Patent Watch: Motiva, LLC. v. Int'l Trade Comm'n

by BakerHostetler
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The "Commission is fundamentally a trade forum, not an intellectual property forum" [and] litigation expenses directed at preventing, instead of encouraging manufacture of, articles incorporating patented technology does not satisfy the domestic industry requirement of Section 337.

On May 13, 2013, in Motiva, LLC. v. Int'l Trade Comm'n, the U.S. Court of Appeals for the Federal Circuit (Newman, Prost,* O'Malley) affirmed the International Trade Commission's decision that Nintendo did not violate 19 U.S.C. § 1337 by importing, selling for importation or selling certain video game systems and controllers because a domestic industry did not exist for U.S. Patents No. 7,292,151 and No. 7,492,268, which related to user testing and training systems involving the manipulation of positional transponders while being guided by interactive and sensory feedback for the purpose of functional movement assessment for exercise and physical rehabilitation. The Federal Circuit stated:

The Commission found -- and Motiva does not dispute -- that Motiva's investments in developing a domestic industry for the '151 and '268 patents were limited after 2007 to the litigation against Nintendo. Indeed, Motiva argues on appeal that its investment in that litigation satisfies the economic prong of the domestic industry requirement of Section 337. It asserts that removing the Wii from the market through litigation was essential to developing a successful "product-driven licensing business" that would encourage partners to develop and adopt its patented technology, which was "ready for a manufacturer to pick it up and incorporate it into a successful product."

Motiva's investment in the litigation against Nintendo could indeed satisfy the economic prong of the domestic industry requirement if it was substantial and directed toward a licensing program that would encourage adoption and development of articles that incorporated Motiva's patented technology. However, the ALJ found that Motiva's litigation against Nintendo was not directed at developing such a licensing program. Relying on extensive documentary evidence and witness testimony, the ALJ concluded that the presence of the Wii in the market had no impact on Motiva's commercialization efforts or ability to encourage partners to invest in and adopt its patented technology. And Motiva was never close to launching a product incorporating the patented technology -- nor did any partners show any interest in doing so, for years before or any time after the launch of the Wii. Motiva's only remaining prototype was a product far from completion, and a multitude of development and testing steps remained prior to finalizing a product for production. Moreover, the evidence demonstrated that Motiva's litigation was targeted at financial gains, not at encouraging adoption of Motiva's patented technology. The inventors looked forward to financial gains through Motiva's litigation, not hopes of stimulating investment or partnerships with manufacturers. Motiva also never asked for a preliminary injunction from the district court, and it waited three years before seeking relief from the Commission -- even though the importation of the Wii was allegedly the only obstacle to adoption of its patented technology in the market.

Thus, on the record here, substantial evidence supports the Commission's finding that Motiva's litigation against Nintendo was not an investment in commercializing Motiva's patented technology that would develop a licensing program to encourage adoption and development of articles that incorporated Motiva's patented technology. There is simply no reasonable likelihood that, after successful litigation against Nintendo, Motiva's patented technology would have been licensed by partners who would have incorporated it into "goods practicing the patents."

The ALJ thoroughly reviewed the evidence in this case, and the Commission adopted the ALJ's conclusion that Motiva's litigation activities did not satisfy the economic prong of the domestic industry requirement of Section 337. Because that determination is supported by substantial evidence, we affirm the Commission's finding of no Section 337 violation.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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