ITC Urges Federal Circuit to Revisit Lashify Ruling, Warns of Risks to U.S. Industry Protections

The ITC argues that this interpretation conflates the activities of a "patent owner" with those of a "mere importer," potentially allowing entities without substantial domestic operations to leverage Section 337 remedies. The Commission emphasizes that such a broad reading could open the door for non-practicing entities (NPEs) or companies with minimal U.S. presence to exploit the ITC's exclusionary powers, contrary to the statute's intent to protect bona fide domestic industries

In its petition, the ITC asserts that the Federal Circuit's decision overlooks the necessity of reading statutory language in context. The Commission maintains that the economic prong should not be satisfied solely by activities typical of importers, such as sales and marketing, without accompanying domestic manufacturing or R&D efforts. This perspective aligns with the ITC's longstanding practice of requiring a more substantial domestic nexus to qualify for relief under Section 337.

The Federal Circuit's decision in the Lashify case has significant implications for the scope of activities that can establish a domestic industry. By recognizing sales and marketing investments as sufficient, the ruling potentially lowers the threshold for companies to access the ITC's remedies, which include exclusion orders barring the importation of infringing goods. This shift could particularly benefit smaller companies or startups that rely on foreign manufacturing but have substantial U.S.-based commercial operations.

Critics of the decision, including the ITC, express concern that this broader interpretation may dilute the domestic industry requirement, allowing entities with limited U.S. presence to initiate Section 337 investigations. They argue that this could lead to an increase in cases brought by NPEs, potentially burdening the ITC and diverting resources from protecting genuine domestic industries.