Latest Federal Court Cases – May 2024 #2 | Schwabe, Williamson & Wyatt PC
Zircon Corp. v. International Trade Commission, Appeal No. 2022-1649 (Fed. Cir. May 8, 2024)
In its only precedential patent opinion this week, the Federal Circuit made clear that in exclusion proceedings under 19 U.S.C. § 1337 involving multiple patents, the “domestic industry” requirement of Section 337(a)(2) requires the complainant to show significant or substantial domestic investments with respect to articles protected by each asserted patent. Because appellant Zircon in this case had submitted evidence only of its own aggregate investments in different products covered by various combinations of the patents at issue, the Federal Circuit affirmed the International Trade Commission’s finding that it had failed to establish the existence of a “domestic industry” for any of those patents, and had therefore failed to show any Section 337 violation.
Before the ITC, Zircon had asserted that certain imported electronic stud finders infringed its U.S. Patent Nos. 6,989,662, 8,604,771, and 9,475,185. To obtain exclusionary relief, Zircon was required to show that “an industry in the United States, relating to the articles protected by the patent … exists or is in the process of being established.” 19 U.S.C. § 1337(a)(2). That requirement includes an “economic prong” that is generally satisfied by showing substantial and significant domestic investments in manufacturing, employment, R&D, or certain other activities relating to the patented products. In arguing the Commission’s finding that Zircon had failed to satisfy this requirement was in error, Zircon relied on ITC precedent which recognizes the existence of a domestic industry for products protected by multiple asserted patents.
In this case, however, Zircon’s products were not all protected by all of the asserted patents. Although the ’662 patent is directed to methods of recalibrating a stud finder through comparative measuring, the ’771 and ’185 patents are directed to specific configurations of hand tool grips. Zircon submitted aggregate investment data for 53 of its products, of which 14 practiced all three patents; 21 practiced only the ’771 and ’185 patents; 16 practiced only the ’662 patent; and two practiced the ’771 patent alone. Based on these facts, the ITC had held that Zircon did “not provide the Commission with adequate information to discern retrospectively whether Zircon could have established a domestic industry for any of its asserted patents under the proper legal framework” (emphasis added).
The Federal Circuit agreed, distinguishing prior cases in which a domestic industry was found based on different products practicing the same patent, or products that each practiced a group of patents. Here, for example, while Zircon may (or may not) have been able to show the existence of a domestic industry based only on its 14 products that practiced all three asserted patents, Zircon had provided no way for the Commission to assess the significance of its domestic investments in that or any other specific product group, because it had submitted its investment data in the aggregate for all 53 products. The Court also rejected Zircon’s argument that an apportionment had been before the Commission in the form of estimates in a declaration from its President, finding no error in the exclusion of that evidence as unreliable (and which Zircon had in any event not appealed). Accordingly, the Court affirmed the ITC’s holding that Zircon had failed to show a violation of Section 337.
The opinion can be found here.
By Jason A. Wrubleski
