Addressing the domestic industry requirement in § 337 investigations at the U.S. International Trade Commission (ITC), the U.S. Court of Appeals for the Federal Circuit held that the complainant must prove that its substantial domestic investments relate to actual articles that practice the asserted patent. Microsoft Corp. v. International Trade Comm’n, Case Nos. 12-1445; -1535 (Fed. Cir., Aug., 3, 2013) (Taranto, J.)
For patent-based infringement allegations§ 337 require proof of a domestic industry relating to “articles protected by the patent.” 19 U.S.C. §§ 1337(a)(2),(3). In the underlying ITC investigation, the complainant Microsoft alleged that Motorola Mobility infringed four of Microsoft’s patents. With respect to two of the asserted patents, Microsoft alleged a domestic industry based on investments in software applications related to the Windows Mobile operating system. Although Microsoft’s expert identified certain “example” applications that Microsoft provided to third-party mobile device manufacturers, Microsoft failed to show that any such applications were actually implemented on any third-party mobile device.
The ITC found Microsoft’s showing to be insufficient to satisfy the domestic industry requirement. In affirming the ITC’s determination based on substantial evidence, the Federal Circuit noted that “[t]here is no question about the substantiality of Microsoft’s investment in its operating system or about the importance of that operating system to mobile phones on which it runs,” but found that was not enough under the statute because “Section 337, though not requiring that an article protected by the patent be produced in the United States, unmistakably requires that the domestic company’s substantial investments relate to actual ‘articles protected by the patent.’” The Court further stated that “[a] company seeking section 337 protection must therefore provide evidence that its substantial domestic investment—e.g., in research and development—relates to an actual article that practices the patent, regardless of whether or not that article is manufactured domestically or abroad.”
Accordingly, the Court concluded that there was substantial evidence to support the ITC’s determination that Microsoft failed to meet the statutory requirement of a domestic industry with respect to articles protected by the asserted patent. As noted by the Court, “[t]he Commission did not lack substantial evidence to support its finding that Microsoft simply failed to identify any actual phones with the required components performing as required [by the asserted patents].”
Based on Microsoft’s failure of proof on domestic industry, the Federal Circuit affirmed the ITC’s determination of no § 337 violation as to two of the asserted patents without reaching the issue of infringement.