Amazon’s Patent Evaluation Express (APEX) Program Has Declaratory Judgment Action Risks for Patent Owners

Amazon’s Patent Evaluation Express (APEX) program provides an expedited and low-cost tool for patent owners to stop the sale of infringing products on Amazon’s platform. But low cost does not mean low risk. The U.S. Court of Appeals for the Federal Circuit’s recent decision in SnapPower v. Lighting Defense Group, 2023-1184 (Fed. Cir. May 2, 2024), confirms that one risk to a patent owner of availing itself of the APEX program is that it may expose the patent owner to declaratory judgment actions outside their home forum.

In SnapPower, a Delaware company initiated an APEX enforcement proceeding against a Utah-based seller of electrical receptacle covers. When a patent owner initiates an APEX proceeding against a seller on Amazon’s platform, Amazon sends the Agreement to all identified sellers with three options for the sellers: (1) opt into the third-party APEX proceeding; (2) resolve the claim directly with the patent owner; or (3) file a lawsuit for declaratory judgment of noninfringement. If a seller takes no action within three weeks, Amazon will remove the accused product listing from its platform. In the case of SnapPower, the accused infringer opted to file a declaratory judgment action in Utah. The patent owner moved to dismiss for lack of personal jurisdiction, and the U.S. District Court for the District of Utah granted LDG’s motion. The accused infringer then appealed. The Federal Circuit reversed and remanded the district court’s finding.

The Federal Circuit concluded that the patent owner, by initiating an APEX proceeding, necessarily affected “sales, marketing, and other activities” of the accused infringer. In particular, the court concluded that the patent owner had purposefully directed its enforcement activities at the accused infringer in Utah. The court explained that the patent owner knew that Amazon would notify the accused infringer and inform it of its options. The patent owner also knew that if the accused infringer took no action, its Amazon listings would be removed, which would necessarily impact its marketing, sales, and other activities within Utah. Ultimately, the patent owner’s intentional actions directed at Utah and the foreseeable impact on the accused infringer’s activities in Utah subjected the patent owner to declaratory judgement action in Utah.

While there may be advantages to a patent owner of using an APEX enforcement proceeding to stop infringing sales, a patent owner will be opening itself up to the risk of having to defend a declaratory judgment suit in any jurisdiction where an accused infringer may reside. Now it is true that not every seller on Amazon may have the means or incentives to bring a declaratory judgment suit, but the SnapPower decision makes it easier by allowing the infringer to bring suit in its home forum.