ITC Finds No Violation of Section 337 by HP in Investigation No. 337-TA-841: Patents Not Infringed and TPL Failed to Establish a Licensing-Based Domestic Industry

On January 9, 2014, the U.S. International Trade Commission (ITC) issued the public version of its Opinion in the 841 investigation, expanding on its December 19, 2013 Notice terminating the investigation against Kenyon’s client, Hewlett-Packard Co. (HP), and other respondents remaining in the case, with a finding of no violation of Section 337 of the Tariff Act of 1930, as amended. The ITC affirmed the Administrative Law Judge’s (ALJ) determination that HP does not infringe any of the four patents asserted against it, and further found that complainant Technology Properties Limited (TPL) failed to prove that it meets the domestic industry requirement of Section 337.

Articles Protected by the Asserted Patent are Required Under 
§ 337(a)(3)(C), Even for Licensing-Based Domestic Industries

Notably, the Opinion sets forth the ITC’s precedent-setting position that “a complainant alleging the existence of a domestic industry under 19 U.S.C. § 1337(a)(3)(C) must show the existence of articles” protected by the intellectual property right at issue. Op. at 40 (emphasis added).1 The ITC agreed with HP’s and the other respondents’ assertion that the Federal Circuit expressly held in InterDigital and Microsoft2 that the statute requires articles protected by the asserted patent in order to satisfy the domestic industry requirement when a complainant relies on its licensing activities under subparagraph (C). Op. at 32, 34-35. Until now, ITC practice had been “not to require a complainant to demonstrate for purposes of a licensing-based domestic industry the existence of protected articles practicing the asserted patents.” Op. at 26-27.

As it has done in several recent investigations, the ITC explicitly requested briefing from the parties on the domestic industry issue. HP and the other respondents took the position that, not only are articles required, they must be the complainant’s or one of its licensees’ articles, i.e., they may not be the accused products in the investigation. Again, the ITC agreed, explaining that permitting a complainant to rely on accused products to satisfy the domestic industry requirement “would make the ‘articles’ requirement illusory because every investigation is founded upon a respondent’s ‘importation into the United States, … sale for importation, or … sale within the United States after importation,’ of ‘articles.’” Op. at 33. The ITC held that licensing-based industries should not be subject to a “special, more lenient” test and that “special treatment” for licensing would be inconsistent with InterDigital. Op. at 35-36. The ITC also reiterated its preference for production-driven licensing, but declined to go so far as to impose a production-driven requirement on licensing-based domestic industries. Op. at 37.

The ITC found that TPL failed to demonstrate the existence of a domestic industry because it failed to demonstrate the existence of articles practicing the patents.

While the respondents agreed that the Initial Determination (ID) erred in finding that TPL satisfied the economic prong of domestic industry because TPL failed to prove that its alleged licensing activities and investments met the requirement that there be a substantial investment in the exploitation of the asserted patents, and jointly requested review on that issue,3 HP also separately moved for review, arguing that the ID failed to follow the requirements in the plain language of Section 337, i.e., that articles protected by the patent are required for licensing-based domestic industries, the finding that TPL has a protectable domestic industry in licensing should be reversed. As stated above, the ITC concurred.

Procedural History of the Investigation and Other Findings

As additional background, TPL alleged HP and others violate section 337 based on infringement of U.S. Patent Nos. 6,976,623; 7,162,549; 7,295,443; 7,522,424; 6,438,638; and 7,719,847, which relate to memory card readers, and importation of alleged infringing computer and printer products into the U.S. TPL also alleged that its licensing investments with respect to the asserted patents satisfied the domestic industry requirement. On May 2, 2012, the ITC instituted an investigation based on those allegations.

ALJ Theodore R. Essex held a hearing at the ITC in January 2013 in which Kenyon attorney Rose Prey presented witnesses and, on August 2, 2013, issued an ID finding no infringement and no violation by HP. After the parties filed petitions for review of the ID, the ITC determined to review the ID in its entirety, including findings of no infringement, validity, and that a domestic industry exists.

In the Opinion, the ITC reversed the ID's finding of infringement as to the '623 patent, affirmed the finding of non-infringement of the '443, '424 and '847 patents, and reversed the finding that TPL satisfied the domestic industry requirement. (The '638 patent was not asserted against any remaining respondent and thus no longer at issue.)

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1 Commissioner Aranoff dissented from this portion of the Opinion. See Dissenting Views of Commissioner Shara L. Aranoff.

2 InterDigital Communications, LLC v. ITC, 707 F.3d 1295 (Jan. 10, 2013) and 690 F.3d 1318 (Aug. 1, 2012), and Microsoft Corporation v. ITC, 731 F.3d 1354 (Fed. Cir. 2013).

3 The ITC did not reach whether the economic prong would have been met if articles had been shown. Op. at 43 fn. 33.