In a recent order, ALJ McNamara denied Complainant SnapPower's motion for summary determination that it satisfies the economic prong of the domestic industry requirement of 19 U.S.C. § 1337(a)(3). In re Certain Powered Cover Plates, Inv. No. 337-TA-1124, Order No. 27 (February 19, 2019).
Commission Rule 210.18 provides that "[a]ny party may move ... for a summary determination in its favor upon all or any part of the issues to be determined in the investigation" and the summary determination "shall be rendered if pleadings and any depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a summary determination as a matter of law." Complainants routinely file motions for summary determination of domestic industry at the ITC in the hopes of reducing the number of issues that must be addressed during the hearing.
In its motion, SnapPower argued that it had made significant investments under each subsection of the economic prong statute – § 1337(a)(3)(A) (plant and equipment), (a)(3)(B) (labor and capital), and (a)(3)(C) (engineering and research and development). Respondents Enstant Technology, Vistek Technology, and Alltrade Tools ("Respondents") opposed the motion with respect to all three categories while the Staff supported the motion with respect to subsections (a)(3)(A) and (a)(3)(B), but opposed it with respect to subsection (a)(3)(C). SnapPower asserted that there were no genuine issues of material fact related to the economic prong issue but both the Respondents and Staff pointed out several areas where material facts were in dispute – most notably, disputes based on discrepancies or lack of clarity in the Complainant's own submissions.
For example, while SnapPower stated that it assembled their Original GuideLight products in its U.S. headquarters, it also conceded that its products are manufactured abroad. Based on this apparent contradiction, the ALJ concluded that "SnapPower has not sufficiently identified the dollar amount of the assembly that occurs outside the United States versus those expenditures that can be claimed as domestic expenditures." As another example, SnapPower alleged certain levels of investments for (1) equipment, tools, and software related to research and design, testing, and quality control, (2) non-capitalized research and development equipment, and (3) equipment and software related to sales and marketing, but Respondents pointed out that supporting exhibits reflected different dollar amounts, making it unclear what portions were being claimed and were appropriate to claim.
With respect to R&D expenditures, Staff argued SnapPower did not provided sufficient evidence of a nexus between its investments and the asserted patents. With respect to labor and capital, Staff pointed out that SnapPower's alleged investment for U.S.-based technical consultants should not be considered because "some of the companies appeared to be located in China" and the cited exhibit included "payments to consultants such as an investor/motivational speaker and a patent and IP translation service," making it "unclear which consultants performed work related to the domestic industry products."
On review of the parties' submissions, ALJ McNamara agreed "with Respondents' arguments that there are genuine issues of material fact such that a summary determination on this issue would be inappropriate."
This Order is a reminder to litigants of the complexities in proving the economic prong of domestic industry at the ITC. While Complainants can benefit from early summary determination of the issue, they need to ensure that they have made the necessary showings required by § 1337(a)(3). This often starts even before the complaint is filed. Respondents challenging domestic industry should be equally aware of these complexities so they can identify evidentiary gaps.
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