Amazon's APEX Procedures – An Option for Patent Owners, with Some Risks

Until recently, if you owned a utility patent another party infringed, your only option to confront that conduct after hiring a lawyer was “send them a letter and sue if they don’t stop.”

Amazon’s Patent Evaluation Express Procedure (“APEX”) changes things for those whose patented invention is being infringed by third-party sellers on Amazon.

Owners of U.S. utility patents whose patents are being infringed by third-party sellers on Amazon now have the option to submit a complaint invoking APEX. An APEX complaint identifies up to 20 products on Amazon by their ASIN that infringe a patent and states the complainant agrees to the APEX process.

If a third-party seller contests infringement and also agrees to the APEX process, the APEX procedure begins.

At the start of the APEX process, both parties are asked to wire $4,000 to a neutral patent evaluator selected by Amazon. It’s loser pays for the evaluation fees, which means the winning party in the proceedings can (absent some unusual circumstance) expect to receive a refund of their $4,000 (though not any attorneys’ fees they’ve spent).

Once an evaluator is selected, they will set a briefing schedule. In general, the patent owner will have 14 days to submit written arguments for infringement. The seller will then have 14 days to respond, and the patent owner 7 days to reply to that response. The evaluator will then typically decide within two weeks with an up-or-down decision, generally without providing any reasoning.

If the evaluator finds the patent owner is likely to prove that the accused products infringe, Amazon will remove the listing and the evaluator will refund the $4,000 to the patent owner. If the evaluator does not find the patent owner is likely to prove that the accused products infringe, no action will be taken on the accused products and the third-party seller’s $4,000 will typically be refunded.

In some important ways, the APEX system strongly favors patent owners.

First, patent validity cannot be challenged in an APEX procedure. The only invalidity-like defense available in the APEX procedure occurs when an accused product was already on sale more than one year before the asserted patent’s priority date. This means that even if an accused third-party seller possesses a very goodinvalidity defense, it will be unavailable in the context of the APEX procedure.

Second, the relative unavailability of an invalidity defense also means that patent owners have a freer hand to argue infringement. In ordinary litigation, a potentially strong invalidity defense can incentivize patent owners to take a narrower view of their own patent’s claims to avoid potentially invalidating prior art or an argument that the patent is invalid for claiming an abstract idea. This can mean a patent owner restricting infringement allegations to dependent claims with more limitations or adopting interpretations of patent terms during claim construction that are relatively more context-dependent in view of the patent’s overall specification and file history. In the APEX procedure, a patent owner doesn’t generally need to worry about potentially invalidating prior art or other invalidity defenses.

Third, even if a patent owner becomes aware of invalidating prior art—e.g., by accusing multiple products, one of which was on sale more than a year before the patent’s priority date—that invalidity defense is only available to the seller of a physically identical product. Even if a patent is invalid, a patent owner can still prevail so long as the accused product is not “physically identical” to the invalidating prior art. This has the bizarre effect that some design changes that may make an older product less like the claims in a patent could make it more likely to lose in the APEX procedure, as it would no longer be “physically identical” to a version on sale more than one year before the asserted patent’s priority date.

In these respects, the APEX system favors patent owners.

The Drawbacks

Not everything comes up roses for patent owners, and they should be cautious before submitting APEX complaints. A relatively small risk is that a haphazard approach to complaint submission could cost money—patent owners may lose $4,000 for each unsuccessful evaluation, plus whatever they’ve spent on attorneys’ fees. (If a patent owner intentionally abuses the APEX procedure by repeatedly filing claims they have no intention of defending or submitting false information in a proceeding, they may also put themselves at risk of tortious interference claims in court, and Amazon could take action against their ability to make such claims.)

Another risk is that a recipient of an APEX complaint could file a declaratory judgment action in their home state, drawing the patent owner into a foreign forum to defend their patent rights in a relatively more expensive litigation posture. This risk was on display in the Federal Circuit’s recent decision in SnapRays v. Lightning Defense Group, No. 2023-1184 (Fed. Cir. May 2, 2024). In that case, the only tie a patent owner had to Utah, where an accused seller brought suit, was invoking the APEX procedure to accuse that third-party Amazon seller of infringing its patent. Because Amazon will act on APEX complaints and thereby foreseeably disrupt the third-party seller’s business in its home state, the Federal Circuit found that the APEX complaint directed at the Utah business met the minimum contacts required to provide personal jurisdiction in Utah.

Meanwhile, while a declaratory judgment action remains pending, Amazon will generally take no action on the accused products.

This post may be considered an advertisement for legal services. It is provided for general information purposes only and may not be relied upon as legal advice. Connor Lynch is a licensed lawyer in California and before the USPTO and is responsible for this content. You can reach Connor at contact at lynchllp.com.