Licensing-based Domestic Industry Requires Articles that Practice the Asserted Patent: ITC | Practical Law

Licensing-based Domestic Industry Requires Articles that Practice the Asserted Patent: ITC | Practical Law

In In re Certain Computers and Computer Peripheral Devices, and Components Thereof, and Products Containing Same, the US International Trade Commission (ITC) held that to establish a licensing-based domestic industry under 19 USC § 1337(a)(3)(C), a complainant must show that the licensing pertains to articles protected by the asserted patent. 

Licensing-based Domestic Industry Requires Articles that Practice the Asserted Patent: ITC

by Practical Law Intellectual Property & Technology
Published on 14 Jan 2014 • USA (National/Federal)
In In re Certain Computers and Computer Peripheral Devices, and Components Thereof, and Products Containing Same, the US International Trade Commission (ITC) held that to establish a licensing-based domestic industry under 19 USC § 1337(a)(3)(C), a complainant must show that the licensing pertains to articles protected by the asserted patent.
On January 9, 2014, in In re Certain Computers and Computer Peripheral Devices, and Components Thereof, and Products Containing Same, the US International Trade Commission (ITC) held that a complainant must show that there are articles protected by the asserted patent to establish a licensing-based domestic industry under 19 U.S.C § 1337(a)(3)(C) (Inv. No. 337-TA-841, Comm'n Op. (Jan. 9, 2014)).

Background

Technology Properties Limited, LLC (TPL) filed a complaint that alleged:
  • Section 337 violations for infringement of six patents.
  • The existence of a domestic industry based in part on licensing investments under Section 337(a)(3)(C).
The Administrative Law Judge (ALJ) conducted a hearing and issued a final Initial Determination (ID) finding, among other things, that:
  • TPL satisfied the domestic industry requirement based on its patent licensing activities. While the ALJ found that TPL did not show that any licensed product practiced the asserted patents, it ruled that such a showing is not required to prove licensing-based domestic industry under ITC precedent.
  • Only one patent was infringed by certain respondents.
  • The patents are not invalid.
The parties then filed petitions with the ITC for review of the ALJ's ID including, as relevant here, the ALJ's finding that TPL demonstrated the existence of a domestic industry.

Outcome

The ITC considered whether establishing a domestic industry based on licensing under Section 337(a)(3)(C) requires proof of articles protected by the patent. The ITC found that Section 337(a)(3)(C) requires a complainant to show the existence of protected articles practicing the patent, noting that:
  • In InterDigital Commc'ns, LLC v. ITC, the US Court of Appeals for the Federal Circuit agreed with the ITC's findings in two separate opinions and held that:
    • to satisfy the domestic-industry requirement, the US industry can be based on patent licensing alone; and
    • there is an articles requirement for Section 337(a)(3)(C) domestic industries, including licensing-based domestic industries (690 F.3d 1318 (Fed. Cir. 2012) ("InterDigital I"), reh'g denied, 707 F.3d 1295 (Jan. 10, 2013 ("InterDigital II")).
  • In Microsoft Corp. v. ITC, the Federal Circuit held that there is an articles requirement for Section 337(a)(3)(C) domestic industries, at least with domestic industries based on engineering and research and development (731 F.3d 1354 (Fed. Cir. 2013)).
  • Section 337 was amended in 1988 with changes in the requirements for patent-based investigations and the addition of paragraph (a)(3). Paragraph 337(a)(3) states that an industry in the US is "considered to exist if there is in the United States, with respect to the articles protected by the patent...substantial investment in its exploitation, including engineering, research and development, or licensing." The ITC has interpreted the "its" in "substantial investment in its exploitation" to refer to the intellectual property at issue.
The ITC further held that:
  • Complainants cannot rely on accused products to satisfy the domestic industry requirement because that would render the articles requirement illusory.
  • While the existence of an article protecting the patent is required, the article need not be made in the US.
  • There is no requirement that licensing-based domestic industries enable the production of patented articles (production-driven licensing), as opposed to licensing of existing articles that practice the patent. Production-driven licensing may be entitled to more weight, but licensing of existing articles also qualifies.
The ITC found that TPL did not prove the existence of articles that practice the asserted patent. Commissioner Aranoff dissented from the Commission’s finding and would have found that a complainant is not required to prove the existence of articles protected by the asserted patent to show licensing-based domestic industry.

Practical Implications

Before this opinion, the ITC had not required patent owners to show the existence of protected articles practicing the asserted patent to establish a licensing-based domestic industry. This decision will require complainants who rely on licensing-based domestic industry to show that articles protected by the licensed patent exist or are in the process of being created.