The requirement of establishing a “domestic industry” in articles protected by a patent is a unique and important aspect of Section 337 litigation. Without it, the statute’s exclusionary remedies against imports that infringe a patent cannot be invoked. The statute enumerates the types of activities that can satisfy the “economic prong” of the domestic industry requirement: namely, significant investment in plant and equipment, significant employment of labor or capital, or substantial investment in engineering, research and development, or licensing. However, that seemingly simple list has spawned numerous disputes and a significant body of precedent that can act as a counterweight to early disposition of the domestic industry issue, no matter how desirable that goal can be as a cost-saving measure.

Judge Shaw’s recent order denying complainant’s request for summary judgment on the domestic industry (economic prong) in Certain Road Milling Machines and Components Thereof, Inv. No. 337-TA-1067 (Jan. 23, 2018) is illustrative. Reciting from the complaint, the Order notes complainant’s allegations that its activities involving “custom-manufacturing and service of, and support for, road-milling machinery in the United States” include a “thirty-four-acre multibuilding campus outside Nashville, Tennessee . . . [where complainant] is a significant employer.” Nevertheless, Judge Shaw held that “the description of [complainant’s] post-importation manufacturing activities (which appear to encompass customization, modification, service, and repair activities)” did “not provide enough context to ascertain” as a matter of law the activities’ “significance” within the meaning of the statute. Although the Order does not say so expressly, its citations to cases requiring that complainant demonstrate the “value added” by the domestic activities suggests that the absence of that demonstration was considered a key, evidentiary failing in complainant’s motion. Additionally, the Order notes that factories and production facilities for the at-issue milling machines are operated by complainant’s corporate affiliates in several foreign countries. Although complainant argued that “comparative analysis” of foreign and domestic expenditures is not required, the Judge found that complainant “had not shown that the foreign investments lack significance[.]”

It will be interesting to see whether Judge Shaw’s reading of Commission precedent on these issues will ultimately prevent complainant from succeeding at trial on the economic prong of the domestic industry.