United States: Recent ITC Decision Clarifies And Eases Domestic Industry Burden For Patent Holders

Last Updated: July 18 2018
Article by Aarti Shah, Andrew H. DeVoogd, Tiffany Knapp and Matthew S. Galica

A recent decision by the International Trade Commission ("ITC" or the "Commission") improves intellectual property holders' ability to prove that they have a "domestic industry" and obtain relief for infringement from the Commission. Specifically, the ITC ruled that investments in "non-manufacturing activities," including engineering and research and development activities related to a domestic industry protected article under section 337(a)(3)(C), can support a finding of domestic industry under sections 337(a)(3)(A) or (B)—the sections traditionally associated with manufacturing. The Commission also ruled that manufacturers could use certain investments in components and contract employees to support a finding of domestic industry. The Commission's opinion removes uncertainty for companies relying upon research and development activities and expenditures to establish a domestic industry. It also helps parties relying on manufacturing expenses to establish a domestic industry.

In Investigation No. 337-TA-1097, Certain Solid State Storage Drives, Stacked Electronics Components, and Products Containing Same ("Solid State Storage Drives"), Complainant BiTMICRO, LLC ("BiTMICRO") attempted to rely on the domestic activities of its licensee BiTMICRO Networks, Inc. to satisfy the ITC's domestic industry requirement, which is a jurisdictional predicate in the forum. These activities included investments in research and engineering as well as component costs for specially order parts and labor expenses for contract employees related to the domestic industry product. BiTMICRO allocated these activities under sections 337(a)(3)(A) (labor and capital) or (B) (facility and equipment). In the initial determination, the Administrative Law Judge found that investments in "non-manufacturing activities" cannot support a finding of domestic industry under section 337(a)(3)(A) and (B). Under the judge's ruling, BiTMICRO could only have established a domestic industry under section 337(a)(3)(C) and satisfied that provision's additional requirement of proving a nexus between the patents and the research investments. To support its findings, the initial determination conducted an analysis of the statutory intent of the ITC's domestic industry requirement, concluding that Congress understood subsections sections 337(a)(3)(A) and (B) to require exploitation of the patent only through manufacturing whereas the newly added subsection (C) requires exploitation through engineering, research and development, or licensing.

The initial determination was consistent with some earlier Commission decisions which had similarly held that companies wishing to establish a domestic industry at the ITC by relying on their research expenditures could only do so under 337(a)(3)(C). Those decisions also imposed an additional nexus requirement that those relying on manufacturing expenses under 337(a)(3)(A) or (B) did not have to satisfy. This nexus requirement was not trivial, as it sometimes required companies to be able to quantify their investments in research in the patented subcomponents of a product, which many were unable to do.

The Commission opinion in Solid State Storage Drives expressly overrules these findings and this precedent, including the ALJ's statutory history analysis. Instead, the Commission concluded that domestic investments in plant and equipment or employment of labor or capitol associated with engineering, research and development, or licensing can support a finding of domestic industry under sections 337(a)(3)(A) and (B). In view of the legislative text and history of the ITC's domestic industry requirement, the Commission found that satisfying subsections (A) and (B) only requires showing that the relied-upon plant and equipment expenses and labor and capital expenses are attributable to the domestic industry product, not the patented feature of the protected article. In other words, with this approach, a complainant need not prove a nexus between the expenses and the patented technology as is required under subsection (C).

This ruling alleviates confusion for practitioners regarding what may be credited to establish a domestic industry and allows complainants relying upon engineering, research and development, or licensing activities to prove domestic industry in a manner that aligns with the reality of their business in the context of the 21st Century economy. In particular, as research and development, as opposed to manufacturing, has been an increasingly important part of corporate activity in the U.S., this decision will help more companies take advantage of the ITC as a forum.

In addition, the Commission provided welcome clarity to the application of the Federal Circuit's opinion in Lelo Inc. v. Int'l Trade Comm'n, in which the Federal Circuit determined that the purchase of "off-the-shelf" component parts from a third party could not support a finding of domestic industry under subsection 337(a)(3)(B) absent "evidence that connects the cost of the components to an increase of investment or employment in the United States." As component costs can be a substantial portion of manufacturing investments, the Lelo decision hurt the ability of manufacturers to establish a domestic industry. In Solid State Storage Drives, however, the Commission found that payments to "third-party contract manufacturers" who make specialized components purchased and used in the domestic industry products and/or providing specialized services, should be credited under subsection (B). Additionally, the Commission also credited labor expenses paid to independent contract employees in connection with specialized portions of the production process for the domestic industry products.

This opinion resolves the question whether engineering, research and development, or licensing activities can be used to demonstrate a domestic industry under sections 337(a)(3)(A) and (B). They can.

Moreover, complainants at the ITC no longer need provide a nexus between those expenditures and the patented technology. The Commission also finally resolved that purchases of custom components and services from third parties and payments to contractors can be credited under 337(a)(3)(B). Contextually, this holding makes sense in today's global economy. Products are often researched, developed, and designed in the United States—but manufactured overseas or with the assistance of third parties within the U.S. This opinion better aligns the ITC statutory purpose of the domestic industry requirement with contemporary business practices. It also helps more patentees seek relief from unfair trade practices through patent infringement at the ITC.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Aarti Shah
Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions