N.P.E.s Rejoice

Submitted by patentadmin on Fri, 12/04/2009 - 10:13

A patent owner whose patent is being infringed by the importation of infringing goods into this country may be able to sue the importer (scum sucker) in the International Trade Commission (I.T.C.). While the I.T.C. cannot award damages to a prevailing patent owner, it will (except in rare cases) issue an “exclusionary order” barring the further importation of infringing goods. Such an order is, in effect, quite similar to a permanent injunction.

Moreover, proceedings before the I.T.C. are fast (as such things are measured in the law biz), generally being concluded within one (1) year. Clearly, bringing an action in the I.T.C., rather than in a federal district court, can offer significant benefits to an aggrieved patent owner.

HOWEVER, in order to gain access to the I.T.C.’s hallowed halls, the patent owner must establish that an industry “relating to the articles protected by the patent … exists or is in the process of being established” in the United States. It has generally been held that this requirement effectively blocked N.P.E.s from utilizing the I.T.C. Well folks, no longer! In The Matter Of Certain Electronic Devices, Including Handheld Wireless Communications Devices (popularly known as the “Saxon Case”).

In order to satisfy the requirement, a “claimant” (the plaintiff) must meet both prongs of a “two prong test.” The “economic prong” requires the claimant to demonstrate that there has been significant investment in the technology covered by the patents. The “technical prong” requires that the claimant establish that it practices at least one claim of the asserted patent.

In a well-deserved victory for N.P.E.s everywhere (everywhere in the US, that is), the I.T.C. has held, based upon a long line of previously ignored or overlooked cases, that Saxon, a “patent-holding company” (a euphemism for N.P.E. – or “troll,” depending upon your viewpoint) had met the requirement through the activities of its licensee, Motorola Inc., which sells devices covered by Saxon’s patents. “The Commission has long held ‘that the domestic industry inquiry … is not limited to the activities of the patent owner, but also involves the activities [and investments] of any licensees … [i]ndeed, the economic prong of the domestic industry requirement can be established where a complainant bases its claim exclusively on the activities of a contractor/licensee’.”

The “respondents” (the defendants) argued that the claimant “must demonstrate that the engineering work done by the licensee relates specifically to the patented technology, and not simply to products that allegedly practice the Asserted Patents.” Not so, held the commission, “[t]he relevant inquiry is whether the [licensee] has made a substantial investment with respect to the articles protected by the patent, and not whether the investment relates to the specific features of the articles that contain the patented technology.”

Finally, the respondent argued that the complainant could not demonstrate substantial investment in licensing without having entered into any licenses prior to initiating the I.T.C. action. The commission rejected this argument as well.

THE LESSON TO BE LEARNED: An N.P.E. which has successfully licensed its patent may now utilize the I.T.C. for further enforcement efforts.

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