When Amazon sells a product directly (as “Shipped and sold by Amazon.com” rather than “Sold by [a third party]”), it is liable for any patent infringement as a direct infringer under 35 U.S.C. § 271(a).1 Likely more common is the sale of an infringing product on Amazon by a third party. Amazon’s marketplace might not be the equivalent of Napster, but it is a convenient platform for patent infringement and many sales are made by overseas sellers who may be difficult to sue or even contact much less collect from. Amazon has fought hard to disclaim its own liability for third party infringing sales on its marketplace, frustrating at least one federal judge if not U.S. patent law:
[T]he Court is troubled by its conclusion and the impact it may have on the many small retail sellers in circumstances similar to the Plaintiffs. There is no doubt that we now live in a time where the law lags behind technology. This case illustrates that point. … As a result, Amazon enables and fosters a market place reaching millions of customers, where anyone can sell anything, while at the same time taking little responsibility for ‘offering to sell’ or ‘selling’ the products. Indeed, under the current case law, Amazon has been able to disavow itself from any responsibility [under 35 U.S.C. § 271(a)] for ‘offering to sell’ the products at all.2
Yet Amazon would be liable for inducement of infringement under 35 U.S.C. § 271(b) for sales made by a third party of an infringing product on the marketplace after Amazon has been duly notified of the infringement. It seems that Amazon has thus far somehow avoided any lawsuit properly pleading this form of infringement,3 which carries the same liability as direct infringement including injunction and damages. So the patent owner in such a case could seek full recourse from Amazon, even where the actual direct infringer is a foreign entity and/or judgment-proof. To prove inducement of infringement, a patent owner must show “that the accused inducer took an affirmative act to encourage infringement with the knowledge that the induced acts constitute patent infringement.”4 This requirement resolves into two parts: 1) inducement, and 2) knowledge. As to the first part, Amazon’s offering and providing the reach and services of its juggernaut online marketplace to the seller of an infringing product goes beyond the typical inducement fact pattern. Amazon entices sellers by advertising the benefits of its marketplace, it provides the very platform through which the product is advertised and made available for sale and each sale is transacted, and it facilitates the consummation of each sale such as by calculating and sending net funds to the seller’s account. These are affirmative acts that inherently encourage each sale, whether or not Amazon also fulfills (“picks, packs, and ships”) the sales itself. Amazon’s actions may be generally directed to a class moreso than particularized to a specific seller or sale, but they are no less inducements.5 Amazon makes these inducements because it earns a significant “referral fee” as a percentage of each sale. The second part of the inducement requirement means that Amazon must have knowledge that a product is covered by one or more claims of a patent that the seller isn’t authorized to practice. On this point it likely behooves one to retain a skilled patent attorney to ensure that Amazon is given notice that the unauthorized product is covered by specific patent claims. To preclude a defense by Amazon that it didn’t have adequate basis to know that a product met one or more of a patent’s claims, an attorney can prepare and furnish Amazon a letter providing a detailed comparison of the elements of the claims to the parts of the infringing product, such as with a “claim chart” and/or pictures of the product’s parts. Though the “Additional Information” field of Amazon’s online infringement reporting form is limited to a paltry 1000 characters – much of which can be consumed by subsequently-demanded additional information regarding formalities – a detailed infringement notice letter can be posted online and a link to it pasted in this field of the report, as well as a hard copy mailed. In conclusion, if a product that infringes your patent is being sold in meaningful numbers on Amazon either directly or by a third party, you will probably want the help of a good patent attorney, but you do have recourse!
- Having gone through contracting with a vendor to supply the product, however, Amazon may not be keen on stopping sales in response to a cursory online infringement report submission. Consequently, an attorney may need to be retained to pursue the matter.
- Milo & Gabby, LLC v. Amazon.com, Inc., Slip. Op. p.5 (W.D. Wash. Nov. 3, 2015) (footnote omitted).
- Two district court complaints against Amazon were found that cursorily mentioned inducement, but neither adequately pled the cause of action including a fact-based allegation of knowledge by Amazon as to the patent-infringing nature of the product.
- Astornet Techs. v. BAE Sys., 802 F.3d 1271, 1279 (Fed. Cir. 2015) (quoting Info-Hold v. Muzak LLC, 783 F.3d 1365, 1372 (Fed. Cir. 2015)).
- See, e.g., Ericsson, Inc. v. DLink Sys., 773 F.3d 1201, 1222 (Fed. Cir. 2014) (affirming finding of inducement where advertisements and manuals were directed to a class of direct infringers, without hard proof the materials actually persuaded any specific third-party to directly infringe).
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