For those who make a living selling products on the Amazon Marketplace, it’s terrifying to imagine having your most valuable listings removed without warning, or your account shut down entirely. And yet, this happens all the time, usually due to claims of patent or copyright infringement.
As we have talked about previously, it has become very common for sellers to bump off competitors by filing false infringement claims with Amazon, or even sending cease and desist letters from non-existent legal firms. This has unfortunately been a very effective means of sabotage, enough so that Amazon has been compelled to take steps to remedy the issue. However, many such takedown requests and legal notices have legitimate rationales, or at least are sent with a good faith belief that a seller is committing infringement.
If you’re an Amazon seller who needs assistance fighting a claim of infringement, the Law Office of Michael O’Brien can help. Contact us today by calling (916) 760-8265, or sending us a message using our contact form.
Now, let’s take some time to examine this issue in more detail. Let’s say you receive a scary-looking email from another seller, an attorney, or from Amazon itself, stating that one or more of your product listings are infringing upon someone’s patent rights. What then?
American civil procedure allows us to define specific milestones for which both the rightsholder (the person alleging infringement) and the alleged infringer (you) both need to meet certain requirements for a lawsuit to proceed. With this in mind, it’s possible to develop a five-tier ranking system to evaluate just how strong the other person’s case is, and whether it’s worth fighting.
Frivolous Claims – Infringement claims that will get killed in court, if they even make it that far.
A frivolous claim is one that contains a fatal legal error that the rightsholder cannot correct, which results in the rightsholder having no enforceable rights against anyone, ever. The reasons for which a rightsholder might be so toothless include:
- The statute of limitations for claiming infringement has expired
- The patent itself has expired
- The patent being asserted is not actually owned by the person making the infringement claim
- The patent being asserted isn’t a patent, but rather an application or provisional application
- The patent covers an invention that was sold as a product before the critical date of the patent, thus invalidating the patent
- The product alleged to be infringing on the patent was sold prior to the critical date of the patent (again, invalidating the patent)
Any one of these flaws are completely, 100% fatal to a claim of patent infringement. And they’re not uncommon. I have seen at least one example of all of them in my practice within the last month. Patent holders unknowingly—or knowingly—assert rights despite these fatal flaws all the time.
Typically, a simple letter to the rightsholder highlighting this flaw is all that is necessary to make the problem go away. If the rightsholder is foolish enough to file a lawsuit anyway, the claim will be dismissed at the pleading stage. In addition, the alleged infringer can file a counterclaim for violation of antitrust laws, and will usually have a very strong case.
Doomed Claims – Infringement claims that are guaranteed to lose in court, but will cost you a lot to fight.
A doomed claim is one that has some sort of reasonable legal basis: the rightsholder has a patent, trademark, or copyright that isn’t undermined by any of the flaws above, and is actually enforceable. However, there is no actual, factual basis for the claim, as what the alleged infringer is selling on Amazon isn’t actually infringing on the IP in question.
In most cases, this amounts to the rightsholder yelling, “You’re infringing,” while the other party yells, “Am not!”
This issue is resolved when the two parties exchange the factual rationales for their respective claims in a process called ‘discovery.’ In doomed claims, this process reveals that the rightsholder has no basis for its claim, and the claim dies in civil litigation through a process called ‘summary judgement.’
The alleged infringer will prevail, but unfortunately, it’s expensive to get to this point. From an economic standpoint, your best bet is to drive up the rightsholders’ legal costs before they can get to summary judgment. However, few Amazon sellers have the resources to do this.
Arguable Claims – Infringement claims in which either side has a change of prevailing, and cost a fortune to fight.
An arguable claim is one where the rightsholder has an enforceable intellectual property right, and has some factual, rational basis for believing that infringement occurred. At the same time, the alleged infringer has a reasonable counter-argument, but the defense is not ironclad.
These disputes are typically left up to juries to resolve by examining the facts of the case. The fact that these cases are uncertain means that they are the worst types of cases, financially speaking, for both sides. They are so incredibly expensive to litigate that both parties are always better off settling, as either side has the potential to lose. Such cases aren’t always settled, but settlement is invariable the best solution.
Legitimate Claims – Arguable claims that aren’t 100% certain, but which you will probably lose.
A legitimate claim is more or less the opposite of a doomed case. In this instance, the rightsholder has a solid argument, and while the alleged infringer has a defense, discovery will show that it has no factual basis for their argument. In such cases, the rightsholder is likely to win a summary judgement.
For the average Amazon seller, it’s usually best to settle these claims as soon as possible. But for those who have patent infringement insurance, or who have a significant financial advantage over the plaintiff, it may be possible to “starve out” the rightsholder by driving up litigation costs.
Clear Claims – Infringement claims in which it’s patently obvious that you committed infringement.
In these cases, the alleged infringer knows that it is guilty of infringement, unless it has no understanding of the legal process. These cases are typically incredibly egregious in nature—for instance, the infringer bought a product from the rightsholder, sent it overseas to have a factory replicate it, and then imported the duplicates back into the U.S. for sale, hoping that the rightsholder doesn’t notice.
These are so clear cut that rightsholders are simply looking to get the alleged infringer to back down as quickly and cheaply as possible. And these should be the goals of the infringer as well. Settle, and settle quickly, because the alleged infringer is going to lose.
For the sake of simplicity, here’s a brief overview of this spectrum of case types, and the advisable action for the infringer:
- Frivolous Claims: The rightsholder is going to lose, and lose hard. The defendant will win with minimal effort, and has a good chance of making a lot of money from an antitrust counterclaim.
- Doomed Claims: The rightsholder is going to lose, but the defendant is going to spend a lot of money getting to that point. If possible, turn up the heat on the plaintiff by making them spend a lot of money.
- Arguable Claims: These are the trench warfare of cases. Either side may win, but both sides will lose a fortune by fighting it out. Both sides benefit by settling as quickly as possible.
- Legitimate Claims: The infringer has a high likelihood of losing. It’s probably advisable to settle, but well-heeled sellers may be able to starve out rightsholders.
- Clear Claims: The infringer committed obvious infringement, and they are going to get nuked in the courtroom. Settle ASAP.
If you are an Amazon seller who has received a legal notice of infringement, not only is it wise to have a patent lawyer on hand to assist in your defense, more importantly, a lawyer can help you determine whether it’s appropriate to fight or seek to settle. The Law Office of Michael O’Brien can assist you with these concerns and more. For more information, contact us by calling (916) 760-8265, or by sending us a message using our contact form.