Addressing the domestic industry requirement of § 337 in the context of licensing activities, the U.S. Court of Appeals for the Federal Circuit found that there is no need to establish that the articles that are the objects of the licensing activities are made in this country.  InterDigital Communications, LLC v. Int’l Trade Comm’n, Case No. 10-1093 (Fed. Cir., Aug. 1, 2012) (Bryson, J.) (Newman, J., dissenting).

This case addresses the issue of whether satisfaction of the so-called “technical prong” is required for a licensing-based domestic industry.  Traditionally, the ITC has required proof that a domestic article practices at least one claim of the asserted patent to satisfy product-based domestic industry allegations, but has not required that proof when a complainant is relying solely upon licensing activities.  In the underlying investigation, the ITC held that complainant InterDigital satisfied the domestic industry requirement, but found no violation of § 337 because respondent Nokia did not infringe the asserted patents. 

On appeal, the Federal Circuit found that the ITC erred in construing certain claim terms and reversed the ITC’s order finding no infringement and remanded the case for further proceedings.

The Federal Circuit also rejected Nokia’s argument that the ITC’s finding of no violation can be upheld on the alternative ground that InterDigital failed to satisfy the domestic industry requirement.  The Court acknowledged that the statute permits barring the importation of infringing articles “only if an industry in the United States, relating to articles protected by the patent . . . exists or is in the process of being established.” Nonetheless, the Federal Circuit rejected Nokia’s argument there must always be a domestic industry relating to articles protected by the patent, noting that “section 337(a)(3) makes clear that the required United States industry can be based on patent licensing alone.” 

In support of this interpretation, the Court looked to the legislative history and found that the Senate report of the bill that amended the domestic industry requirement recognized that the “third factor,” which permitted reliance upon investments in licensing, “does not require actual production of the article in the United States if it can be demonstrated that substantial investment and activities of the type enumerated are taking place in the United States.”  The Court also noted that in the years since the enactment of that amendment, the Commission has consistently ruled that a domestic industry can be found based on licensing activities alone.  As such, “[i]f there were any ambiguity as to whether the statute could be applied to a domestic industry consisting purely of licensing activities, the Commission’s consistent interpretation of the statute to reach such an industry would be entitled to deference under the principles of Chevron U.S.A.”

Judge Newman dissented with respect to claim construction issues, but did not address the domestic industry requirement.