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 modications 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 brieng requirements may seem restrictive, they
are consistent with Amazon’s goal of making the UPNE pro-
ceeding “fast, efcient, 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.
Benets of Arbitration for Resolving Disputes on
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 benets of arbitra-
tion procedures should be extended to all types of IP disputes,
for at least the reasons discussed below.
Benets 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 benet 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 benets 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 condence 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 benet third-party sellers.
Continued on page 60