SnapRays v. LDG: How Amazon's APEX Program is Impacting Patent Litigation

Photograph of a courthouse, in iStock (last visited Nov. 16, 2024).

Amazon’s APEX Program and Traditional Patent Claims

In 2022, Amazon launched the APEX program, a tool designed to help patent owners safeguard their intellectual property by preventing the sale of infringing products on Amazon’s website.[1]  For a fee of $ 4,000, a utility patent owner can submit a claim of infringement against up to twenty sellers on Amazon.[2]  The accused seller has three options: (1) agree to the review process and allow a neutral party to make a decision; (2) resolve the dispute directly with the patent owner; or (3) file a lawsuit against the patent owner for declaratory judgment of patent invalidity or noninfringement.[3] Amazon will permanently remove the infringing product from its website if the seller does not respond within twenty-one days.[4]

Traditionally, a patent owner may file a patent infringement lawsuit in a federal court where the defendant (1) is incorporated; (2) maintains a regular and established place of business; or (3) has committed acts of infringement.[5]  Additionally, if an accused infringer is seeking a declaratory judgment of non-infringement, they must sue in a court that can establish personal jurisdiction over the patent owner.[6]

Personal jurisdiction can be either general or specific.[7] General personal jurisdiction is established in the forum where the patent owner maintains their principal place of business or place of incorporation.[8]  Specific personal jurisdiction is established where the patent owner has sufficient “minimum contacts” with the forum state.[9]  “Minimum contacts” are established when: (1) the patent owner has “purposefully directed” their activities towards the forum state, (2) the claim “arises out of or relates to” the patent owner’s activities in the forum state, and (3) asserting jurisdiction does not offend “traditional notions of fair play and substantial justice [TNFPSJ].”[10]  

In the patent litigation context, “a patentee should not subject itself to personal jurisdiction in a forum solely by informing a party who happens to be located there of suspected infringement.”[11] However, in the 2024 case SnapRays v. Lightning Defense Group, the Federal Circuit Court of Appeals held that patent owners participating in Amazon’s APEX program are subject to declaratory judgment suits in the accused infringer’s forum state.[12]

SnapRays v Lightning Defense Group

Lightning Defense Group (“LDG”), the patent owner for an electric outlet cover, initiated APEX proceedings against several companies, including SnapRays.[13] SnapRays responded by filing a declaratory judgment action.[14]  Despite LDG being subject to general personal jurisdiction in Delaware and Arizona, SnapRays filed suit in SnapRay’s home state of Utah.[15]

Utah’s district court ruled that it lacked personal jurisdiction over LDG because LDG did not have sufficient contacts with Utah.[16] On appeal, the Federal Circuit reversed and remanded.[17]  The Federal Circuit held that by filing a claim through Amazon’s APEX program, LDG had “purposefully directed” activities at SnapRays in Utah and intended effects that would be felt in Utah.[18] Additionally, the court held hailing LDG into court in Utah would not offend TNFPSJ.[19] LDG is now urging the U.S. Supreme Court to review the Federal Circuit’s decision.[20] LDG argues that the Federal Circuit has ignored its own precedent in Red Wing Shoe Co. and its progeny.[21]

Implications of the SnapRays Decision

After SnapRays, the APEX program may complicate patent litigation.[22] Any patent owner participating in the APEX program could be subject to suit in a declaratory relief action in the accused infringer’s forum state.[23] This raises questions of practicality and fairness.[24] The patent owner would have to hire outside counsel, bring any witnesses or experts to the infringer’s forum state, and deal with any “home court” advantage(s) the accused infringer may have.[25]  As a result, patent owners may be reluctant to join the APEX program.[26] This would eventually make the APEX program less effective as a means of settling intellectual property issues, which might lead to more cases in federal court.[27]  Still, programs like APEX are appealing to patent owners and accused infringers who lack the financial means to litigate in court.[28]

References

[1] See Robert Payne, Informal Resolution of Patent Disputes through Amazon’s APEX Program: Do You Want the Good News First, or the Bad News?, ABA (July 12, 2024),

https://www.americanbar.org/groups/business_law/resources/business-law-today/2024-july/informal-resolution-patent-disputes-amazons-apex-program/?login (noting Amazon launched the APEX program in 2022).

[2] See Greg Geiser, AMAZON APEX: WHAT IT IS, THE PROCESS, AND HOW IT ALL WORKS, Gutwein Law, https://info.gutweinlaw.com/blog/amazon-apex (last visited Nov. 16, 2024) (explaining how the APEX program works).

[3] See Payne, supra note 2 (describing how sellers can respond to an APEX claim).

[4] See id.

[5] See 28 U.S.C. § 1400.

[6] See Elizabeth L. Brann & Soyoung Jung, The Federal Circuit Addresses Where Participants of Amazon’s APEX Program Can Be Haled Into Court, Paul Hastings (May 14, 2024), https://www.paulhastings.com/insights/client-alerts/federal-circuit-addresses-where-participants-of-amazons-apex-program-can-be-haled-into-court (providing the test for specific personal jurisdiction).

[7] See id.

[8] See id.

[9] See Int'l Shoe Co. v. Wash., 326 U.S. 310, 316 (1945) (holding a party must have “minimum contacts” with a forum state for the court to exercise personal jurisdiction).

[10] See Brann & Jung, supra note 6 (explaining the “minimum contacts” test).

[11] Red Wing Shoe Co. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355, 1361 (Fed. Cir. 1998) (holding patent owner’s notice to accused infringer does not subject them to jurisdiction in the accused infringer's forum state).

[12] See SnapRays v. Lighting Def. Grp., 100 F.4th 1371, 1379 (Fed. Cir. 2024).

[13] See Adam Lidgett, Justices Urged To Review Amazon Patent Program Case, Law360 (Nov. 8, 2024, 6:05 PM), https://www.law360.com/articles/2258794/justices-urged-to-review-amazon-patent-program-case (providing information about the SnapRays lawsuit).

[14] See id.

[15] See Brann & Jung, supra note 6 (stating where LDG resides).

[16] See id (stating the holding of the district court).

[17] See id.

[18] See id.

[19] See id.

[20] See Lidgett, supra note 14 (providing comments from LDG attorneys to Law360).

[21] See id; see supra note 13.

[22] See id.

[23] See Payne, supra note 2 (explaining the consequences of the SnapRays decision).

[24] See id.

[25] See id.

[26] See id.

[27] See id.

[28] See Roy Wepner, Outsourcing Patent Enforcement: You May Get What You Pay For, IPWatchDog (May 7, 2024), https://ipwatchdog.com/2024/05/07/outsourcing-patent-enforcement-may-get-pay/id=176302/# (providing a summary of the SnapRays decision and future implications).