In a recent Initial Determination ("ID"), Chief Administrative Law Judge Bullock held that the "greater weight of authority" supports the conclusion that investments in discontinued products can form the basis for an existing domestic industry. Certain Memory Modules and Components Thereof, and Products Containing Same, Inv. No. 337-TA-1023, Initial Determination (Nov. 14, 2017).
Netlist Inc. ("Netlist") filed a complaint asserting that SK hvnix Inc., SK hynix America Inc., and SK hvnix memory solutions Inc. (collectively, "SK hynix") violated a number of its patents by importing certain memory modules. To show that it had a domestic industry, Netlist submitted evidence that it had invested significantly in certain HyperCloud products and had ongoing domestic activities incorporating HyperCloud technology into Netlist's next-generation HybriDIMM products. SK hynix argued that Netlist's investments in the HyperCloud products were irrelevant, because Netlist has since stopped investing in HyperCloud.
In the ID, ALJ Bullock found that Netlist had not stopped investing in the HyperCloud technology. It had merely transitioned its investments to a new product—one that "draws heavily on the patented technology originally developed via the investments in the HyperCloud products." He relied on the fact that the HyperCloud product had not been simply abandoned by Netlist to distinguish this case from Motiva, LLC v. ITC, 716 F.3d 596 (Fed. Cir. 2013) where the Federal Circuit dismissed evidence of a discontinued domestic-industry investment, because "there is no evidence in the record relating that development activity to [the patentee]'s efforts to establish a domestic industry at the time [it] chose to file its complaint three years later."
Here, by contrast, ALJ Bullock found there was evidence of such a relationship because Netlist transitioned its investments from the HyperCloud product to the HybriDIMM product which draws heavily on the patented technology originally developed via the investments in the earlier HyperCloud products.
Takeaway
Parties in the ITC should be aware that investments in discontinued products can form the basis for an existing domestic industry. Complainants seeking to rely on discontinued investments to meet the domestic-industry requirement of Section 337 should consider relating that investment to an existing product or risk having their evidence dismissed. Respondents seeking to challenge the existence of a domestic industry may attempt to establish that the alleged relationship fails to relate the earlier development activity to [the patentee]'s efforts to establish a domestic industry at the time the complaint was filed.
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