By Eric Schweibenz
On December 19, 2011, ALJ Thomas B. Pender issued the public version of Order No. 24 (dated November 19, 2011) in Certain Vaginal Ring Birth Control Devices (Inv. No. 337-TA-768).  The order denied a motion for summary determination filed by Respondents Merck & Co., Inc., Schering Plough Corp., Organon USA, Inc., N.V. Organon, Wal-Mart Stores, Inc., CVS Pharmacy, Inc., and Walgreen Co. (“Respondents”) that Complainant Femina Pharma, Inc. (“Femina”) failed to meet the domestic industry requirement of Section 337.

The investigation is based on a complaint filed by Femina alleging violation of Section 337 in the importation into the U.S. and sale of certain vaginal ring birth control devices.  See our February 28, 2011 post for more details.

According to the Order, Respondents’ motion was based on the assertion that Femina has only two employees, earns little revenue, and makes no sales.  Respondents pointed out that Femina has only granted two licenses for the patent-in-suit, one royalty free academic license and one granted to a related entity after the complaint was filed.  According to Respondents, these activities do not have a nexus to the patent-in-suit, do not have a nexus to licensing activities, and do not represent a substantial industry, thus failing to qualify as domestic industry.  Respondents also argued that Femina is relying on the former patent owner’s activities to satisfy its domestic industry requirement, but that these activities are too attenuated in time.

Femina and the Commission Investigative Staff (“OUII”) opposed the motion.  Femina detailed its activities over a span of several years in relation to licensing the patent supported by evidentiary documents.  Femina pointed out that the results of the academic license have been extremely successful, with the licensor winning a very competitive grant.  According to the Order, Femina acknowledged that the related entity licensee “performs its efforts on a very small budget but vigorously asserts those efforts are meaningful.”  OUII argued that Femina’s responses were sufficient to create genuine issues of material fact in several areas, including the relevance, scope, and extent of Femina’s licensing activities, whether Femina’s alleged investment in licensing is substantial, and whether licensing discussions engaged in by Femina may be sufficient to satisfy the domestic industry requirement. 

ALJ Pender agreed with Femina and OUII and denied Respondents’ summary determination motion.  Specifically, the ALJ determined that the former patent owner’s activities can be considered in evaluating the domestic industry requirement.  In doing so, ALJ Pender stated that “domestic industry analysis is not confined to a rigid formula, and must be addressed on a case-by-case basis” and that Respondents’ position that domestic industry must be considered only from the time of filing the Complaint is an “overly broad” reading of the case law.  Additionally, ALJ Pender pointed out that while “Respondents characterize Femina’s activities as ‘largely un-corroborated’…it is, at least, equally true that Respondents have not rebutted any of Femina’s assertions of activity.”  ALJ Pender also determined that the activities of the academic licensee “arguably tend to prove there are ongoing efforts to establish a domestic industry, even if it could be argued none was in existence at the time of the complaint,” emphasizing that 19 U.S.C. § 1337(a)(2) states that domestic industry requirement is met if either a domestic industry exists or is in the process of being established.  Finally, ALJ Pender determined that Femina’s evidence shows a nexus between all the described activities and advancement of the patent-in-suit and that these efforts are substantial, noting “what is ‘substantial’ for a concern the size of Femina is different for a concern the size of Merck.  As Femina correctly asserts, the ITC is not a forum solely for larger corporations like Merck, CVS, and Walgreens.”