Docket Update: Eking Out a Domestic Industry
Two recent decisions at the ITC favored complainants who just barely managed to satisfy the domestic industry test.
On October 31, the ITC released a public version of the Final Initial Determination in Road Milling Machines (Inv. 1067). That investigation was based on a complaint by Wirtgen, a German company recently purchased by John Deere, accusing Caterpillar of infringing various patents related to cold planers, a machine used in road construction. The Final ID found a violation for two of four asserted patents and both parties are petitioning for review by the Commission.
One issue that Caterpillar raises in its petition is the Final ID’s finding that Wirtgen satisfied the domestic industry test based entirely on post-importation activities. That is, although the complainant’s products are designed and manufactured abroad, it has a U.S.-based subsidiary that exists to augment the company’s sales and customer support efforts. While this sort of investment is often considered typical of a mere importer not entitled to Section 337 relief, the ALJ determined nevertheless that Wirtgen’s U.S. operations “are significant because they are performed over several years and because they drive purchasing decisions.”
The ITC also recently released a public version of the Commission Opinion in Non-Volatile Memory Devices (Inv. 1046). The Final ID in the investigation found no violation of Section 337 by Toshiba because the complainant, Macronix, had failed to show that a domestic industry was “in the process of being established.” While the question in most Section 337 investigations is whether a complainant has already made significant investment in domestic activities, the law also allows reliance on plans for future investment as long as the complainant is taking steps that are likely to lead to the existence of an industry in the future.
Macronix relied on that provision to argue it satisfied the test through substantial investment in research and development toward a prototype product. However, the ALJ ruled that the domestic industry requirement is not satisfied by “research that is not embodied in an article of commerce” and found that Macronix’s prototype was “at most a precursor of what may someday be a prototype or an actual article.”
On review, the Commission disagreed with the ALJ’s characterization of the law and overturned the finding of no violation. In its opinion, the Commission explained that Section 337 “does not require commercial production for a domestic industry in the process of being established. The term ‘article’ on its own is sufficiently capacious to embrace pre-commercial or non-commercial items.”
Photo Credit: Gene Wilburn