Expansion of ITC Domestic Industry Coupled with PTAB Immunity = Greater ITC Appeal
Since Ebay v. MercExchange in 2006, patentees have lamented the practical loss of injunctions in most patent litigation. In the 20 years since, neither the courts nor Congress have shown any interest in revisiting or recalibrating Ebay. Of course, patent infringement complainants before the International Trade Commission (ITC) have always been guaranteed a form of special injunctive relief (exclusion orders), but the ITC’s “domestic industry” jurisdiction has always been construed narrowly by the agency. Given the limited jurisdiction, despite the desirable form of relief, ITC proceedings have been far less common than traditional district court litigation.
Last week, however, the Federal Circuit rejected the ITC’s longstanding and narrow view of domestic industry, potentially opening its doors to a far greater percentage of patentees. Independently, the USPTO’s Patent Trial & Appeal Board (PTAB) also withdrew its Biden-era discretionary guidance last week, which prevented discretionary denials under 314(a) on IPR petitions co-pending with an ITC action. The upshot of these near simultaneous developments is that the ITC is now available to a greater number of patentees, at a time when filing at the ITC may also effectively guarantee immunity from PTAB review.
That is a one-two-punch that no plaintiff-friendly Texas court can rival.
More specifically, on March 5, 2025, the Federal Circuit rejected the ITC’s longstanding practice of excluding certain types of activities from qualifying as “domestic industry” activities under Section 337(a)(3)(B), finding the ITC’s approach to domestic industry “is counter to the statutory text.” Prior to the Lashify decision, the ITC had interpreted Section 337(a)(3)(B) to exclude certain types of activities, including:
- Sales and marketing absent the existence of “other qualifying expenditures,” such as R&D or manufacturing; and
- Activities of a “mere importer,” including quality control, warehousing, and distribution.
In Lashify, the Federal Circuit applied its “independent judgment” under Loper Bright and flatly rejected the ITC’s prior approach, eviscerating what has come to be known as the “mere importer” test for determining whether activities should count towards domestic industry. The Federal Circuit concluded that Section 337(a)(3)(B) does not exclude any “enterprise functions.”
The Federal Circuit remanded the decision back to the ITC, holding that the ITC “must count Lashify’s employment of labor and capital even when they are used in sales, marketing, warehousing, quality control, or distribution.”
ITC Jurisdiction is Expanded
The Lashify decision signals a significant shift in the ITC’s domestic industry analysis by greatly expanding the types of activities a complainant can rely on to satisfy the domestic industry requirement. This change in the legal standard will make the ITC a viable forum for entities regardless of whether they conduct any research or manufacturing in the U.S., potentially opening the door to entities whose only presence in the U.S. is sales, marketing, or warehousing, provided that they can establish that they meet the “significance” requirement.
PTAB Discretion Will Shut Down IPRs Co-pending an ITC Trial
At the same time, the PTAB has withdrawn its Biden-era 314(a) policy. While the agency has not stated specifically that it will deny AIA trial petitions co-pending prior to an ITC trials, that was effectively the previous practice. I would expect any PTAB judge straying from the 2020 polices to be reversed on Director Review (perhaps sua sponte given the alignment in Trump-era policies now, and prior to the now rescinded 2022 memo).
Of course the ITC will not aid those patentees suing a defendant that is not importing infringing products, but that scenario is increasingly uncommon outside of a handful of industries (e.g., software, pharma). Likewise, while many patentees ultimately seek damage awards that aren’t available from the ITC, the leverage of excluding products from the market is perhaps the most effective means to that end—especially when free from PTAB threat.
Going forward, given the added bonus of insulating a portfolio from PTAB review, and the seemingly lower bar to ITC jurisdiction/remedial orders, there will undoubtedly be more ITC filings, perhaps a lot more.