decider of the UPNE proceeding), or any
other participant. At the same time, Amazon requires that the
participants agree not to sue Amazon itself for patent infringe-
ment relating to the offending listings or listings for “materially
identical products.” But such a waiver is limited to a patent
infringement case against Amazon itself, not to a potential
future case against the seller or any other third party for pat-
ent infringement. Finally, Amazon requires that the participants
“agree to the jurisdiction and venue of the federal and state
courts located in King County, Seattle, Washington.”
General rules aside, a UPNE proceeding is in effect
a streamlined arbitration mechanism for deciding patent
infringement complaints lodged against a third-party Ama-
zon seller. The evaluator is charged with making a “yes/no
decision about whether the patent covers the product list-
ings” challenged by the patent owner.6 A yes answer by the
Gaston Kroub is a partner at Kroub, Silbersher & Kolmykov PLLC in
New York City. A registered patent attorney, he specializes in intellectual
property litigation. He can be reached at
against their account, sellers are permitted to lodge an appro-
priate response, with Amazon promising to conduct additional
review to ascertain that the IP owner’s complaints against the
seller were well-founded. Importantly, however, Amazon has the
right to act against sellers before they can lodge their response.
Put another way, third-party sellers on Amazon bear the risk that
an IP infringement claim can at least temporarily derail their
sales before they even have an opportunity to respond. But that is
changing, at least for utility patent-based complaints on Amazon.
How Amazon Handles IP Complaints
against Third-Party Sellers
Existing Protocols Work Well for Resolving Most
Types of IP Disputes
In addition to the Amazon IP policy for third-party sellers,
Amazon also publishes a policy aimed at IP rights own-
ers.2 While Amazon here again encourages rights owners to
solicit the advice of counsel before taking action on their IP
rights, Amazon also reiterates that it is “dedicated to ensur-
ing that goods do not violate or infringe a Rights Owner’s
intellectual property (IP).”3 As an example, Amazon suggests
that rights owners with registered trademarks seek to enroll
themselves in Amazon’s Brand Registry. Similarly, Ama-
zon has announced “a new program that empowers brands
to help drive counterfeits to zero” called Project Zero, which
is already being piloted with third-party sellers of note.4
Both the Brand Registry and Project Zero are tools Amazon
offers to help combat the sale of counterfeit items, as well as
listings that try and take advantage of another brand’s trade-
marks to move a third-party seller’s goods.
While initiatives such as Amazon’s Brand Registry and
Project Zero are designed to aid brand owners selling on Ama-
zon, the centerpiece of Amazon’s offerings for rights owners
of all stripes is its complaint system. Depending on their rela-
tionship with Amazon, IP owners can “Report a Violation” (for
companies in the Brand Registry) or use Amazon’s “Report
Infringement Form” to lodge their complaint against an unau-
thorized third-party seller. Anyone ling an infringement report
must be logged in to an Amazon account at the time of submis-
sion, and is limited to ling a “specic complaint” based on
one type of IP right (patent, trademark, or copyright) at a time.
Once a complaint is led, Amazon conrms receipt and will
notify the seller that a valid complaint was received. Amazon
also shares the contact information of the complainant with the
seller. If Amazon agrees that an IP violation has occurred, it will
remove the offending listing, while reserving the right to take
additional condential action against the seller. IP owners are
notied as well when a complaint is deemed unfounded and are
warned that multiple lings of frivolous complaints could result
in forfeiture of their right to le additional complaints.
In this author’s experience, Amazon’s system for handling IP
complaints is very effective for both trademark and design pat-
ent owners, in part because of the ease of determining whether
a listing uses another’s trademark to promote the good for sale.
Likewise, simple observation can often determine whether a
counterfeit product, or one that infringes on a patented design, is
being sold. For most IP complaints, therefore, there is no need
for Amazon to offer a more involved process for resolution.
Published in Landslide® magazine, Volume 12, Number 1, a publication of the ABA Section of Intellectual Property Law (ABA-IPL), ©2019 by the American Bar Association. Reproduced with permission. All rights reserved.
This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.
evaluator will result in removal of the offending listings
from Amazon. In exchange for his or her efforts, the evalua-
tor is paid $4,000, with Amazon not retaining any portion of
the cost of the proceeding—a cost borne by the losing party.
At the outset, both patent owners and third-party sellers are
asked to wire $4,000 to the evaluator; failure to do so would
result in dismissal of the UPNE or removal of the challenged
listings depending on which side fails to pay.
Payment of the evaluator’s fee triggers the setting of a
schedule for the submission of written arguments by both
sides, on an expedited basis with no modications permitted.
Patent owners are allowed 20 pages in total for their opening
and reply submission, with third-party sellers allowed 15 pages
for their response. Claim charts and exhibits are also permitted,
and do not count against the page limits. The proceeding takes
place in English, with physical exhibits not permitted. While
patent owners can waive their reply submission, failure to sub-
mit a required paper on time results in a loss for the offending
party. If the parties settle before the reply date, the fees are
refunded, except for $1,000 equally divided between the par-
ties to pay for the evaluator’s time expended. If settlement
occurs after the reply, the evaluator can keep up to $2,000, with
half coming from the patent owner and the other half from any
participating third-party sellers.
While the brieng requirements may seem restrictive, they
are consistent with Amazon’s goal of making the UPNE pro-
ceeding “fast, efcient, and relatively low-cost.” Accordingly,
patent owners can only assert “one claim from one unex-
pired U.S. utility patent” against third-party seller listings for
products that are ideally “physically identical.” The evaluator
determines whether the challenged products likely infringe
the asserted claim. Defendants are limited to two defenses
other than noninfringement. To win on validity, they must
demonstrate to the evaluator that a court (including the U.S.
International Trade Commission and Patent Trial and Appeal
Board) has determined that the asserted claim is invalid.
Alternatively, they can show that the accused products were
on sale before the earliest effective ling date of the asserted
patent. That showing must be made by “independently veri-
able objective evidence.
Importantly, there is no discovery, trial, or hearing of any sort
in the UPNE. Nor can the parties independently contact the eval-
uator ex parte during a proceeding. They do, however, receive a
determination on the merits of their arguments within 14 days of
the reply date. If the patent owner wins, the decision is rendered
without reasoning. If a third-party seller wins on noninfringe-
ment, the evaluator provides “a brief explanation of why the
Patent Owner is unlikely to prove infringement.” The parties
cannot contact the evaluator about the ruling, and the decision
rendered is nal. If infringement against one or more listings is
found, Amazon takes down the listings in short order, usually
within 10 business days of receiving the evaluator’s decision.
If a listing is taken down but a seller later obtains proof that the
asserted patent is not infringed or invalid from a court or other
arbitration, then the listing could be restored. Likewise, if the
patent owner loses the UPNE but wins in another proceeding,
Amazon could still take down the challenged listings once the
patent owner furnishes proof of that win.
Benets of Arbitration for Resolving Disputes on
Amazon’s Platform
Amazon’s third-party sellers already consent to arbitration
of any disputes that arise out of their relationship to Ama-
zon itself. To date, Amazon’s arbitration system for settling
seller disputes has proven robust and capable of handling the
increased number of sellers on the platform. More impor-
tantly, it works even though Amazon’s ability to fully vet
each third-party seller in advance is limited. At a minimum,
Amazon’s successful history with administering arbitration-
based resolution protocols for third-party sellers bodes well
for the viability of the UPNE procedure it now offers. Going
forward, Amazon may well decide that the benets of arbitra-
tion procedures should be extended to all types of IP disputes,
for at least the reasons discussed below.
Benets for Third-Party Sellers
The nature of selling on Amazon (or any other e-commerce
platform) places speed at a premium. For example, Amazon
cannot allow counterfeit items to remain listed on its platform
one minute longer than necessary. At the same time, Amazon
cannot wait too long to solicit and consider a seller’s response
to a claim of IP infringement relating to a listing. This can
result in a seller losing sales—even if only temporarily—
as a result of an unfounded IP claim. Under the current
framework, sellers face a lack of transparency and control
regarding Amazon’s actions with respect to IP complaints
lodged against the seller. On the ip side, because many sell-
ers cannot afford to litigate IP claims in court, they are forced
to engage with IP owners ling complaints against them on
Amazon—relying on Amazon’s IP dispute team to get the
decision on the complaint right.
As such, third-party sellers would benet from the addi-
tional transparency, speed, and fairness that an optional
Amazon-administered arbitration system (ideally using neutral
arbitrators) based on the UPNE would offer them, especially
one they could opt in to, in exchange for Amazon agreeing that
sellers who opt in would no longer face sudden removal of list-
ings without notice. The UPNE already recognizes the value of
the latter point, since it allows sellers to opt in to the proceed-
ing by agreeing to pay the evaluator, even as the cost of the
proceeding helps reduce the odds of a frivolous complaint.
In addition to the benets arbitration offers as a dispute res-
olution mechanism, third-party sellers would also appreciate
the opportunity to distinguish themselves from the competition
by opting in to the arbitration process offered by Amazon (or
those of any other e-commerce website). Some already look to
distinguish themselves by opting in to Amazon’s Brand Regis-
try, conceivably to increase customer condence that they are
offering authentic goods for sale. A seller agreeing in advance
to participate in an arbitration mechanism for resolving IP dis-
putes likewise would send a message to both customers and
IP owners (and Amazon for that matter) that the seller is trust-
worthy and responsible. Compared to the alternatives currently
offered, an arbitration system for resolving all types of IP dis-
putes consistent with the approach of Amazon’s UPNE would
likely benet third-party sellers.
Continued on page 60

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