ITC Grants Request for Early Determination: Can a Licensing Company with No Licensees Be a Domestic Industry?

Chemistry Lab

The ITC recently instituted a Section 337 investigation into Certain Taurine (2-Aminoethanesulfonic Acid), Methods of Production and Processes for Making the Same, and Products Containing the Same (Inv. 1146). Taurine is an amino acid used as a nutritional supplement and as an ingredient in energy drinks. The complainant is a company called Vitaworks run by an independent inventor who owns a U.S. patent for a method for efficiently producing large quantities of synthetic taurine.  The respondents are three Chinese pharmaceutical companies and 24 of their U.S. customers.  According to the complaint, those three producers (who together supply about 90% of the taurine in the United States) began using the patented production method despite failing to reach licensing agreements with Vitaworks.

In their pre-institution filings, respondents immediately pounced on the most obvious weakness for the patent owner in this investigation—Section 337's domestic industry requirement.  Respondents characterize the complainant as "the antithesis of a protectable domestic industry" because it "produces no taurine . . . has no concrete plans to produce taurine . . . has no known licensees for taurine . . . [and] has, at most, a speculative plan to piggy-back litigation into future licenses."  They argue that the complainants investments "are no different than the types of efforts the Commission would expect to see from a foreign U.S. patent holder with no connection to the United States. . . . Vitaworks may want to license its patents, but its mere intent to do so is insufficient to establish a domestic industry. If it were otherwise, any future patent owner could avail itself of the ITC merely by expressing a desire to execute licenses using the leverage generated by the Section 337 investigation itself."

The complainant notes, however, that the ITC has found the domestic industry requirement to be met in other cases brought by sole inventors based on activities similar to those alleged in this investigation.  

In the Notice of Investigation, the Commission granted the respondents’ request to conduct expedited proceedings, ordering the ALJ to hold a hearing and issue an early determination on the domestic industry question within 100 days.  

The early disposition program exists so the ITC can resolve threshold issues like domestic industry, standing, or importation before conducting a time-consuming and expensive trial on complex questions of patent infringement. However, most requests for early proceedings are denied, and when an early determination is made, it usually goes in favor of the complainant.

The early determination on domestic industry in the Taurine investigation should be issued by early June.

Image Credit: George Redgrave