Soft-Edged Trampolines: Can Domestic Industry Be Proven by Practice of An Invalid Claim?

The Commission decision of May 1, 2015, in Certain Soft-Edged Trampolines and Components Thereof, Inv. No. 337-TA-908, held that complainants had satisfied the technical prong of the domestic industry requirement by proving that their products practiced a claim of the asserted patent, even though that claim was invalid.  This finding was not dispositive, however, because complainants were also found to have failed to satisfy the economic prong of the domestic industry standard with respect to the asserted patent.

Soft-Edged Trampolines involved U.S. Patent No. 6,319,174 (the “’174 Patent”), which relates to soft-edged trampolines that do not have exposed springs near the bouncing surface.  Complainant Springfree Trampoline, Inc. asserted that Vuly Trampolines Pty. Ltd. infringed Claims 1 and 13 of the ’174 Patent.  ALJ Pender found that Vuly infringed both claims, but found no violation because Springfree failed to establish a domestic industry.  Specifically, Springfree did not show sufficient investments for the economic prong of the analysis, did not practice Claim 1, and, while it did practice Claim 13, that claim was invalid.  ALJ Pender explained that Springfree could not establish the technical prong of the domestic industry requirement based on practice of an invalid claim (Claim 13) to recover for infringement of a separate, valid (but not practiced) claim (Claim 1).

The Commission affirmed ALJ Pender’s infringement and invalidity findings, but reversed his technical prong finding.  The Commission first found that Springfree’s products did practice the limitations of Claim 1.  The Commission also found that Springfree sufficiently proved the technical prong of the domestic industry requirement as to Claim 13, notwithstanding that Claim 13 was invalid.  The Commission explained:

 [T]he ALJ’s coupling of the technical prong of the domestic industry requirement with invalidity is contrary to Commission practice.  See Certain Silicon Microphone Packages and Products Containing the Same, Inv. No. 337-TA-695, USITC Pub. No. 4293, Notice at 3 (Jan. 21, 2011) ([…] “It is Commission practice not to couple an analysis of domestic industry to a validity analysis.”).

 […]  [T]he prevailing rule is that a complainant need only show that it practices one claim of an asserted patent (not necessarily an asserted claim) to meet the technical prong of the domestic industry requirement.

 […]  The ALJ therefore erred in finding that the invalidity of claim 13 is a basis for concluding that Springfree failed to meet the technical prong of the domestic industry requirement.

             The Commission affirmed ALJ Pender’s finding that Springfree failed to establish the economic prong of the domestic industry analysis, and therefore affirmed the finding of no violation.  The Commission’s statements regarding the technical prong were, thus, not dispositive.

The Commission’s opinion in Soft-Edged Trampolines regarding the technical prong appears to be at odds with its opinion in Certain Microprocessors, Components Thereof, and Products Containing Same, Inv. No. 337-TA-781(Mar. 4, 2013).  In that investigation, the Commission agreed with the ALJ’s determination that “it was appropriate to examine whether the domestic industry patent claims are valid where challenged.”  Microprocessors, Inv. No. 337-TA-781, Comm’n Op. at 20.

Not only do the opinions discussed above (as well as other Commission decisions cited in those opinions) point in different directions on the question of whether the invalidity of a claim affects the determinations regarding the existence of a domestic industry, but a footnote in the Commision’s opinion in Certain Integrated Circuit Chips, 337-TA-859, further complicates the issue. In Integrated Circuit Chips, the Commission  observed  that “the correct finding when the DI products practice only invalid claims is that there is no violation of section 337, not that there is no domestic industry.”  Integrated Circuit Chips, Inv. No. 337-TA-859, Comm’n Op. at 52 n. 27 (Aug. 22, 2014).  In support of this statement, the Commission cited Certain Audiovisual Components, 337-TA-837, where the Commission stated – in the domestic industry section of its opinion – that “[b]ecause invalid claims cannot protect articles, LSI has not proven that a valid patent claim protects the [alleged domestic industry] products,” and then concluded, “for this additioinal reason, LSI has not proven a violation of section 337 based on the ‘958 patent.”  Audiovisual Components, Inv. No. 337-TA-837 at 33 (Mar. 26, 2014).  Here again, the Commission’s decision regarding the invalidity of the asserted domestic industry patent claims was not dispositive of the domestic industry issue, as the Commission found that no domestic industry had been proven on other grounds.

Thus, while the Soft-Edged Trampolines opinion indicates that a complainant can satisfy the technical prong of the domestic industry requirement by showing that it practices an invalid claim, this is an area where further clarification from the Commission is likely.  Such clarification may, for example, elucidate the reasoning underlying the Commission’s conclusion in Integrated Circuit Chips that an invalid claim can satisfy the domestic industry requirement of Section 337, but cannot support a finding of violation where respondents have been shown to infringe other valid claims of an asserted patent.