AIPPI logo AIPPI
e-News
No. 13
July 2010
International Association for the Protection of Intellectual Property
AIPPI General Secretariat |Toedistrasse 16 | CH-8027 Zurich
Tel. +41 44 280 58 80 | Fax +41 44 280 58 85
enews@aippi.org | www.aippi.org
In the Matter of Certain Coaxial Cable Connectors: the U.S. International Trade Commission clarifies the domestic industry requirement in patent infringement actions
Kenneth R. Adamo, David M. Maiorana, and Jonathan A. Muenkel

On April 14, 2010, the United States International Trade Commission (“ITC” or “Commission”) , issued a decision in Certain Coaxial Cable Connectors and Components Thereof and Products Containing Same, holding that litigation activities (including patent infringement suits) related to licensing may qualify to meet the economic prong of the domestic industry requirement in patent-enforcement proceedings before the ITC.[1] The decision provides clarity into what is required to meet the domestic industry requirement in ITC proceedings insofar as licensing activities are concerned.

The Coaxial Cable decision

At issue in Coaxial Cable was whether U.S. district court patent litigation expenses, that resulted in the defendant taking a license, could be considered “exploitation” for the purpose of finding a domestic industry in an ITC proceeding involving the same patent. The ALJ determined that the domestic industry requirement was met based on evidence showing substantial investment made by the complainant, PPC, Inc. (“PPC” ), by incurring patent litigation expenses in a U.S. district court proceeding that resulted in a license.

    The Commission's Decision

    The Commission agreed in principle, and ruled that “litigation activities (including patent infringement lawsuits) may satisfy [the domestic industry requirement] if a complainant can prove that these activities are related to licensing and pertain to the patent at issue, and can document the associated costs.”[2] The Commission went on to state, however, that patent infringement litigation activities on their own do not meet the domestic industry requirement under 19 U.S.C. §[3] 1337(a)(3)(C). The fact that a license is obtained following litigation also does not mean that a patent owner has proven the economic prong of the domestic industry requirement. The costs associated with the litigation must also be “substantial.” Whether an investment is “substantial” is a factual inquiry, and depends “on the industry in question and the complainant's relative size.”

    [4] Examining the factual record before it, the Commission could not determine whether PPC showed domestic industry through its patent infringement litigation activities and costs for the patent in question. Accordingly, the Commission remanded the matter to the ALJ for further consideration of this issue. As to whether PPC's investment in exploitation through licensing was “substantial,” the Commission stated that it was appropriate for the ALJ to consider the number of licenses obtained by PPC for the patent in question, or other activities by PPC in attempting to solicit licenses for that patent.[5]

    The ALJ's Remand Initial Determination

    On remand, the ALJ determined that PPC did not show domestic industry.[6] In reaching this conclusion, the ALJ examined the evidence presented by PPC, and determined that it would be inappropriate to apportion 100 percent of the litigation activities and expenses asserted by PPC as related to licensing of the patent in question. The ALJ further determined that the expenses it could consider (e.g., approximately 124 attorney hours and $42,000) were not “substantial” as required to show domestic industry. In addition, while the ALJ considered the issue “a close one,” he found that PPC did not establish a domestic industry with respect to the patent in question since PPC: ( 1) “received only one license for the [ ] patent, of which only a portion actually relates to the patent at issue”; (2) “has no established licensing program, let alone one that encompasses the [ ] patent”; (3) “has made no other efforts to send cease and desist letters with offers to license the [ ] patent”; and (4) “has not engaged in other licensing offers or talks with any persons or entities other than those involved with the single [patent] license.”[7] On June 7, 2010, PPC petitioned the Commission to review the ALJ's Remand Initial Determination.

Conclusion

While the ALJ's remand determination reversed his previous finding of domestic industry, the Commission's decision in Coaxial Cable has clearly expanded the types of activities available to a complainant to meet the domestic industry requirement when bringing a patent enforcement proceeding in the ITC.



  • Inv. No. 337 -TA-650, Comm'n Op. (Apr. 14, 2010) (Public Version).

  • Id at 44 (emphasis added). The Commission made clear that its decision here did not address litigation activities relating to engineering and research and development. Id. at 44, n.13.

  • Id. at 43-44.

  • Id. (quoting Certain Stringed Musical Instruments and Components Thereof, Inv. No. 337-TA-586, Comm'n Op. at 25 (May 2008)).

  • Id. at 55.

  • Certain Coaxial Cable Connectors, Inv. No. 337-TA-650, Remand Initial Determination (May 27, 2010) (Public Version at 25).

  • Id.

Top
Back
Valid XHTML 1.0 Transitional