Our Patent Litigation team is a proud partner to the world’s most innovative life sciences and technology companies. Our experience successfully handling high-stakes patent matters, joined with Paul, Weiss's legendary litigation capabilities, enable us to provide comprehensive strategies to protect our clients’ most valuable innovations that extend well beyond traditional patent litigation.
Federal Circuit Expands Qualifying Investments for Domestic Industry at the International Trade Commission
March 7, 2025 Download PDF
In Lashify, Inc. v. Int’l Trade Comm’n, the United States Court of Appeals for the Federal Circuit held that labor and capital for sales, marketing, warehousing, quality control and distribution are cognizable activities for the economic prong of a complainant’s domestic industry in a section 337 investigation. This holding may expand access to the International Trade Commission (“ITC”) as a forum for relief from patent infringement, particularly for companies that manufacture products abroad.
Background
Lashify is an American company headquartered in the United States that distributes, markets and sells in the United States eyelash extensions that are manufactured abroad. In 2020, Lashify filed a section 337 complaint at the ITC against several respondents for patent infringement. The ITC determined to institute an investigation and assigned the case to an Administrative Law Judge (“ALJ”).
In 2021, the ALJ issued a final initial determination (“FID”) finding that the respondents infringed the asserted patents and that the asserted patents were valid but denied relief based on the domestic industry requirement. The FID found, inter alia, that Lashify’s investments in warehousing, distribution, quality control, sales and marketing were not cognizable for the economic prong of domestic industry in the context of the investigation.
In October 2022, the ITC affirmed the ALJ’s findings with respect to the economic prong in a split decision. Two commissioners dissented, believing that Lashify had established the economic prong under subsection 337(a)(3)(B).
Relevant Statutory Text
Section 337 investigations are governed by 19 U.S.C. § 1337. A precondition for relief is satisfaction of the so-called domestic-industry requirement set forth in § 1337(a)(2) and (3). An existing domestic industry can be established one of three ways:
(3) For purposes of paragraph (2), an industry in the United States shall be considered to exist if there is in the United States, with respect to the articles protected by the patent, copyright, trademark, mask work, or design concerned—
(A) significant investment in plant and equipment;
(B) significant employment of labor or capital; or
(C) substantial investment in its exploitation, including engineering, research and development, or licensing.
19 U.S.C. § 1337(a)(3).
The Federal Circuit’s Decision
The Federal Circuit vacated the Commission’s determination with respect to the economic prong of domestic industry and remanded for further proceedings, with instructions that “the Commission must count Lashify’s employment of labor and capital even when they are used in sales, marketing, warehousing, quality control, or distribution.”
The Federal Circuit explained that the Commission’s approach—excluding certain categories of labor and capital unless they are accompanied by manufacturing—is contrary to the plain language of the statute. The court found that there is no requirement in section 337(a)(3)(B) that goods be manufactured domestically or that certain categories of labor and capital be excluded.
The Commission argued that it did not categorically exclude these activities but that such activities alone cannot establish a domestic industry. The Commission relied primarily on its practice of interpreting the domestic industry requirement in this way as well as inferences drawn from the legislative history of amendments made to section 337 in 1988. The court found that there was no support for such an interpretation in the statute, and because the statutory text is clear, legislative history cannot support a different result. The court also rejected the Commission’s interpretation of the legislative history.
Takeaways
The key takeaway from Lashify is that section 337 investigations may be a viable option for more companies and more patents, especially for companies that manufacture their products abroad. To establish a domestic industry, complainants may now be able to rely on labor and capital investments in warehousing, distribution, quality control, sales and/or marketing alone—provided such investments are significant and relate to a protected article.
* * *