Online Marketplaces Beginning to Enforce Industrial Design Rights
Intellectual Property Alert 05/02/18 Nicholas P. Schmidbauer, Justin E. Doop
With the continued growth of e-commerce platforms over the last decade, counterfeiting has dramatically increased and is estimated to account for more than $450 Billion USD/year of the global market. Although many companies, with varying results, have used e-commerce platform take down procedures to remove products that allegedly infringe one or more trademarks or copyrights, a recent trend has emerged where e-commerce platforms have similarly begun to take down products for allegedly infringing one or more design patents without a final judgment or other court order. In this scenario, an allegedly infringing company may find itself unable to have its products returned to the marketplace without instituting a legal action in a U.S. District Court or the Patent Office. Such circumstances raise issues and questions concerning the extent to which e-commerce marketplaces are responsible for regulating intellectual property rights associated with products sold on their platforms.
As a result of online e-commerce marketplaces, such as Amazon, eBay, and Alibaba, beginning to enforce design patent rights asserted by design patent holders without the benefit of any type of judicial or administrative review, allegedly infringing products are being taken down from the online marketplace without formally engaging in design patent claim construction. While some companies, including Amazon.com, Inc., have already implemented sophisticated procedures for trademark take down procedures of allegedly infringing trademarked goods—such as the Amazon Brand Registry—e-commerce platforms are beginning to wade into the waters of construing design patents and are assessing design patent infringement claims. These procedures have resulted in the take down of products deemed to fall within the scope of one or more asserted U.S. design patents.
Subsequent to being notified regarding the submission of a take-down request due to alleged design infringement by sellers on e-commerce platforms, the allegedly infringing products are immediately taken down. Unfortunately, once a decision to take down a product is made by an e-commerce platform, the seller is given limited information and may only be notified that the seller should resolve the infringement issue with the rights owner directly. The notices imply that the products will not be re-listed until the rights owner withdraws its complaint—a seemingly unlikely scenario. In at least one case, a report was made based on an expired design patent, and the e-commerce platform still immediately removed the allegedly infringing product and refused to re-list it.
Such instances exhibit potential flaws with the current system and how the current system for reporting design patent infringement on e-commerce platforms is still fairly unsophisticated. However, it seems likely that the procedures will mature to provide sufficient protection without unduly burdening non-infringing sellers. Because it is unknown whether design patent rights holders that make false or frivolous complaints could be held liable for such actions, it is strongly encouraged that design patent owners take care with making such complaints under the current system. However, even with its flaws, the current system may be a quick and effective tool to remove products that genuinely appear to be infringing one or more design patents.
While some companies having robust design portfolios stand to benefit from the establishment of design patent take down procedures, many companies facing allegations of infringement may nonetheless find themselves swept up in a nascent process that is being implemented within forums that are ill-suited for final arbitration regarding design patent claim construction. However, due to the continued and increasing strength of design patent rights globally, and the emerging mechanisms being offered by e-commerce platforms as an aim to enforce design rights, many corporations facing counterfeit issues stand to benefit from the ability to more easily and cost effectively assert design patent rights against infringers.