In an ITC proceeding, previous litigation of a patent by the complainant does not constitute a substantial investment in licensing to satisfy the domestic industry requirement of 19 U.S.C. § 337 where the evidence demonstrates the “litigation was targeted at financial gains, not encouraging adoption of [the] patented technology.”

Motiva, LLC v. Int’l Trade Comm’n, No. 2012-1252 (Fed. Cir. May 13, 2013).

Motiva filed a complaint with the International Trade Commission (“ITC”) seeking to enforce two of its patents against Nintendo’s Wii product. Shortly after the ITC investigation began, Nintendo moved for a summary determination that the domestic industry requirement was not satisfied at the time Motiva filed its complaint with the ITC. In order for the domestic industry requirement of Section 337 to be met, for articles protected by the patent, there must be either (1) a significant investment in plant and equipment; (2) significant employment of labor or capital; or (3) substantial investment in its exploitation, including engineering, research and development, or licensing. Nintendo argued that Motiva did not satisfy any of these requirements because there were no commercialized products incorporating Motiva’s technology and Motiva’s sole activity aimed at developing a domestic industry for articles protected by the patents was its previous litigation against Nintendo in a district court.

After conducting fact-finding, the ITC ruled that Motiva did not show that the domestic industry requirement was met. The ITC found that while Motiva likely made substantial investments between 2003 and 2007 to commercialize the patented technology, those activities ended in January 2007 before a final product was even close to being produced. Motiva’s only remaining prototype was far from completion and a multitude of development and testing steps remained prior to finalizing a product for production. The ITC ruled that these activities were too remote to establish a domestic industry.

Motiva argued that its investments in litigation against Nintendo were a substantial investment in a licensing program because once Nintendo was either forced to license or leave the market, potential partners would be willing to invest in and license Motiva’s patented technology. The ITC rejected this argument and found that the litigation itself was not “in anyway related to the exploitation of the patents.” The ITC found that the presence of the Wii would not affect Motiva’s attempts to commercialize its patented technology and Motiva was only interested in “extracting a monetary award through damages or financial settlement.” The ITC’s finding was supported by emails between the inventors discussing financial gains from litigation, Motiva’s decision not to seek immediate injunctive relief from the district court, and Motiva’s delay in filing a complaint with the ITC until more than three years after the launch of the Wii. The court agreed, finding the “evidence demonstrated that Motiva’s litigation was targeted at financial gains, not at encouraging adoption of Motiva’s patented technology.”

The court found that the appeal only presented factual issues, and thus deferred to the ITC’s thorough review of the evidence. Under the standard of review, the court affirmed the ITC’s finding because it was supported by substantial evidence.

A copy of the opinion can be found here.