ITC: COAXIAL CABLES
“take advantage of the patent, i.e., solely derive revenue”. In this regard, litigation costs that result in the patent owner obtaining a licence would fall under the second category of licensing activities.
Te ITC noted, however, that obtaining a licence following litigation does not automatically fulfil the economic prong of the domestic industry requirement. Specifically, any and all costs associated with the litigation must be well documented and linked to the specific patent that is the subject to the ITC proceeding. Te costs incurred by the patent owner in bringing the litigation must be “substantial”, as required in § 1337(a)(3)(C). Tis is a factual inquiry and depends “on the industry in question and the complainant’s relative size”.
Examining the record before it, the ITC could not determine whether PPC showed domestic industry for the ‘539 patent through its patent infringement litigation activities and costs. Accordingly, it remanded the matter to the ALJ for further consideration.
The ALJ’s Remand Initial Determination
On May 27, 2010, ALJ Gildea issued a Remand Initial Determination, finding that PPC did not show domestic industry for the ‘539 patent. In reaching this conclusion, the ALJ carefully considered whether each litigation activity asserted by PPC, and associated litigation expense, related to licensing and the ‘539 patent. Since PPC sought a general exclusion order with respect to any Section 337 violation of the ‘539 patent—instead of a limited exclusion order—PPC faced a higher burden to show domestic industry “by substantial, reliable, and probative evidence”.
On remand, PPC argued that six separate lawsuits were directly connected to its efforts to license the ‘539 patent and, as such, all expenses incurred from those actions could be considered in determining domestic industry. Te ALJ disagreed and found that it would be inappropriate to apportion 100 percent of PPC’s litigation expenses from these actions to PPC’s licensing efforts, because each was only tangentially related to the licensing of the ‘539 patent. Specifically, four of the actions did not even concern the ‘539 patent. As for the other two, PPC presented no evidence that it had sent cease and desist letters, or otherwise engaged in licensing efforts, prior to commencing those actions. Te ALJ, however, agreed to consider expenses relating to: PPC’s draſting of the settlement and licence agreements that resulted in termination of all six PPC litigations, and licences to multiple patents, including the ‘539
patent; and general licensing and settlement efforts with respect to only two of the six PPC litigations.
Based on PPC’s evidence concerning litigation costs, the ALJ found that the number of attorney work hours and amount of money spent on licensing and settlement efforts with respect to the ‘539 patent were 79.4 and $27,506.00, respectively. Te ALJ also considered 45.15 attorney work hours or almost $15,000, but gave these amounts less weight because they could not be 100 percent attributable to the specific matter in question.
Te ALJ considered the issue “a close one”, but found that PPC did not establish domestic industry with respect to the ‘539 patent in light of the fact that PPC: “received only one license for the ‘539 patent, of which only a portion actually relates to the patent at issue”; “has no established licensing program, let alone one that encompasses the ‘539 patent”; “has made no other efforts to send cease and desist letters with offers to license the ‘539 patent”; and “has not engaged in other licensing offers or talks with any persons or entities other than those involved with the single ‘539 license”. Tese facts, along with the reduced value of time and money spent in litigation activities concerning licensing of the ‘539 patent, were not “substantial” investments in the exploitation of the ‘539 patent to prove domestic industry. Consequently, there could be no Section 337 violation of the ‘539 patent. On June 7, 2010, PPC petitioned the ITC to review the ALJ’s Remand Initial Determination. On July 12, 2010, the ITC issued a decision not to review the ALJ’s Remand Initial Determination,terminating the matter.
The practical effects of, and questions raised by, Coaxial Cable
While Coaxial Cable has clearly expanded the types of activities available to meet the domestic industry requirement, the ITC’s decision raises new questions and considerations:
• Is engaging in US district court litigation now sufficient to meet the domestic industry requirement?
Not necessarily. Te ITC’s decision made clear that litigation activities alone would not meet the economic prong of the domestic requirement. Litigation activities must specifically relate to licensing of the particular patent(s) at issue, in accordance with the text of § 1337(a)(3)(C), and the litigation costs must be adequately documented.
• What effect does Coaxial Cable have on a prospective ITC complainant whose only activity is licensing, i.e. Non-Practicing Entities (NPEs)?
54 World Intellectual Property Review September/October 2010
Coaxial Cable will likely be helpful to those seeking access to the ITC and who are only engaged in licensing activities with respect to their patents, because patent litigation activities can now be used to prove domestic industry so long as such activities relate to licensing. But even before Coaxial Cable, it was possible to demonstrate domestic industry through licence activities alone. It is important to remember, however, that one must also show a nexus between the licensing activities relied on and the patent- in-suit (i.e. technical prong). A complainant must also receive some revenue, either as a lump-sum payment or royalties from its licensing activities. Te “investment” made in licensing the patent- in-suit must also be “substantial”.
Kenneth R. Adamo is a partner at Jones Day. He can be contacted at:
kradamo@jonesday.com
David M. Maiorana is a partner and chair of the ITC group within the IP practice at Jones Day. He can be contacted at:
dmaiorana@jonesday.com
Tis paper reflects only the present considerations and views of the authors, which should not be attributed to Jones Day.
Kenneth R. Adamo is a partner with Jones Day in the US. As a lead trial lawyer, he practises all facets of IP, including patent litigation before US district courts and Section 337 actions before the ITC.
David M. Maiorana is a partner with Jones Day in the US, and chair of the ITC group within Jones Day’s IP practice. He has significant experience in Section 337 actions before the ITC, representing both complainants and respondents.
www.worldipreview.com
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94 |
Page 95 |
Page 96 |
Page 97 |
Page 98 |
Page 99 |
Page 100 |
Page 101 |
Page 102 |
Page 103 |
Page 104 |
Page 105 |
Page 106 |
Page 107 |
Page 108 |
Page 109 |
Page 110 |
Page 111 |
Page 112