Amazon’s Utility Patent Neutral Evaluation Proceeding: Let the Seller Beware
Speed and efficiency have long been Amazon’s hallmarks, and its dispute resolution system for patent infringement claims is no exception. Amazon’s Utility Patent Neutral Evaluation (“UPNE”) proceeding is quickly emerging as an efficient and powerful dispute resolution tool, especially in the consumer goods industry, where sellers rely on Amazon for a significant portion of their sales. So efficient, in fact, that sellers who have either ignored or not taken a UPNE seriously have found their products suddenly banned from Amazon’s website, leaving them with no recourse other than to file a declaratory judgment action in federal court and request relief that is typically far from quick or certain.
Bissell’s UPNE Against Tineco
Tineco Intelligent Technology Co., Ltd.’s and its affiliates’ declaratory judgment action this month against Bissell, Inc. for noninfringement and invalidity, W.D. Wash. 22-cv-297-TL, has put a spotlight on the quick and powerful form of relief that a patent owner can obtain using a UPNE.Amazon had notified Tineco, a Chinese company that manufactures and sells portable vacuums on Amazon, that Bissell had commenced a UPNE. Tineco then had three weeks to indicate whether or not it wished to contest Bissell’s claim. Tineco apparently ignored Amazon’s e-mail, however, resulting in Amazon automatically imposing “default judgment” against Tineco and removing their accused products. Unlike in Court, either party’s failure to meet Amazon-imposed deadlines in a UPNE results in termination of the proceeding in favor of the other party. Even worse for Tineco, Amazon’s removal of Tineco’s products is not reviewable, as Amazon has no official internal appeal process.
Facing a near total loss of its business, Tineco’s only option was to bring a declaratory judgment action against Bissell in federal court for non-infringement and invalidity and move for a TRO. Fortunately for Tineco, Amazon departed from its standard procedure and reinstated Tineco’s listings pending the outcome of the litigation, so Tineco withdrew its TRO motion.
Not the First
Tineco is not the first consumer goods company to have met a similar fate in a UPNE proceeding – and to be left with no option other than to turn to a court for far slower redress. In November 2021, Shenzfiett Gooloo E-Commerce Co., a distributor of electric jump starters and power stations that derives 80% of its revenue from Amazon, had several of its products removed from Amazon in a UPNE brought by Pilot, Inc. Shenzfiett then sued Pilot for a declaratory judgment of noninfringement and invalidity and brought a motion for a TRO asking that Pilot be ordered to undo Amazon’s removal of its products. Shenzfiett Gooloo E-Commerce Co. et. al. v. Pilot, Inc. 2021 U.S. Dist. LEXIS 225300, C.D. Cal. 2021. Facing loss of virtually its entire business, Shenzfiett argued that it would be irreparably harmed by Amazon’s removal of its products. While the court acknowledged that loss of business could be considered irreparable harm, the court denied the TRO for two reasons: because Shenzfeitt apparently still had some top selling products on Amazon, and because it had waited over a month and a half to bring a motion for a TRO. Only one court so far has enjoined a UPNE, but that was before the UPNE was decided, and only because a patent infringement case on the same patent claims was already pending before that court. Thermolife Int'l v. Human Power of N Co., 2021 U.S. Dist. LEXIS 249770, W.D. Tex. Dec. 21, 2021.
Take UPNE’s Very Seriously
The lesson to be learned, especially for companies that depend on Amazon sales for their business, is that a UPNE should be taken very seriously by Amazon sellers, both because of the speed at which it proceeds and the severity of the potential remedy. In the space of 60-90 days, a patent owner commencing a UPNE can obtain private injunctive relief from Amazon in the form of a permanent exclusion of an accused product from all Amazon sales. And even if Amazon’s removal of accused products pursuant to its procedure can eventually be undone by a court, it may be too late for the seller to resume its business by the time it obtains a contrary ruling.
For patent owners, a UPNE can be used as an efficient and expedited alternative to federal court litigation for infringements by products that are sold on Amazon.
