Third-party listings of infringing products for sale on eBay's online marketplace did not result in direct or indirect infringement by eBay. The court distinguished such third-party listings on Amazon and Alibaba marketplaces.
Patent infringement occurs if a party makes, uses, offers to sell, or sells a patented invention within the United States or imports into the United States any patented invention.
In Blazer v. eBay Inc., a patent owner sued eBay alleging that eBay infringed his patent based on eBay product listings created by third parties. The U.S. District Court for the Northern District of Alabama granted eBay’s motion for summary judgment, finding that hosting a listing created by a third party does not constitute an "offer to sell," and thus, eBay could not be liable for patent infringement as a matter of law.
eBay lists on a virtual marketplace products offered for sale by third parties. The third parties provide a description and price of the products for sale. The listing identifies the seller, and the seller is responsible for shipping the item to the buyer.
eBay has a Verified Rights Owner ("VeRO") program designed to identify and remove listings that infringe a valid patent or trademark. To alert eBay to infringement and action under VeRO, a patent owner must submit a Notice of Claimed Infringement along with a court order finding infringement of the patent by the item in the listing.
Robert Blazer, the owner of a U.S. Patent on Carpenter Bee Traps, contended that certain products listed by third parties on eBay infringed his patent. Blazer filed a Notice of Claimed Infringement ("NOCI") under eBay’s VeRO program. While he identified his patent, he never sent eBay a court order finding that the products listed on eBay infringed his patent. eBay never reviewed Blazer’s patent or attempted to compare the claims in his patent to the products listed on the site. And eBay did not remove the listings of the allegedly infringing items.
In response, Blazer sued eBay for patent infringement, arguing that hosting the listings amounted to an infringing "sale" or an infringing "offer to sell" his patented invention. eBay moved for summary judgment on Blazer’s infringement claims arguing that eBay did not infringe the patent.
The Blazer v. eBay Decision
Blazer conceded that eBay does not itself sell the allegedly infringing bee traps. Therefore, the court focused its analysis on whether eBay could be liable for direct patent infringement by offering to sell the allegedly infringing products.
The court applied a holistic approach to determine what constitutes an "offer to sell" under the Patent Act. In considering state contract law and patent law, the court rejected the notion that a description of an item for sale and a purchase price automatically constitutes an "offer to sell." The court distinguished two cases cited by Blazer involving the Alibaba and Amazon marketplaces, where summary judgment of no infringement was denied.
eBay identifies the seller of the item, clearly states that eBay is not the seller, and has the buyer pay the seller directly. In contrast, the buyer pays Alibaba for the items, and Amazon incites users to "buy the item through Amazon." Also, buyers on eBay have no option to buy the item directly through eBay.
eBay explicitly informs its users that it is not making an offer by hosting a listing for an item and also lacks title and possession of the items for sale. Thus, the court reasoned that no reasonable person would think that eBay is making an "offer to sell" by hosting third party listings on their website.
The court next considered whether eBay induced infringement or contributed to infringement, finding that eBay had no actual knowledge of infringement and was not willfully blind to infringement because eBay is not an expert in patent law or the patented bee traps. The court noted that eBay only removes product listings if a NOCI identifies a court order because eBay lacks the expertise or resources to investigate each allegation of patent infringement. At best, eBay knew that Blazer believed his patent was infringed, which does not rise to actual knowledge of infringement.
Strategy and Conclusion
Whether an online marketplace is liable for patent infringement by "offering to sell" products listed by third parties may depend on various factors: (1) whether the host is not the seller or that the listing is not an "offer to sell," (2) whether payment is made directly to the seller or to the host, and (3) whether there is an option to buy the item directly from the host.
Further Information The Blazer decision can be found here.