By: Nathan Elmer and Matt Cutler

Introduction

As the landscape of e-commerce is constantly evolving, patent enforcement has become a costly challenge for patent owners. E-commerce platforms may have millions of sellers, many from outside the US, and an even larger number of products. Pursuit of legal action against all sellers is, of course, cost-prohibitive. Recognizing these challenges, Amazon introduced the Amazon Patent Evaluation Express (APEX) in 2022 as a streamlined program to resolve patent infringement disputes. Initially launched as the Utility Patent Neutral Evaluation Program in 2019, APEX seeks to provide a faster, more cost-effective alternative to litigation.

What is APEX?

The APEX program is a private program administered by Amazon to address patent infringement on their platform. APEX is a way to enforce patent rights for U.S. utility patents in a manner similar to arbitration, at a cost of $4,000 (not including attorney fees). Amazon hires a neutral evaluator to decide whether an accused product is likely to infringe a single patent claim. If the evaluator finds infringement is likely, Amazon removes the accused product listing from their website. There is no judicial effect, no federal court review, and written materials may not be used in later proceedings. In short, APEX is a quick and easy way to enforce exclusive patent rights with little risk.

Eligibility Limitations

There are two main eligibility limitations: (1) the patent owner must have a valid U.S. utility patent, and (2) the patent owner’s brand must be registered on Amazon’s Brand Registry. To be eligible to register, the brand must have an active registered trademark in each country for enrollment or have a pending application in a subset of trademark offices. Registrations through the United States Patent and Trademark Office allow for enrollment on the Brand Registry if there is an active trademark or live application on the Principal Register or a pending registration.

APEX Process

To begin an evaluation, the patent owner must submit an APEX Agreement to Amazon identifying one claim of a valid patent and up to 20 ASINs of accused products. Then, Amazon sends the APEX Agreement to each seller listing an accused product with a deadline of three weeks to respond. The seller of an accused product has four options: (1) execute and return the APEX Agreement and proceed with the third-party evaluation, (2) fail to respond and have Amazon remove their product listings, (3) resolve the claim directly with the patent owner, or (4) initiate a lawsuit seeking a declaratory judgment of noninfringement in the US district courts. If a seller completes the APEX Agreement, Amazon then selects a neutral individual from a list of attorneys experienced in U.S. patent disputes (“Evaluator”) and the evaluation begins.

Once each participating party wires $4,000 to the Evaluator, a schedule is set for the submission of written arguments. The schedule will provide the patent owner with 14 days to submit its initial arguments, 14 days for the sellers to respond, and 7 days for the patent owner to submit an optional reply. The patent owner’s submissions are limited to 20 double-spaced 8.5” x 11” pages between both submissions, and each seller is limited to 15 double-spaced pages in their single response. Then, the Evaluator announces their decision within 14 days of the patent owner’s reply due date on whether the patent owner is likely to prove that the accused product infringes the asserted claim. Notably, the APEX proceedings do not allow for discovery that is so common in federal court litigation.

APEX Outcomes

If an evaluation is completed, there are essentially two possible outcomes. First, the patent owner is found likely to prove an accused product infringes. As a result, Amazon removes the accused product listing, the Evaluator returns the $4,000 deposit to the patent owner, and the Evaluator retains $4,000 from the infringing sellers. Second, the patent owner is found not likely to prove an accused product infringes. Thus, Amazon has no further obligation to act, the Evaluator retains the patent owner’s $4,000 deposit, and the Evaluator returns the seller’s (or sellers’) $4,000 deposit(s). Additionally, the parties may settle the dispute before the Evaluator has reached a decision at any time during the evaluation.

Risks and Benefits of APEX Participation

As a patent owner considering APEX participation, there are risks and benefits to note. In a scenario in which the patent owner loses an APEX evaluation, there is a loss of $4,000 and any attorney fees, the alleged infringer keeps their Amazon listings, and there is no option for an APEX reconsideration. Additionally, if an APEX Agreement is sent to an alleged infringer, they can initiate a declaratory judgment against the complaining party.

However, there are benefits that may outweigh such risks. Pursuing the APEX program is an effective way of forcing an alleged infringer to the table or have their Amazon listings removed. Additionally, the APEX process is limited to infringement disputes, inexpensive compared to litigation, and is efficient, with the evaluation typically completed in about four months. And, of course, an APEX decision does not preclude subsequent litigation. Lastly, it is notable that any decision via an APEX proceeding cannot be used in subsequent proceedings between the parties, per the APEX agreement both parties sign.

Overall, the APEX program is a relatively new but cost-effective alternative to litigation for quickly and easily removing infringing products from Amazon. For eligible parties, the benefits will often far outweigh any risks, leading to a cost-effective, efficient way to remove infringing products from the Amazon.com website.