Today the Federal Circuit issued a per curiam order (with Judge Newman dissenting) denying a combined petition for a panel rehearing and a rehearing en banc in InterDigital Communications v. International Trade Commission (No. 2010-1093) (en banc). However, along with the order, the panel also issued a new opinion to fully address arguments made by intervenor Nokia (the respondent in the underlying ITC case, Inv. No. 337-TA-613). In the opinion (written by Judge Bryson), the Court reiterates its prior conclusion (InterDigital Commc’ns v. Int’l Trade Comm’n, 690 F.3d 1318 (Fed. Cir. 2012)) that non-practicing entities (NPEs) may satisfy the ITC’s domestic industry requirement through substantial investment in domestic licensing activities, without any need to prove that any licensed products are actually produced domestically.
The main issue in the petition for rehearing involves the ITC’s domestic industry requirement — the requirement that the patent holder or its licensee expends significant or substantial domestic investments in the exploitation of its patent in order to avail itself of the exclusionary relief offered by the ITC. InterDigital is a non-practicing licensing entity, which had extensively licensed the patents-at-issue (which were incorporated within various CDMA-based 3G cellular standards) 24 times over a period of 14 years prior to the complaint. Under a 1988 set of amendments to Section 337 (19 U.S.C. § 1337) — the statute through which the ITC is authorized to hear patent infringement actions — Congress allowed that the domestic industry may be satisfied if it the complainant can demonstrate that “with respect to the articles protected by the patent . . . substantial investment in its exploitation, including engineering, research and development, or licensing” have been made in the United States.
As it had in its prior opinion, the majority held that InterDigital’s licensing activities and investments alone were sufficient to satisfy the domestic industry requirement — even though no licensed products were apparently produced domestically. The Court rejected various Nokia arguments, including the assertion that licensing activities must be tethered to domestically-manufactured products.
Judge Newman disagreed with the majority and filed a nearly 30-page dissent from the denial of the petition for an en banc rehearing. In her dissent, Judge Newman focuses extensively on the legislative history of the 1988 amendment, taking the position that the intent of the amendment was to sanction only licensing activities that support domestic manufacture of licensed products — not to allow NPEs to satisfy domestic industry merely by licensing their patents to foreign manufacturers (even if those products might later be imported into the U.S.).
The takeaway from this case is that if NPEs can establish that they substantially invest in licensing activities that take place in the United States, seeking exclusionary relief at the ITC remains an option. Given the concerns expressed by those in industry, Congress and regulatory agencies over the effect of NPEs on the economy and misuse of standard-essential patents, it would not be surprising to see Nokia file a petition for certiorari with the U.S. Supreme Court. In fact, the final few pages of Judge Newman’s dissent include several quotes from testimony at a House Judiciary Subcommittee hearing on Section 337 patent infringement actions at the ITC that addressed with these very issues.