05
Nov
By John Presper and Alec Royka

On October 28, 2021, the Commission issued the public version of its opinion vacating the initial determination (“ID”) in Order No. 10 with respect to the economic prong of the domestic industry requirement in Certain In Vitro Fertilization Products, Components Thereof, and Products Containing the Same (Inv. No. 337-TA-1196).

By way of background, this investigation was based on a March 11, 2020 complaint filed by EMD Serono (“Complainant”) alleging violations of section 337 by way of unlawful importation and/or sale of certain in vitro fertilization products, components thereof, and products containing the same that infringe U.S. Trademark Registration Nos. 4,689,651; 1,772,761; 3,777,170; 3,389,332; 3,816,320; 1,972,079; 3,604,207; and 3,185,427. The Commission instituted the investigation on April 10, 2020, naming three respondents: FastIVF c/o Domains by Proxy LLC of Scottsdale, Arizona; Hermes Eczanesi of Turkey, and General Plastik Drug Stores of Turkey. On September 1, 2020, FastIVF and Hermes Eczanesi (collectively, “the Defaulting Respondents”) were found in default, and on October 13, 2020, Chief ALJ Charles E. Bullock granted Complainant’s motion to terminate the investigation as to General Plastik Drug Stores based on withdrawal of the complaint.  On April 28, 2021, the Chief ALJ issued the public version of Order No. 10 granting-in-part Complainant’s motion for summary determination of violation of section 337 by the Defaulting Respondents.  Chief ALJ Bullock granted the motion with respect to Complainant’s trademark infringement claim but denied the motion with respect to Complainant’s unfair competition claims.  See our May 5, 2021 post for more details regarding the ID.

According to the opinion, the Commission found that many of Complainant’s investments are those of a mere importer and do not qualify as expenses under section 337(a)(3)(C).  The Commission also found that the ID lacks a meaningful contextual analysis as to the substantiality of Complainant’s investments, as required under section 337(a)(3)(C).  The Commission proceeded by addressing the categories of Complainant’s expenditures credited in the ID, and the additional expenditures put forth in Complainant’s briefing.  Regarding “non-promotional education of third-party health care providers on the science of fertility drugs” and “medical grants to support the U.S. IVF products”, the Commission found that Complainant’s investments in education of health care providers has an obvious relationship to the domestic industry products and were properly credited in the ID, but found that the record before the Commission lacked any evidence as to how, if at all, Complainant’s grants to continuing medical education providers with respect to fertility issues relate to the U.S. IVF products in particular, and thus, were not properly credited.  With respect to FDA fees, the Commission declined to credit Complainant’s payment of New Drug Application maintenance fees, noting that bare fees paid to the FDA that any importer would be required to pay in order to sell its products in the United States are not properly considered towards a domestic industry under section 337(a)(3)(C).   Regarding quality assurance and third-party logistics expenses to ensure compliance with quality control, the Commission noted that it “has declined to credit general quality assurance and logistics activities because these are expenditures that would be expected of any commercial purchaser,” and ultimately found that none of Complainant’s activities are directly related to the exploitation of the asserted trademarks.  Finally, with respect to product support, sales, and promotion, the Commission declined to credit marketing, promotion and sales expenses, noting that the legislative history of section 337(a)(3)(C) expressly states that “marking and sales in the Unites States alone would not be sufficient to meet this test.”  The Commission noted that “[i]n this investigation, the asserted promotion, marketing, and sales expenses are not merely supplementing Complainant’s domestic industry investments, but instead represent a substantial portion of those investments.”  Accordingly, the Commission determined that genuine issues of material fact remain as to whether the economic prong of the domestic industry requirement was satisfied in this investigation, remanded the investigation for further proceedings, and extended the target date until December 16, 2021.
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