Domestic Industry

Requirements

&

Non

-

Practicing

Entities

An essential element of a

Section 337 violation is the domestic industry requirement. The

complainant must show that ithas made sufficient investments in the United States

withrespect to articles protected by the

IP right concerned

.

The statute was amended in 1988 to

allow IP rights holdersthat do not manufacture products

(i.e.,non-practicing entitiesor NPEs)to obtain remedies at theUS

ITC. Congress made note in amending the statute that

inventors,universities,start-ups,and other entities that conduct

research and development, engineering,or licensing activities

are equally entitled to Section 337 relief as are manufacturing industries.

An issue receiving some attention is whether certain NPEs should be permitted to

For analytical purposes,

the Commission used the following categories:



Category 2 NPEs. Entities that do not manufacture products that practice the asserted patentsand whose business model primarily focuses on purchasing and asserting patents.



Category 1 NPEs.All other entities that do not manufacture products

that practice the asserted patents, including

inventors who may have done R&D or built prototypes

but do not make a product covered by the asserted patents and therefore rely on licensing to meet the domestic industry requirement; research institutions, such as universitiesand laboratories, that do not make products covered by the patents, and therefore relyon licensing to meet the domestic industry requirement;start-ups

that possess IP rights but do not yet manufacture products

that practice the patent; and manufacturers whose products do not practice the asserted patents

.

Some commentators have suggested that NPE filings, particularly by Category 2 NPEs,accountfor the increased caseload at the USITC because ofthe U.S. Supreme Court’s decision in eBay Inc. v. MercExchange, LLC

, which made injunctions more difficult to obtain in district courts

.

However, those commentators have not offered a convincing analysis of the data on investigation institutions to support this suggestion

.