Before the ITC can issue an exclusion order under Section 337, a patent owner must show that “an industry in the United States . . . exists or is in the process of being established.”  By trade law standards, this a very lax domestic industry requirement.  The purpose of this requirement is to ensure that Section 337 be utilized “on behalf of an industry in the United States” while precluding its use by “holders of U.S. intellectual property rights who have no contact with the United States other than owning such intellectual property rights.”

To achieve that goal, Section 337 requires complainants to demonstrate “significant investment” in plant, equipment, labor, and/or capital in the United States related to articles protected by the patent.  According to the Commission, these investments must be in “domestic production related activities—as opposed to those of a mere importer.”

But what if the domestic investments are limited to activities that are necessary to secure and maintain FDA approval of a drug product designed and manufactured abroad by a foreign company?

A newly filed Section 337 complaint—Pre-Filled Syringes for Intravitreal Injection and Components Thereof—involves a dispute between two pharmaceutical companies that make eye medicines used to treat macular degeneration.  The respondent (Regeneron) recently began selling its medicine in a pre-filled syringe, but the complainant (Switzerland-based Novartis) owns a U.S. patent for a syringe filled with eye medicine and wants to block imports of Regeneron’s product.

In its domestic industry argument, Novartis notes it is seeking FDA approval to sell its own medicine in a pre-filled syringe and also that a third party (Genentech, a subsidiary of Switzerland-based Hoffman-La Roche) already sells its eye medicine in a syringe with a license from Novartis.

Both Swiss pharmaceutical companies manufacture their medicines abroad and package them in syringes abroad to sell in multiple markets around the world.  Novartis nevertheless argues that a domestic industry exists based on the companies’ investments in “clinical studies, regulatory work, and various customer support activities.”  There is no indication in the complaint, however, that these investments exceed the minimum amount necessary to legally sell their pharmaceutical product in the U.S. market.

A similar argument is being put forward in In Vitro Fertilization Products, and Components Thereof, and Products Containing the Same (Inv. 1196).  That case, which was filed in March, also involves pre-filled syringes and a foreign complainant (Merck Serono) that manufactures its “domestic industry” product abroad for a global market.  The complainant’s U.S. investments include “administrative, commercial, supply chain, and regulatory activities” that are carried out in order to “comply with the stringent regulatory requirements for the sale of a drug in the United States.”

If the ITC accepts the arguments put forward in these cases—that compliance costs alone are “significant investments”—it may be impossible for a company that sells FDA-regulated pharmaceuticals in the U.S. market to be a “mere importer.”

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