ITC Economic Prong Requires Quantitative Analysis of Complainant's Domestic Activities

Lelo Inc. v. International Trade Commission, ___F.3d ___ (Fed. Cir. May 11, 2015) (Moore, Clevenger, REYNA) (U.S.I.T.C.) (4 of 5 stars)

Federal Circuit reverses determination that ITC complainant had a domestic industry in its asserted patent.

The ITC erred in reasoning that because certain components in an ITC complainant's patented product were "crucial" to the patented device, even modest domestic expenditures associated with those components could satisfy the economic prong of the domestic industry requirement. Section 337(a)(3)'s requirement of "significant" or "substantial" domestic investment/employment requires a quantitative analysis of a complainant's domestic activities.

The 2007 ITC investigation Certain Male Prophylactic Devices did not support establishing domestic industry's economic prong without any quantitative analysis. In that case, quantitative analysis was used in partial support of the domestic industry determination. Moreover, that case involved a "significant employment of labor" because the complainant used a U.S. subcontractor that provided a detailed accounting of time spent on custom components for the complainant, while, here, the complainant simply purchased "off-the-shelf" components from U.S. retailers. Because, in this case, the complainant's domestic commercial activities were held to be insignificant, the ITC should have held that the complainant did not satisfy the economic prong of section 337's domestic industry requirement. That those components for which the complainant had some "modest" domestic activity were crucial to the patented product could not, without more, satisfy the statute.