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ITC Shuts the Door (Partly) to Non-Practicing Entities

By Adam H. Gordon and Brian H. Pandya of Wiley Rein LLP

The International Trade Commission’s (ITC) July 22, 2011 decision on what satisfies the ITC’s domestic industry requirements when a patent holder does not develop or manufacture products in the United States raises new hurdles for patent holding companies seeking to use the ITC rather than the district courts to enforce their patent portfolios.

The ITC’s decision In the Matter of Certain Multimedia Display and Navigation Devices and Systems, Components Thereof, and Products Containing Same (Investigation No. 337-TA-694) found that Pioneer, which accused Garmin of infringing several GPS navigation patents held by Pioneer’s patent licensing subsidiary, failed to establish a domestic industry for the patents because “Pioneer’s activities, on the whole, reflect a revenue-driven licensing model targeting existing production rather than industry-creating, production- driven licensing activity that Congress meant to encourage.” In other words, a business based on licensing patent portfolios is, by itself, insufficient to establish a domestic industry. Because Pioneer failed to establish a domestic industry, Garmin could not be liable for allegedly infringing Pioneer’s patents.

This investigation drew significant industry attention because more non-practicing entities, whose sole business is licensing and enforcing patents, are turning to the ITC to litigate their patents. Unlike many district courts that have grown skepti...

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