On June 10, 2009, Chief ALJ Paul J. Luckern issued the public version of his May 8, 2009 Initial Determination (Order No. 72) in Certain Short-Wavelength Light Emitting Diodes, Laser Diodes and Products Containing Same (Inv. No. 337-TA-640), granting Professor Gertrude Neumark Rothschild’s motion for summary determination that she satisfied the domestic industry requirement.  One day later, on June 11, the Commission issued a Notice that it would review the ID – see our June 11 post for details.

On April 13, Professor Rothschild moved for summary determination that her substantial investment in exploiting, licensing, and enforcing the asserted patent (U.S. Patent No. 5,252,499 (the ‘499 patent)) satisfied the domestic industry requirement.  Respondents Toshiba Corp. and Panasonic Corp. opposed (note that on May 19, 2009, ALJ Luckern issued an order granting Rothschild’s motion to consolidate Certain Light Emitting Diode Chips, Laser Diode Chips and Products Containing Same (Inv. No. 337-TA-674) with the 640 investigation – see our May 21 post).  The Commission Investigative Staff also opposed the motion.

As a threshold matter, ALJ Luckern stated that “[u]nder 337(a)(3)(C), a complainant may satisfy the domestic industry requirement solely by relying on licensing activities that relate to the patent(s) asserted in the investigation, even if the complainant (or a licensee of the complainant) does not manufacture patented products in the United States.”  He cited to initial determinations from Certain Digital Processors, Inv. No. 337-TA-559, Certain Semiconductor Chips with Minimized Chip Package Size, Inv. No. 337-TA-432, and Certain Digital Satellite Sys. Receivers, Inv. No. 337-TA-392.  ALJ Luckern also referred back to his earlier ruling in this investigation (Order No. 16) in which he stated that “[t]he domestic industry analysis under subsection (C), ‘subsumes within it the technical-prong aspect’ and, thus, only the economic prong needs to be proven.”  According to ALJ Luckern, “complainant need only demonstrate that (1) it has made a substantial investment in its licensing program and (2) there is a sufficient nexus between the patent at issue and the alleged domestic licensing industry.”

After noting that there is no bright-line test to determine what constitutes a “substantial investment,” ALJ Luckern proceeded to list factors “such as the number of companies that are licensed, licensing revenues, licensing costs, the number of employees involved in the licensing process, legal fees, and whether licensing activities are active and on-going.”

Although many of the facts supporting Professor Rothschild’s arguments regarding substantial investment were redacted from the public version of the ID, ALJ Luckern noted that Professor Rothschild was an individual (rather than a company with many employees) but that she has granted a license to the ‘499 patent to more than 15 companies.  ALJ Luckern also noted Professor Rothschild’s assertion as to how much money she had spent from 1998 to 2008 on her licensing and enforcement efforts with respect to the ‘499 patent, including litigation costs (although this figure was redacted from the public version of the Initial Determination).  ALJ Luckern found that Professor Rothschild had consummated four licenses prior to the investigation, and that five former respondents in this investigation had entered into licenses.

ALJ Luckern concluded that “complainant’s licenses, pattern of licensing, and licensing revenue in evidence demonstrate that there is no genuine issue of fact that exists in this investigation with respect to complainant’s substantial investment in licensing.”  Significantly, in granting Professor Rothschild’s motion, ALJ Luckern also concluded that “complainant is not required to separately prove the technical prong of domestic industry.”