The Amazon Patent Evaluation Express (APEX) program offers patent owners a cost-effective way to address claims that third-party product listings are infringing on their utility patents. Under the APEX program, a third-party arbitrator assesses whether a product available on Amazon.com infringes a utility patent, leading to the removal of the listing if the article determines patent infringement. To begin an evaluation, a patent owner submits an APEX Agreement to Amazon, specifying one patent claim and up to 20 allegedly infringing listings. Sellers can avoid automatic removal of their listings by: (1) opting into the APEX program, paying a fee, and participating in the arbitration; (2) resolving the issue directly with the patent owner; or (3) filing a lawsuit for declaratory judgment. If the seller takes none of these actions, its accused listing is removed from Amazon.com.
Although this procedure is cost-effective and fast, a recent ruling by the U.S. Court of Appeals for the Federal Circuit introduces a potential risk for patent owners participating in the APEX program, as it may subject the patent owner to declaratory judgment actions outside their home forum.
In the case of SnapPower v. Lighting Defense Group, Lighting Defense Group (LDG), a limited liability company based in Delaware with its main office in Arizona, filed an APEX Agreement claiming that certain products sold on Amazon.com by SnapPower, a company based in Utah, infringed its patent. Despite attempts by both companies to resolve the dispute internally, they could not reach a settlement agreement. Consequently, SnapPower filed a declaratory judgment action for noninfringement in the U.S. District Court of Utah. LDG moved to dismiss the case due to lack of personal jurisdiction, and the district court granted the motion.
However, on appeal, the court found that by initiating the APEX proceeding, LDG intentionally targeted SnapPower in Utah, intending to create effects that would be felt in Utah. The court noted that, according to APEX procedures, LDG was aware that Amazon would notify SnapPower of the APEX Agreement and inform SnapPower of its available options. If SnapPower did not respond, its listings would be removed, thus impacting sales and activities in Utah. As a result, the court determined that LDG could adequately be subjected to a declaratory judgment proceeding in Utah.
The court dismissed concerns that this decision would lead to excessive personal jurisdiction claims. It explained that participants in the APEX program would only be subject to specific personal jurisdiction where they have deliberately targeted a state by identifying listings for removal that, if removed, would impact marketing, sales, or other activities in that state. Nonetheless, this means patent owners might still face lawsuits in states where they otherwise have no minimum contacts to support personal jurisdiction.
While APEX offers an efficient method to address patent infringement on Amazon's platform and remove infringing products, it now comes with the downside of supporting personal jurisdiction in the accused infringer's home state. Patent owners seeking to enforce their rights without risking personal jurisdiction in less favorable forums may need to explore alternative enforcement strategies.
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