In an opinion that further reinforces the authority of the U.S. International Trade Commission’s (ITC) to conduct Section 337 investigations initiated by non-practicing entities, the U.S. Court of Appeals for the Federal Circuit found that if the asserted patent covers the article that is the subject of the proceeding and the party seeking relief can show substantial investment in exploitation of the patent so as to satisfy the domestic industry requirement, that party is entitled to seek relief under section 337. InterDigital Communications, LLC v. Int’l Trade Comm’n, Case No. 10-1093 (Fed. Cir., Jan. 10, 2013) (Bryson, J.) (Newman, J., dissenting).
In order to maintain a Section 337 action, there must be “an industry in the United States, relating to the articles protected by the patent, copyright, trademark, mask work, or design concerned, exists or is in the process of being established.” The statute further provides that “an industry in the United States shall be considered to exist if there is in the United States, with respect to the articles protected by the patent, copyright, trademark, mask work, or design concerned— . . . (C) substantial investment in its exploitation, including engineering, research and development, or licensing.” The primary issue on appeal in this case was whether a complainant relying on its investments in licensing must also establish the existence of “articles protected by the patent” in order to satisfy the domestic industry requirement.
In the original Federal Circuit opinion, the majority rejected respondent 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.” (see IP Update, Vol. 15, No. 9). The same majority provided further clarification in the second opinion that, while the requirement that investments must be “with respect to articles protected by the patent” is applicable to a domestic industry based on subparagraph (C), that requirement can be satisfied even when the complainant fails to establish that it has products of its own that practice the asserted patent.
The opinion noted that complainant InterDigital had entered into 24 revenue-producing licenses that included the asserted patents with major manufacturers of wireless devices, including Samsung, LG, Matsushita, Apple and RIM. In view of these licensing investments, the majority found this to be a “classic case for the application of subparagraph (C).” There was no genuine dispute that InterDigital’s level of investments were substantial, and the only question was whether those investments were made with respect to the articles protected by the patent. The Court held that this requirement was satisfied because “the patents in suit protect technology that is, according to InterDigital’s theory of the case, found in products that it has licensed and that it is attempting to exclude.”
The opinion provided an extensive discussion of the legislative history behind the 1998 amendments that added licensing to the domestic industry requirement and, based on this legislative history, concluded that it was not necessary that the party manufacture the product that is protected by the patent, nor was it necessary that any other domestic party manufacture the protected article.
In dissent, Judge Newman argued that the panel majority erred in holding that the domestic industry requirement is met by licensing the importation of foreign-made articles. Under Judge Newman’s view, the statutory phrase “articles protected by the patent” requires proof of domestic manufacture.
Practice Note: Since there appeared to be no dispute that the complainant’s licensees had articles that practiced the patent, thus satisfying the statutory domestic industry requirement, it is an open question as to whether products that are accused of infringement in a Section 337 investigation can by themselves be used to satisfy the requirement of “articles protected by the patent.”