June 2013
Investment in Litigation Targeted at Financial Gain Does Not by Itself Satisfy the Economic Prong of the Domestic Industry Requirement
| Judges: Newman, Prost (author), O’Malley |
| [Appealed from ITC] |
In Motiva, LLC v. International Trade Commission, No. 12-1252 (Fed. Cir. May 13, 2013), the Federal Circuit affirmed the ITC’s decision that Nintendo Co., Ltd. and Nintendo of America, Inc. (collectively “Nintendo”) did not violate § 337 of the Tariff Act of 1930. Specifically, the Court upheld the ITC’s finding that Motiva, LLC (“Motiva”) did not satisfy the economic prong of the domestic industry requirement of § 337.
Motiva owns U.S. Patent Nos. 7,292,151 (“the ’151 patent”) and 7,492,268 (“the ’268 patent”), both related generally to systems for exercise and physical rehabilitation that guide user movements by interactive and sensory feedback. Motiva made substantial investments from 2003 to 2007 to commercialize the technology. During that time, however, Motiva did not get past the prototyping stage. It was never close to producing a final product, much less testing and commercializing it. Motiva’s last partner withdrew in 2004, and no others after that examined Motiva’s prototypes or the patents. Motiva ended those activities by January 2007.
The next year, Motiva sued Nintendo in district court, alleging that Nintendo’s Wii video game system infringed the ’151 patent. Two years later, Motiva filed its ITC complaint alleging that Nintendo’s Wii system infringed both the ’151 and ’268 patents, and thus Nintendo’s importation of those systems violated § 337. The district court proceedings were stayed pending resolution of the ITC investigation.
“[T]he evidence demonstrated that Motiva’s litigation was targeted at financial gains, not at encouraging adoption of Motiva’s patented technology.”
Slip op. at 10.
At the ITC, Nintendo moved for summary determination that Motiva did not satisfy the domestic industry requirement of § 337. The ITC ultimately agreed with Nintendo, and thus adopted a final determination that Nintendo did not violate § 337. Motiva appealed to the Federal Circuit.
On appeal, the Federal Circuit held that Motiva did not satisfy the economic prong of the domestic industry requirement for two reasons. First, the Court held that the filing date of the ITC complaint was the relevant date at which to determine if the domestic industry requirement was satisfied. Here, the Court reasoned, at the filing date of the complaint, Motiva’s district court litigation against Nintendo was the only activity that could establish a domestic industry in the asserted patents’ technology. Second, the Court held that litigation expenses should not automatically be considered a significant investment towards a licensing program as required by § 337. Instead, such a conclusion must be supported by evidence. In this case, the Court found substantial evidence that Motiva was only interested in extracting a monetary award or settlement from the litigation, not encouraging adoption of the patented technology. Accordingly, the Federal Circuit affirmed the ITC’s decision that Nintendo did not violate § 337.
