The Federal Circuit recently upheld the decision of the U.S. International Trade Commission that Motiva, LLC had failed to satisfy the domestic industry requirement via licensing and, therefore, had failed to show a violation of Section 337 existed in the case of Motiva, LLC v. U.S. International Trade Commission, Case No. 12-1252 (Fed. Cir., May 13, 2013) (Prost,  J.). 

In 2010, appellant Motiva filed a complaint at the International Trade Commission against Nintendo Co., Ltd. and its U.S. subsidiary, alleging that Nintendo’s Wii entertainment system infringed two Motiva patents.  After a five-day hearing, the administrative law judge (ALJ) determined that Motiva had failed to demonstrate that it had established or was in the process of establishing a domestic industry.  The ALJ found that at the time the complaint was filed, the only activity on which Motiva could rely was a district court case that had been filed against Nintendo in 2008, that this litigation was not relevant to the domestic industry analysis because it was not related to the exploitation of the patents, and that earlier manufacturing activities were also not relevant because they had ceased as of 2007, three years prior to filing the complaint with the International Trade Commission (ITC). 

On appeal, the panel affirmed.  The panel agreed with the ITC that the proper date for determining if a domestic industry exists is the date the complaint is filed.  Next the panel found that while Motiva’s district court litigation against Nintendo could satisfy the domestic industry requirement if it was “substantial and directed towards a licensing program that would encourage adoption and development of articles that incorporated Motiva’s patented technology,” Motiva had failed to meet this standard.  The panel found that the presence of the Wii in the market had no effect on Motiva’s commercialization efforts, that Motiva’s only prototype was not market-ready and that Motiva’s litigation was targeted at financial gain instead of adoption of Motiva’s technology.  Finally, the panel found that there was no evidence that its 2007 development activities contributed to a market that existed or was in the process of being created at the time the complaint was filed. 

Practice Note:  The panel ruling continues the Federal Circuit and Commission’s recent trend towards tightening the requirements for proof of domestic industry on the basis of licensing at the ITC.