PROST, Circuit Judge.
Motiva, LLC ("Motiva") appeals the decision of the International Trade Commission ("Commission") that Nintendo Co., Ltd. and Nintendo of America, Inc. (collectively "Nintendo") did not violate § 337 of the Tariff Act of 1930 by importing, selling for importation, or selling certain video game systems and controllers. Because the Commission properly determined that a domestic industry does not exist nor is in the process of being established for U.S. Patent Nos. 7,292,151 ("'151 patent") and 7,492,268 ("'268 patent"), we affirm.
Motiva owns the '151 and '268 patents. The '151 patent issued in November 2007 and is titled "Human Movement Measurement System." It generally relates to a "system for ... testing and training a user to manipulate the position of ... transponders while being guided by interactive and sensory feedback ... for the purpose of functional movement assessment for exercise and physical rehabilitation." '151 patent abstract. The '268 patent issued in February 2009 and was a continuation of the application for the '151. It generally relates to the same subject matter as the '151 patent.
In 2008, Motiva filed suit against Nintendo in the United States District Court for the Eastern District of Texas accusing Nintendo's Wii video game system ("Wii") of infringing the '151 patent. The case was later transferred to the United States District Court for the Western District of Washington. In June 2010, that district court stayed the case pending completion of reexamination of the '151 patent by the U.S. Patent and Trademark Office.
Subsequent to the stay order, in September 2010, Motiva filed its complaint with the Commission that gave rise to this appeal.
Shortly after the Commission began its investigation, Nintendo moved for summary determination that the domestic industry requirement of Section 337 was not satisfied at the time Motiva filed its complaint with the Commission. Under Section 337, it is unlawful to import articles that infringe a valid and enforceable United States patent if "an industry in the United States, relating to the articles protected by the patent ... exists or is in the process of being established." 19 U.S.C. § 1337(a)(2). Section 337 details how that domestic industry requirement can be satisfied.
19 U.S.C. § 1337(a)(3).
Nintendo argued that Motiva's domestic activities failed to satisfy any of those requirements. According to Nintendo, there were no commercialized products incorporating Motiva's patented technology, and Motiva's activity aimed at developing a domestic industry for articles protected by the asserted patents consisted solely of the district court litigation against Nintendo. Nintendo asserted that litigation was not a significant or substantial investment that could satisfy the domestic industry requirement.
In February 2011, the administrative law judge ("ALJ") granted Nintendo's motion. The ALJ agreed that the patent litigation suit against Nintendo was Motiva's only activity that could be related to commercializing the technology covered by the '151 and '268 patents at the time the complaint was filed. That activity, as the ALJ saw it, was insufficient to satisfy the domestic industry requirement because it was not adequately directed toward licensing activities related to the practical application of the patents' claimed inventions. The ALJ also found that Motiva was not engaged in any licensing activities: Motiva never offered to license, never received a request to license, and never in fact licensed either the '151 patent or the '268 patent.
On appeal, the Commission vacated the ALJ's summary determination and remanded for additional fact finding regarding Motiva's activities related to developing a domestic industry for the technology covered by the patents. It found that a genuine issue of material fact existed regarding whether Motiva's litigation efforts were — as Motiva claimed — adequate "to facilitate and hasten the practical application of the inventions of the patents at issue." J.A. 7866. According to the Commission, litigation could be relevant in a licensing effort directed at "encouraging adoption and development of the [patented] technology by bringing a product to market" and protecting the ability of a patentee to derive revenues from patented technology by engaging "potential manufacturers, investors, and licensees who were not already involved in existing production." Id. The Commission directed the ALJ to further explore the relationship of the Wii to Motiva's licensing efforts, determine how production-ready Motiva's technology was, and examine how Motiva's litigation related to its commercialization of the patented technology.
In November 2011, after briefing and a five-day evidentiary hearing, the ALJ once again ruled that Motiva had not shown that the economic prong of the domestic industry requirement of Section 337 was satisfied.
According to Motiva, that litigation against Nintendo was "a necessary step to preserve and hasten [its] licensing opportunities, which would otherwise remain completely curtailed by the Wii's infringing presence on the market." J.A. 7830 (internal quotation marks omitted). As Motiva saw it, once Nintendo was forced to license its patents or leave the market for video-game-based motion tracking systems, potential partners would be willing to invest in and license Motiva's patented technology. It believed that the costs of litigation against Nintendo were, therefore, a substantial investment adequate to satisfy the economic prong of the domestic industry requirement. However, based on the testimony of witnesses and documentary evidence, the ALJ disagreed.
The ALJ found that the litigation costs related to the district court proceedings were not relevant to the domestic industry analysis because the litigation itself was not "in any way related to the exploitation of the patents."
The ALJ further found that testimony of investors and potential investors demonstrated that there was no interest in Motiva's technology prior to the release of the Wii: Motiva's last partner withdrew in 2004 and no others since that point ever showed enough interest to even examine Motiva's prototypes or patent applications. The only potential interest that the ALJ found to exist was directed at "excluding Nintendo from the market, not utilizing Motiva's patent technology" in a product. J.A. 7812.
Moreover, according to the ALJ, the Wii would not even compete with Motiva's potential products because they were in different markets. Motiva's product was an "expensive tool" designed for "exercise, athletic performance training, and physical therapy and research." J.A. 7817-19. The Wii, though, was a "relatively inexpensive video game system for home consumers" that had games for exercising but would not "compete with the expensive and sophisticated fitness product envisioned by Motiva." J.A. 7818-19.
Thus, the ALJ reasoned that the presence of the Wii — and the possibility of its removal from the market by successful litigation — did not and would not affect
On appeal, the Commission adopted the ALJ's decision as its final determination on the investigation.
Motiva filed a timely appeal of the Commission's decision.
Although the question of whether the domestic industry requirement is satisfied presents issues of both law and fact, this appeal presents only factual issues which we review for substantial evidence. See John Mezzalingua Assocs. v. Int'l Trade Comm'n, 660 F.3d 1322, 1327 (Fed.Cir. 2011).
The Commission found — and Motiva does not dispute — that Motiva's investments in developing a domestic industry for the '151 and '268 patents were limited after 2007 to the litigation against Nintendo. Indeed, Motiva argues on appeal that its investment in that litigation satisfies the economic prong of the domestic industry requirement of Section 337. It asserts that removing the Wii from the market through litigation was essential to developing a successful "product-driven licensing business" that would encourage partners to develop and adopt its patented technology, which was "ready for a manufacturer to pick it up and incorporate it into a successful product." Appellant's Br. 44, 47.
Motiva's investment in the litigation against Nintendo could indeed satisfy the economic prong of the domestic industry requirement if it was substantial and directed toward a licensing program that would encourage adoption and development of articles that incorporated Motiva's patented technology. See InterDigital Commc'ns, LLC v. Int'l Trade Comm'n,
However, the ALJ found that Motiva's litigation against Nintendo was not directed at developing such a licensing program. Relying on extensive documentary evidence and witness testimony, the ALJ concluded that the presence of the Wii in the market had no impact on Motiva's commercialization efforts or ability to encourage partners to invest in and adopt its patented technology. And Motiva was never close to launching a product incorporating the patented technology — nor did any partners show any interest in doing so, for years before or any time after the launch of the Wii. Motiva's only remaining prototype was a product far from completion, and a multitude of development and testing steps remained prior to finalizing a product for production. Moreover, the evidence demonstrated that Motiva's litigation was targeted at financial gains, not at encouraging adoption of Motiva's patented technology. The inventors looked forward to financial gains through Motiva's litigation, not hopes of stimulating investment or partnerships with manufacturers. Motiva also never asked for a preliminary injunction from the district court, and it waited three years before seeking relief from the Commission — even though the importation of the Wii was allegedly the only obstacle to adoption of its patented technology in the market.
Thus, on the record here, substantial evidence supports the Commission's finding that Motiva's litigation against Nintendo was not an investment in commercializing Motiva's patented technology that would develop a licensing program to encourage adoption and development of articles that incorporated Motiva's patented technology. See John Mezzalingua, 660 F.3d at 1328 (discussing how litigation expenses should not automatically be considered a substantial investment in licensing, even where litigation leads to a license). There is simply no reasonable likelihood that, after successful litigation against Nintendo, Motiva's patented technology would have been licensed by partners who would have incorporated it into "goods practicing the patents." See InterDigital, 707 F.3d at 1299.
The ALJ thoroughly reviewed the evidence in this case, and the Commission adopted the ALJ's conclusion that Motiva's litigation activities did not satisfy the economic prong of the domestic industry requirement of Section 337. Because that determination is supported by substantial evidence, we affirm the Commission's finding of no Section 337 violation.