On April 14, 2010, the U.S. International Trade Commission (ITC) issued an opinion clarifying the extent to which litigation expenditures may be used to establish the existence of a domestic industry for purposes of jurisdiction in intellectual property actions. Under 19 U.S.C. §1337 (Section 337), the ITC offers an alternative forum for IP owners seeking to block infringing imports from the U.S. market. Section 337 ITC actions differ procedurally from litigation in the district courts, and the remedies available also vary. One requirement to establish standing at the ITC is proof of domestic industry.
For traditional manufacturing entities, the domestic industry requirement is typically easy to satisfy. To do so, the complaining party must prove that a legitimate U.S. industry relating to the articles protected by the asserted IP right exists. The domestic industry requirement has two components, known as the economic and technical prongs. The technical prong is satisfied if the complainant practices or licenses at least one claim of the asserted patent. The economic prong is satisfied by establishing the existence of significant investments in plant, equipment, labor or capital, including engineering, research and development or licensing.
For companies not currently practicing an invention covered by their patents, however, access to the ITC has been more difficult because they do not make or sell a product that implements the pertinent IP rights and, thus, could not establish domestic industry. In the Coaxial Cable Connectors investigation (337-TA-650), the ITC maintained that “patent infringement litigation activities alone, i.e., patent litigation activities that are not related to engineering, research and development or licensing, do not satisfy the requirements” of the statute. Nonetheless, it held that “litigation activities (including patent infringement lawsuits) may satisfy these requirements if a complainant can prove that these activities are related to licensing and pertain to the patent at issue, and can document the associated costs. The same holds true for other types of activities that are allegedly related to licensing.” The Commission further held that in assessing whether the domestic industry requirement has been satisfied, it will consider licensing activities that “bring a patented technology to market, as well as licensing activities that ’take advantage of’ the patent, i.e., solely derive revenue.”
While this ruling makes it easier for non-practicing entities to assert patents in the ITC, it may also enable companies to assert patents that do not cover their own products but are instead directed to competing products. Depending on the facts and circumstances, the ITC may be an attractive alternative to U.S. district court litigation.
To learn more about Section 337 litigation at the ITC, please contact Baker Hostetler’s Patent Team.
Authorship Credit: A. Neal Seth. Bukola T. Aina contributed to this alert.
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