U.S. Manufacturing Not Required to Satisfy Section 337 Domestic Industry Requirement, says CAFC
A product does not have to be manufactured in the U.S. for the licensee of that product to have access to the International Trade Commission’s import restrictions, said the Court of Appeals for the Federal Circuit in a denial of Nokia’s request for rehearing. A U.S. patent holder’s investment in research and licensing alone satisfies the domestic industry requirement, regardless of whether actual production is performed entirely abroad. In a dissent from the ruling, Judge Pauline Newman disagreed that no domestic production need take place to satisfy the domestic industry prong. Such an interpretation ignores Congressional intent to protect U.S. industry, even in cases where the U.S. industry is comprised of licensees rather than actual patent holders.
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
CAFC had in August remanded the ITC’s finding of no Section 337 violations by Nokia with respect to InterDigital’s patent claims in the investigation of certain wireless devices with 3G capabilities and components thereof (337-TA-800). That opinion that accompanied the remand only discussed arguments related to claim construction (see ITT’s Online Archives 12083002 for summary). Unmentioned was Nokia’s challenge of the ITC’s finding that the domestic industry prong of Section 337 had been met. Although InterDigital, the patent holder, is a U.S. corporation that invests in licensing and research, all licensed production of the products at issue occurs abroad. In its request for rehearing, Nokia fleshed out its argument relating to the domestic industry requirement, and the ITC addressed it in this opinion.
While no domestic industry existed to make products using the patents at issue, the distinction between U.S. and foreign manufacturing is irrelevant, CAFC said. Section 337 only requires either “significant investment in plant or equipment, significant employment of labor capital, or ‘substantial investment in its exploitation, including engineering, research and development, or licensing,’” it said. InterDigital satisfies the latter requirement, and so can request Section 337 remedies. Nowhere does the statute explicitly require U.S. manufacturing, said CAFC. Looking to the Congressional record, CAFC said that Congress implemented the 1988 amendments allowing engineering, research, and licensing to qualify for Section 337 actions in order to give access to patent import cases for universities and businesses too small to manufacture.
In his dissent, however, Judge Newman said the majority misinterpreted Congress’ intent. During the legislative process leading up to the 1988 amendments to Section 337, removal of the domestic industry requirement in its entirety was on the table. The decision of Congress not remove the requirement in its entirety, along with several statements made at the time, show that the amendments intended to protect industries where U.S. businesses manufactured products using intellectual property licensed by other U.S. firms, Newman said. The majority’s opinion is in direct opposition to its own precedent in John Mezzalingua and Associates v. ITC, where the ITC said Congress intended for Section 337 to only cover “productive licensing,” he said.
(Interdigital Communications v. ITC, Court No. 2010-1093, dated 01/10/12, Judges Bryson and Mayer on the majority, Judge Newman dissenting)
(Attorneys: Donald Dunner of Finnegan Henderson for appellant InterDigital; Megan Valentine for defendant U.S. government; Patrick Flinn of Alston & Bird for defendant-intervenor Nokia)