ITC: COAXIAL CABLES
The recent Coaxial Cable decision confirms that patent litigation activities related to licensing may meet the US International Trade
Commission’s domestic industry requirements. Kenneth Adamo and David Maiorana explain.
On April 14, 2010, the United States International Trade Commission (ITC) issued a decision in Certain Coaxial Cable Connectors and Components Tereof and Products Containing Same, holding that litigation activities related to licensing may qualify to meet the economic prong of the domestic industry requirement in patent-enforcement proceedings before the ITC. Tis decision is important since it arguably expands the types of activities that may now be used to show existence of a domestic industry in ITC actions.
The Coaxial Cable decision
Te Coaxial Cable investigation was instituted by the ITC on May 30, 2008, based on a complaint for patent infringement filed by PPC, Inc. At issue were four patents, all owned by PPC, covering a specific type of coaxial cable connector used in the telecommunications, satellite and television industries. While PPC does not itself manufacture or sell any of the patented connectors in the US, it does license its patent rights to a company in the US that makes and sells the connectors. On at least one occasion, PPC enforced its cable connector patent rights by asserting one of its patents (the ‘539 patent) in a patent action in a US district court. PPC was successful at trial in that case, with the defendant subsequently taking out a licence for the ‘539 patent.
The ALJ’s decision and request for review by the ITC
Following an evidentiary hearing, on October 13, 2009, Administrative Law Judge (ALJ) E. James Gildea issued an initial determination. He found that several of the respondents were in violation of § 337 of the Tariff Act by infringing the asserted claims of all four patents-in-suit. In addition, the ALJ determined that PPC met the domestic industry requirement for
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all four patents. As to the ‘539 patent, the ALJ determined that the economic prong of the domestic industry requirement was met based on several factors, including evidence showing substantial investment made by PPC in enforcing its rights under the ‘539 patent, specifically by incurring litigation expenses through its patent infringement suit in the US district court, which resulted in a licence.
Following the ALJ’s decision, the ITC’s investigative attorney filed a petition seeking review of inter alia the ALJ’s finding that PPC satisfied the economic prong of the domestic industry requirement as to PPC’s ‘539 patent. On December 14, 2009, the ITC granted the petition.
The ITC’s decision
On April 14, 2010, the ITC issued its final determination. On the issue of domestic industry and the ‘539 patent, it considered “whether litigation activities constitute ‘exploitation’ under section 337(a)(3)(C)”. Te ITC stated that while patent infringement litigation activities on their own do not meet the domestic industry requirement under § 337(a)(3)(C), “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. Te same holds true for other types of activities.”
In reaching this conclusion, the ITC found that litigation activities related to licensing may constitute ‘exploitation’ for the purposes of showing domestic industry. It went on to state that the ordinary meaning of the term ‘exploitation’ would cover licensing activities that both: “put [the patent] to a productive use, i.e., bring a patented technology to market”; and
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