Using the Economic Theory of Investment to Prove whether a Domestic Industry Exists in a Section 337 Patent Infringement Investigation Before the U.S. International Trade Commission

J. Gregory Sidak

Introduction

As a prerequisite to establishing one’s right to an exclusion order from the U.S. International Trade Commission (ITC) under section 337 of the Tariff Act due to the infringement of a U.S. patent, a complainant must prove that “an industry in the United States, relating to the articles protected by the patent, . . . exists or is in the process of being established.” The language of section 337(a)(3) lacks specificity and precision. The economic prong of the domestic-industry analysis requires the complainant to address whether its investment in the product relating to the patent in suit in the United States is “significant” or “substantial.” The ambiguous standard enables complainants to submit unreliable evidence that lacks economic relevance and rigor to the ITC to consider during this inquiry.

For the domestic-industry requirement to be meaningful, the ITC needs to cure the ambiguity of section 337(a)(3) by assessing the significance or substantiality of the complainant’s investment with respect to an external, objective criterion. Such a criterion must reflect both cost causation and the sunk costs associated with the patent holder’s development and exploitation of the product relating to the patent in suit. Only those costs reflect the relevant increment of the patent holder’s risk taking.

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