In a recent development that could potentially reshape the landscape for patent litigation involving imports, the U.S. Court of Appeals for the Federal Circuit has offered new interpretations regarding the domestic industry requirement under Section 337 of the Tariff Act. This comes as a result of two significant rulings in Lashify, Inc. v. ITC and Wuhan Healthgen Biotech Corp. v. ITC.
The Lashify decision constitutes a pivotal reinterpretation by emphasizing a broader scope for what constitutes a “domestic industry.” Previously, sales and marketing activities were insufficient alone to meet the threshold requirements set by the ITC. However, the Federal Circuit has now established that expenditures in areas like sales, marketing, warehousing, quality control, and distribution should be counted in the domestic industry analysis. This shift aligns with the U.S. Supreme Court’s decision in Loper Bright v. Raimondo, which empowered the Federal Circuit’s decision to reject the ITC’s narrower interpretation.
Similarly, the ruling in Wuhan Healthgen supports the notion that smaller segments within a business can substantiate the domestic industry requirement. This affirmation was crucial for Ventria Bioscience, which met the economic prong without having to demonstrate large-scale investments. The court’s decision suggests that the judicial body is willing to take a more inclusive approach, allowing firms with minimal domestic activities relating to patented articles some footing to seek relief.
These decisions mark a departure from past interpretations, such as those seen in the 2015 precedent of Lelo Inc v. ITC, which necessitated a “quantitative analysis” of investments. The Federal Circuit’s current stance proposes a more holistic review of investments and expenditures, suggesting that patent holders may now have broader pathways to advocate for their interests in the face of unlawful imports.
While these rulings could ease the process for complainants to meet the ITC’s requirements, they also leave room for the Commission to apply qualitative judgments. As such, the discretion remains with the ITC to determine the significance of various business activities, which could affect a domestic industry’s standing. Companies with predominantly sales-oriented domestic spending or those focused on a smaller market segment may find renewed prospects under these interpretations. However, the ultimate impact on the ITC’s enforcement of Section 337 remains to be seen, as both plaintiffs and respondents continue to navigate the implications of these legal updates.