Exploring the Timeframe for Activities Establishing a Domestic Industry in ITC Investigations

Authored by Stephen E. Kabakoff and Andrew G. Strickland

Intellectual property disputes may be brought in the U.S. International Trade Commission (ITC) to prevent the importation and sale of infringing articles from harming a domestic industry within the United States. To establish a protectable domestic industry, the ITC employs a two-part test that includes an economic prong, requiring a threshold level of domestic activities or investments, and a technical prong that relates those domestic activities to the subject intellectual property.

19 U.S.C. § 1337(a)(3) codifies types of activities that can satisfy the economic prong. Although an ITC complainant must show that its domestic industry "exists or is in the process of being established," the statute requiring domestic industry is silent as to when, specifically, activities satisfying the economic prong must occur. While the required domestic-industry activities generally must occur before or concurrent with the filing date of the complaint, under certain circumstances, the ITC may examine domestic-industry activities after the investigation has been instituted.

Generally speaking, the economic prong of the domestic-industry requirement can be satisfied by a complainant's activities at or before the date of filing the complaint, even if those activities are later curtailed during the course of the investigation. For example, in the 743 Investigation, the ITC found that a complainant's research and development activities before the issue date of the patent were sufficient to satisfy the economic prong of the domestic-industry requirement, even though the complainant was not actively engaging in those activities at the time of the complaint. In another case, Bally/Midway Manufacturing Co. v. U.S. International Trade Commission, the U.S. Court of Appeals for the Federal Circuit held that Bally continued to have a domestic industry in a video game even though the company ceased production of the game and had few of the video games in inventory soon after the ITC complaint was filed. But the ITC has been careful to distinguish Bally/Midway in later investigations by stating that Bally/Midway turned on "the circumstances of [that] case."

In addition to considering a complainant's domestic-industry activities before and at the time of filing of the complaint, the ITC will also consider activities when a significant and unusual development occur[s] after the complaint has been filed. While the ITC has not defined what constitutes a "significant and unusual development," some ITC decisions provide examples. In Certain Semiconductor Integrated Circuits and Products Containing Same, Inv. No. 337-TA-665, for example, an ITC Administrative Law Judge (ALJ) considered whether a complainant had "abandoned the products upon which it relie[d] to satisfy the economic prong of the domestic industry requirement" when it filed for bankruptcy during the course of the investigation. Although the ALJ ultimately determined that the complainant's activities satisfied the economic prong of the domestic-industry requirement, he emphasized that the complainant's "post-bankruptcy domestic activities are relevant to a domestic industry analysis and must be examined." In Enercon GmbH v. U.S. Int'l Trade Comm'n, 113 F.3d 1256, after the ITC issued an exclusion order and the patent-in-suit was subsequently sold, the Federal Circuit remanded to determine if post-exclusion-order activities of the new patent owner qualified as a domestic industry. The ITC has also considered post-filing domestic-industry activities relative to dates of amended or supplemental complaints (337-TA-446) or a discovery cut-off date (337-TA-289).

Parties to an ITC investigation can take away some key points from the above-noted ITC decisions. First, complainants can rely on domestic-industry activities occurring before the filing date of the complaint to satisfy the economic prong of the domestic-industry requirement, even though the complainant may not be participating in those activities at the time of the complaint or during the investigation. Second, because the ITC may continue to analyze whether a complainant's activities satisfy the economic prong of the domestic-industry requirement in the event of a "significant and unusual development," respondents should consider opportunities to challenge a complainant's domestic industry based on post-filing developments. Finally, the ITC analyzes the question of domestic industry on a case-by-case basis and does not require a rigid timeframe for the required domestic-industry activities. As a result, all parties to an ITC investigation should consider the sufficiency of activities occurring both before and after the filing of the complaint in connection with the economic prong of the domestic-industry requirement.

Published in TYL In Focus Volume 1, Number 5 © 2014 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.