The Federal Circuit Expands Scope of Domestic Industry Requirement in Lashify
In Lashify v. ITC, the Federal Circuit held that the economic prong of the domestic industry requirement, which is a precondition for obtaining International Trade Commission Section 337 relief, can be satisfied with investments in sales, marketing, warehousing, or related activities alone, even if those activities do not relate to or are not accompanied by manufacturing and development expenditures.
On March 5, 2025, in Lashify v. ITC, the Federal Circuit held that Section 337 does not exclude several categories of activities—specifically, sales, marketing, warehousing, or related activities—from qualifying, standing alone, to establish the economic prong of the domestic industry requirement.
In order to obtain relief before the ITC, a complainant must establish that it has a domestic industry in the products covered by the asserted patents. Under Section 337(a)(3), an industry is said to exist if there is "(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." Prior ITC precedent often excluded, for purposes of evaluating subparagraph (B)'s "significant employment of labor or capital," certain categories of investments like marketing, sales, and warehousing. Based on this precedent, the ITC found in this case that the complainant (Lashify) lacked a domestic industry for its asserted products.
On Lashify's appeal, the Federal Circuit rejected the ITC's view. In examining the statutory language and congressional history, the Federal Circuit held: "The provision covers significant use of 'labor' and 'capital' without any limitation on the use within an enterprise to which those items are put… In particular, there is no carveout of employment of labor or capital for sales, marketing, warehousing, quality control, or distribution. Nor is there a suggestion that such uses, to count, must be accompanied by significant employment for other functions, such as manufacturing."
The Federal Circuit's decision likely opens up the ITC to more complainants. Moreover, this decision follows on the heels of another recent decision, Wuhan Healthgen Biotechnology Corp v. ITC, where the Federal Circuit held that the domestic industry requirement could potentially be satisfied if a large proportion of a company's investments were in the United States, even if the total investment amount was "small."
Under this pair of decisions, more parties are likely to utilize the ITC as a venue for raising patent-infringement disputes, and respondents in such matters will want to focus on more holistic assessments of the complainant's domestic industry when tailoring their economic prong challenges.
