Specializing in cheating cross-border sellers, a small team of 4 people earns 25 million yuan a year

There is no cross-border e-commerce seller who is not afraid of "patent infringement complaints", because once a complaint is made, it means that the account funds may be frozen. For sellers, the most feared thing is not that the connection goes down, but that the lifeline of funds is cut off.

Some Chinese people have seized on this pain point of sellers and made a lot of money. They used the patents they applied for from foreign trademark and patent offices to complain about Chinese sellers' infringements on some e-commerce platforms. Facing the "secret arrows" from Chinese people, Chinese sellers are suffering, while these "patent hooligans" are making a lot of money from this highly profitable business.

What’s even more terrifying is that training institutions have also joined this profit chain, continuously supplying this kind of “patent trolls” to the industry, under the euphemism of “rights protection and claims training.”

"Patent trolls" specifically defraud Chinese people, a small company of 4 people earns 25 million yuan a year

From a legal perspective, the purpose of applying for patents is to encourage more inventions and to protect the intellectual property rights of inventions, but it has been exploited by some people to make huge illegal profits.

A few days ago, a netizen was shocked by the money-making ability of such companies . He said that his friend was engaged in cross-border claims business, applied for patents in the United States, and then sued cross-border sellers. The small company of four people has earned more than 7 million in less than half a year, and the expected income this year is as high as 25 million.

Although he thought that his friend's business was "a bit unfair", facing this kind of lucrative business where a few patents and personnel costs could exchange for tens of millions of profits, he couldn't help but shout: "I'm convinced, this really made me see it clearly."

It is said that cross-border e-commerce sellers going abroad to earn US dollars is a high-profit money-making business, but compared with this black-hearted business that makes a lot of money, it is nothing. If sellers want to make money, they need to go through market research, product selection /product development, delivery, shelf sales and a lot of other things before they can achieve it.

However, the "patent trolls" directly suck blood from the sellers.

Usually they will cooperate with rogue foreign law firms, one of which is responsible for registering patents and the other for prosecuting. In the end, they will use the guise of "infringement complaints" to ask for "settlement money."

They are well aware that even if the seller can respond to the lawsuit or invalidate the patent, they will eventually choose to settle due to time and cost pressures.

It is worth mentioning that in order to prevent the complaining party from asking for an exorbitant amount of money, sellers often hire lawyers to negotiate on their behalf. However, one thing to note here is that these "so-called lawyers" may be in the same group as the other party.

Their operation is to publish the case information through some channels, then win over the accused sellers and guide them to these "lawyers". In this way, they not only get the "settlement money", but also earn "lawyer fees".

Sellers Leon and Toby are both sellers that Yien has contacted and have been cheated by patent trolls. Among them, Toby not only paid a large settlement, but his products also had a large amount of inventory due to missing the sales season.

A single infringement claim is not scary. What is scary is that there are people who continue to "cultivate" these people who make unfair profits.

The institution offers a training course on "infringement claims" and charges 19,800

Yien.com found that there are not only "patent trolls" in the cross-border circle, but also institutions that specialize in training them. One of the institutions said that they have a systematic infringement claim training course with a total of 10 sections and a price of 19,800 yuan .

The flow chart of the patent infringement operation of Meibiaogao provided by the company is as follows:

Select industry → Select category → Select product → Find high anchor → Fine screening → Institutional cooperation → Apply for patent → Search for infringement → Lock sales → Sue for infringement

In addition, the emergence of AI technology, which is very popular this year, has also provided them with a new selling point. It is reported that they will use the ChatGPT training model to optimize and upgrade the patent high anchor application, and then manually extract and compare the series of value information to obtain the patent with the most infringement claim value.

Public information from the China Anti-Infringement Claims Alliance shows that in the current patent infringement lawsuits initiated by Chinese in the United States, no matter whether the plaintiffs are individuals or companies, there are always the shadows of three institutions behind them, namely Chrome ** Company, Han*** Law Firm, and Blue*** Company.

In addition, it provides detailed analysis of various patent claim types.

1. Preemptively registering U.S. design patents. Preemptively registering design patents for domestic products in the U.S. "Patent trolls" will search for "e-commerce patent infringement" and other related topics on a certain audio platform, find the sellers who have been sued in the comment area, and gain sympathy by pretending to be victims, and then obtain the reasons for infringement and patents, and finally download the corresponding domestic patent documents and preemptively apply for design patents in the U.S. Currently, the focus is on pet products, sports equipment, and daily life products in the disaster area.

2. Preemptive patent registration. "Patent trolls" will ambush in the fan groups of "industrial design" and "product design" bloggers in advance. Once the business owners disclose the design information, they will preemptively register the appearance patents of their products in the United States.

3. Through the settlement agency, reverse the infringing patents. After the seller's store is frozen, they often seek help from the settlement agency. "Patent trolls" usually find these settlement agencies in advance, find out the regular characteristics of infringing patents, and then reverse the application of highly infringing patents.

According to the chat content exposed by the company, the "patent trolls" make a lot of money. It is easy to make 5-6 million a year, and they can achieve several small goals in 2 years. Initially, they will "start" through cross-border e-commerce training companies, that is, by studying the product selection ideas and social circle dynamics of these companies, they will find anchor products, make patent claims, and then go back to "snipe" the products of the trainees of the training companies. It is conceivable that once this method succeeds, many sellers will be cheated.

Every time a "patent troll" makes trouble, Amazon sellers will be on the defendant list. In fact, such behavior also disrupts the normal operation of the platform. Therefore, Amazon, which has always been complained by sellers for its "one-size-fits-all" approach to infringement complaints, has recently begun to take action.

Amazon takes action to rectify the situation and files three lawsuits at once

It is reported that Amazon recently filed three lawsuits against some groups because these groups abused its removal system and filed thousands of illegal copyright complaints against other products.

Amazon said in a statement that the lawsuits are a new offensive against bad actors.

Among these groups, one defendant registered under the name "Sidesk" is the most serious. The complaint alleges that the company used a "fraudulent" trademark application to enter the Amazon Brand Registry program. However, the US Patent and Trademark Office has canceled the trademark application, but Sidesk still uses the trademark.

Interestingly, the trademark application was filed by Shenzhen Huanyi Intellectual Property Co., Ltd. As is known, the company was previously found by the USPTO to have "submitted more than 15,800 trademark applications using false, fictitious, or fraudulent domicile information and/or credentials."

According to Amazon’s lawsuit, Sidesk also filed the most takedown requests so far, with about 3,850. The other two defendants, Dhuog and Vivcic, submitted 229 and 59, respectively, within a few months.

Not only did they file fake complaints, but they also created throwaway websites and scraped product images from Amazon in an attempt to use that as evidence that they were the legitimate copyright owner. It's like if you copied an image and then used that image as evidence to prove that the copied image was infringing. It's kind of funny.

Amazon’s “takedown request system” obviously has its legitimate uses. For example, if someone tried to sell a shirt with Mickey Mouse on it, Disney would have the legal right to take it down because it owns the copyright to the character. The same goes for sellers.

But as these cases show, it’s a difficult line to walk between making it easier for legitimate claimants to get infringing products taken down and creating a system that bad actors can abuse.

Amazon said that while it has a range of strong protections in place to detect and stop bad actors from attempting to submit false and abusive infringement notices, nothing is perfect.

If Amazon's lawsuit is successful, it will serve as a deterrent to those who try to abuse its system.