786 F.3d 879
Fed. Cir.2015Background
- Standard Innovation (Canada) owns U.S. Patent No. 7,931,605 and sells kinesiotherapy devices through U.S. subsidiary Standard Innovation (US) Corp.; manufacturing is done in China from parts sourced domestically and abroad.
- Standard Innovation purchased four component types from U.S. suppliers (backbone material, rubber, microcontrollers, pigment); many other components sourced abroad; detailed values and allocations were not in the public record.
- Standard Innovation alleged LELO imported devices infringing the ’605 patent; an ITC ALJ found infringement and validity but concluded Standard Innovation failed the § 337 domestic industry requirement (prongs A, B, C) based on quantitative evidence.
- The ITC Commission reversed the ALJ on domestic industry, holding the U.S. purchases of "critical" components were qualitatively significant enough to satisfy the domestic industry requirement despite modest quantitative measures.
- LELO appealed to the Federal Circuit; the central legal question was whether qualitative evidence alone can satisfy the “significant investment” or “significant employment” requirements of 19 U.S.C. § 1337(a)(3)(A)–(B).
Issues
| Issue | Plaintiff's Argument (Standard Innovation) | Defendant's Argument (LELO/ALJ) | Held |
|---|---|---|---|
| Whether qualitative factors alone can satisfy § 337 prongs (A) and (B) | Qualitative importance of domestically sourced "critical" components suffices even if dollar amounts are modest | Quantitative measures of investment/employment are required; purchases were off‑the‑shelf retail transactions with no record linking amounts to domestic investment or labor | Reversed ITC: qualitative factors alone are insufficient; statute requires quantitative evidence of "significant" investment/employment |
| Whether off‑the‑shelf U.S. component purchases can satisfy prong (C) (substantial exploitation investment) | Component purchases were crucial to patented products and therefore relevant to exploitation investment | No evidence the components were developed for petitioner or that purchase prices reflect R&D/exploitation investments | ITC correctly found prong (C) not satisfied; petitioner failed to allocate or show relevant exploitation investments |
Key Cases Cited
- Carcieri v. Salazar, 555 U.S. 379 (statutory interpretation principle: start with plain meaning of the statute)
- Hughes Aircraft Co. v. Jacobsen, 525 U.S. 432 (statutory interpretation and deference to plain text)
- Finnigan Corp. v. Int’l Trade Comm’n, 180 F.3d 1354 (standard of review for ITC findings; law de novo, facts substantial evidence)
- Motorola Mobility, LLC v. Int’l Trade Comm’n, 737 F.3d 1345 (same standards of review for ITC determinations)