By Eric Schweibenz
On January 10, 2013, the Federal Circuit issued its opinion denying a petition for panel rehearing and for rehearing en banc by Nokia Inc. and Nokia Corp. (collectively, “Nokia”) in InterDigital Commc’ns, LLC v. Int’l Trade Comm’n (2010-1093).

InterDigital Communications, LLC and InterDigital Technology Corporation (collectively, “InterDigital”) had appealed the International Trade Commission’s (the “Commission”) final determination in Certain 3G Mobile Handsets and Components Thereof (Inv. No. 337-TA-613) that Nokia had not violated Section 337 in connection with the importation and/or sale of certain 3G mobile handsets and components thereof.  On August 1, 2012, the Federal Circuit reversed the Commission’s findings that Nokia did not infringe InterDigital’s U.S. Patent Nos. 7,190,966 and 7,286,847, and remanded for further proceedings.  In particular, the Federal Circuit found that the ITC had erred in its construction of the claim terms “code” and “increased power level,” which in turn had led to erroneous determinations of non-infringement.  The Federal Circuit also rejected Nokia’s argument that the Commission’s decision could be upheld because InterDigital’s licensing activities were allegedly insufficient to satisfy the domestic industry requirement.  See our August 3, 2012 post for more details.

Nokia petitioned for rehearing on the issue of whether InterDigital’s licensing activities satisfied the domestic industry requirement of Section 337, arguing that the Commission and the Federal Circuit panel misconstrued the statutory language “relating to the articles protected by the patent” in Section 337(a)(2) and “with respect to the articles protected by the patent” in Section 337(a)(3).  Specifically, Nokia contended that this statutory language regarding domestic industry meant that there must be “articles protected by the patent,” that the only licensing activity that matters is activity “with respect to the articles protected by the patent,” that the licensing activity must be tethered to a tangible good, and that the technology covered by the patent must be put into practical use.  The Federal Circuit panel in its January 10, 2013 opinion ruled 2-1 against Nokia, explaining that the 1988 amendment to Section 337 which allowed patent holders to meet the domestic industry requirement by showing they made a “substantial investment in engineering, research and development, or licensing” allowed InterDigital’s domestic licensing activities -- including 24 revenue-producing licenses to its U.S. patents with major manufacturers such as Samsung, LG, Matsushita, Apple and RIM -- to give the company standing to file a complaint with the Commission.  Judge Bryson’s majority opinion stated:
Under the clear intent of Congress and the most natural reading of the 1988 amendment, Section 337 makes relief available to a party that has a substantial investment in exploitation of a patent through either engineering, research and development, or licensing.  It is not necessary that the party manufacture the product that is protected by the patent, and it is not necessary that any other domestic party manufacture the protected article.  As long as the patent covers the article that is the subject of the exclusion proceeding, and as long as the party seeking relief can show that it has a sufficiently substantial investment in the exploitation of the intellectual property to satisfy the domestic industry requirement of the statute, that party is entitled to seek relief under section 337.

In her dissent, Judge Newman agreed with Nokia that proof of a licensing industry under Section 337(a)(3)(C) requires proof that the licensed products are manufactured domestically, and opined that the majority opinion actually contradicted Congress’ intent in adopting the 1988 amendment.  Quoting the legislative record at length in her dissent, Judge Newman found that the purpose of the 1988 amendment was not to remove the requirement that “articles protected by the patent” be produced in the U.S., but to “enlarge the incentive for domestic production” by permitting patentees “such as universities and others that perform research or engineering” that do not themselves manufacture their patented products to have access to the Section 337 remedy:
The panel majority insists that Congress intended to make the ITC remedy of exclusion available to exclude foreign manufactures in the absence of domestic production, although the patentee in this case does not want to exclude the foreign product, but only to obtain a fee for its importation.  My colleagues hold that it is irrelevant that no domestic industry is producing, or planning to produce, the patented articles, directly or under license, stating that Congress ‘clearly’ intended to abandon the purpose of Section 337 to serve domestic production.  However, that is the purpose of Section 337.  The legislative record is clear that the 'licensing' amendment to Section 337 was enacted to encourage and support domestic production of patented products.