• ALJ Rogers Grants Motion for Summary Determination of No Domestic Industry in Certain Video Game Systems and Controllers (Inv. No. 337-TA-743)
  • March 7, 2011 | Authors: Alexander E. Gasser; Eric W. Schweibenz
  • Law Firm: Oblon, Spivak, McClelland, Maier & Neustadt, L.L.P. - Alexandria Office
  • On February 24, 2011, ALJ Robert K. Rogers, Jr. issued the public version of Order No. 12 (dated February 11, 2011) in Certain Video Game Systems and Controllers (Inv. No. 337-TA-743) granting Respondents Nintendo Co., Ltd. and Nintendo of America Inc.’s (collectively “Nintendo”) motion for summary determination that the economic prong of the domestic industry requirement is not satisfied and terminating the investigation.

    According to the Order, Nintendo argued that Complainant Motiva, LLC (“Motiva”) cannot satisfy the economic prong of the domestic industry requirement because (1) the activities of the inventors of the asserted patents should not be attributable to Motiva because their activities occurred prior to the formation of Motiva, and the alleged marketing and development activities are not “substantial” at any rate; (2) Motiva’s research and development, marketing activities, and obtaining a freedom-to-operate opinion are irrelevant because they occurred before the asserted patents issued and several years prior to the filing of the complaint; (3) Motiva has neither invested in licensing activities or anything else relevant to the economic prong of the domestic industry requirement; and (4) Commission precedent establishes that Motiva’s alleged prosecution, district court litigation, and opinion-of-counsel cannot establish a domestic industry.

    According to the Order, Motiva relied upon 19 U.S.C. §1337(a)(3)(C) to assert domestic industry, and therefore countered that it made “substantial investment in [the patents’] exploitation, including engineering, research and development, or licensing.”  At a minimum, Motiva alleged there are issues of disputed fact regarding whether its investments show the existence of a domestic industry or one in the process of being established.  Motiva further argued that Commission precedent permitted finding a domestic industry based on its activities prior to the filing of its complaint.  The Commission Investigative Staff, while raising questions whether Motiva could ultimately demonstrate a domestic industry, agreed there were disputed issues of fact regarding the existence of a domestic industry and whether one is in the process of being established.

    As an initial matter, ALJ Rogers determined it is proper to include the activities of the inventors, as predecessors in interest, when considering Motiva’s claim of a domestic industry.  ALJ Rogers also determined that 19 U.S.C. §1337(a)(2) explicitly requires that a domestic industry must exist at the time of the filing of the complaint, and that the only activities Motiva asserts  being contemporaneous with the filing of its complaint were patent litigation and the prosecution of “related patent applications.”  According to the Order, ALJ Rogers rejected Motiva’s argument that Commission precedent generally considers Complainant’s activities prior to the complaint’s filing.  Instead, ALJ Rogers distinguished that precedent as involving significant investment just a few months prior to the filing of the complaint, with continuing operations and offers for sale from existing inventory after the filing of the complaint, while to the contrary, here Motiva admitted that (1) all research and development, marketing activities, and obtaining a freedom-to-operate opinion occurred prior to the issuance of the two patents at suit and more than three years prior to the filing of the complaint, and (2) Motiva has never produced a product for market, never maintained an inventory, or conducted licensing activities of any kind for the patents.  ALJ Rogers specifically determined that while some legal precedent held that research and development prior to the issuance of a patent could be considered in a domestic industry analysis, those instances involved cases where such research and development continued after the patents issued, which is not the case here, and therefore, Motiva’s research and development activities would not be considered because they completely ended prior to the issuance of either patent in suit.

    ALJ Rogers declined to consider Motiva’s patent prosecution activities in a domestic industry analysis, because he determined that patent prosecution for the asserted patents constitute “steps toward mere ownership” of the patents and would otherwise “render the domestic industry requirement a nullity because every patent requires time and fees to prosecute.”  ALJ Rogers further determined that Motiva’s alleged investments relating to patent prosecution were not contemporaneous with the filing of the complaint in this investigation, since Motiva did not incur expenses with respect to the patents in suit for at least nineteen months prior to the filing of the complaint, and ALJ Rogers also determined that the prosecution of related applications “is in no way relevant to the domestic industry analysis of the patents in suit.”

    ALJ Rogers also rejected Motiva’s argument that its patent infringement litigation efforts and expenses against Nintendo should be considered for purposes of domestic industry.  ALJ Rogers determined that Motiva did not make the required showing that the litigation was related to engineering, research, or licensing, because it did not allege that the litigation related to engineering or research, and “Motiva has never engaged in any sort of licensing activities.”

    Finally, ALJ Rogers determined that Motiva had not asserted facts sufficient to show that a domestic industry “is in the process of being established,” because subsequent to assigning the asserted patents to Motiva, there were no offers to license or requests to license either of the asserted patents, and Motiva ceased investing in research and development and marketing in 2007, which does not “indicate a significant likelihood that the industry requirement will be satisfied in the future.”  ALJ Rogers specifically determined that it is insufficient for Motiva to assert that once it wins its patent infringement suit against Nintendo, it will reenter the market.

    Based on the above, ALJ Rogers determined there were no genuine issues of material fact, granted Nintendo’s motion for summary determination that no domestic industry exists or is in the process of being established, and ordered the termination of this Investigation.