In its December 18, 2015, decision in In re Certain Wireless Standard Compliant Electronic Devices, Including Communication Devices and Tablet Computers, Inv. No. 337-TA-953 (public version December 30, 2015), the U.S. International Trade Commission ("ITC") raised the bar for satisfying the economic prong of domestic industry in cases where the asserted patents cover only a component of a larger product.
Statutory Framework
The ITC has jurisdiction over only cases involving "industr[ies] 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." Section 337(a)(2). This requirement is met only if there is "(A) significant investment in plant and equipment; (B) significant employment of labor or capital; or (C) substantial investment in its exploitation, including engineering, research and development, or licensing." Section 337(a)(3).
The Case
At the ITC, the complainant, Ericsson, moved for a summary
determination that it met the economic prong of the domestic
industry requirements for its telecommunication patents. Ericsson
alleged it met the economic prong of the domestic industry
requirement because Samsung produced telephones under a portfolio
license from Ericsson. Ericsson's motion was denied because,
according to the ITC, Ericsson failed to show a nexus between its
patents and the domestic industry. Administrative Law Judge Lord
explained that the general rule is that the ITC assesses only
activities "with respect to the [asserted] patent," and
only in "exceptional situations" will it consider
"downstream article[s] of commerce" that incorporate a
patented article. Op. at 8 (citing earlier cases). According to the
ITC, although Ericsson identified particular Samsung telephones,
Ericsson never "establish[ed] how the telephones practice the
asserted patents," let alone "whether this would be an
appropriate case in which to extend the concept of domestic
industry to cover more than the technology to which Ericsson holds
a patent, i.e., some portion of Samsung's phone or
even the entire device." Op. at 9. Because Ericsson failed to
provide evidence that the downstream products are central to
enabling the patentee to exploit the technology described in the
patents, the ITC denied summary determination.
The case settled soon after the ITC's decision. See
Joint Motion to Terminate the Investigation on the Basis of
Settlement Agreement (Dec. 29, 2015).
Key Takeaway
The ITC's nexus requirement places the burden on complainants to show a domestic industry by tying domestic expenditures to the patented technology. A complainant relying on the exceptional situation of investment in a downstream product as part of the domestic industry showing may present market evidence to demonstrate that the downstream product is part of exploiting the patented technology. The ITC's decision here suggests that this evidentiary showing linking exploitation of the patent to the downstream product will be examined closely.
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