IP Law Daily, PATENT NEWS: High Court declines to address domestic industry requirement for ITC exclusion orders, (Jan 15, 2025)

By Cheryl Beise, J.D.

The Court denied a petition by Roku contending that the “overly broad” interpretation of the “domestic industry” requirement by the Federal Circuit and the ITC undermines patent rights and market fairness.

The U.S. Supreme Court on Monday denied a petition for certiorari filed by streaming service Roku asking the Court to overturn a Federal Circuit decision and an International Trade Commission (ITC) opinion barring Roku from importing certain streaming devices based on alleged infringement of patents held by Universal Electronics Inc. (UEI). The patent claims relate to devices for translating communication protocols used by TVs and streaming video devices. Roku contended that the Federal Circuit and ITC erred by adopting an overly broad interpretation of the “domestic industry” requirement in patent cases (Roku, Inc. v. International Trade Commission (Dkt. No. 24-180)).

The case stems from a patent dispute between Roku and Universal Electronics Inc. (UEI). UEI obtained an exclusion order from the ITC blocking certain Roku streaming devices based on alleged infringement of a UEI patent related to remote control technology.

Section 337 of the Tariff Act of 1930, 19 U.S.C. § 1337, authorizes the ITC to issue exclusion orders banning the importation of infringing products. However, complainants must first demonstrate the existence of a “domestic industry” related to products protected by the patent at issue.

To satisfy the domestic industry requirement, UEI relied on its U.S. investments in software called QuickSet. However, QuickSet itself does not practice all elements of the patent claims. Instead, UEI contended that certain Samsung TVs incorporating QuickSet were the relevant “articles protected by the patent.” The ITC determined that UEI’s U.S.-based QuickSet research and development spending satisfied the economic prong of the domestic industry requirement by proving a substantial investment in engineering and research and development to exploit the asserted patent. The Federal Circuit agreed.

In its petition for certiorari, Roku argued that the ITC and Federal Circuit erred in two key ways. First, they failed to allocate UEI’s QuickSet investments to patent-practicing products. The ITC counted all of UEI’s U.S.-based QuickSet research and development spending toward the domestic industry, without determining what portion actually related to the Samsung TVs found to practice the patent. Roku contended this contradicts the statutory language requiring investments be “with respect to the articles protected by the patent.” Second, according to Roku, the ITC and Federal Circuit erred by not evaluating whether investments were “substantial” relative to protected articles. The ITC found UEI’s investments “substantial” without comparing them to overall investments in the Samsung TVs.

Roku’s petition contended that relaxing the domestic industry standard threatens to undermine the carefully calibrated regime Congress created for patent disputes. According to the petition, this relaxation could allow more non-practicing entities to access the ITC’s powerful remedies. It also risks turning the ITC into just another patent litigation forum, potentially raising constitutional issues. Furthermore, the petition contended that this relaxed standard may incentivize more patent owners to pursue ITC cases to avoid the stricter injunction standard applied in federal courts.

The questions presented by Roku's petition were: (1) Did the ITC exceed its Section 337 authority by finding the entirety of complainant’s investments in unpatented, multi-purpose software to be “with respect to the articles protected by the patent?” and (2) Did the ITC exceed its Section 337 authority by failing to consider whether the complainant’s investments in unpatented, multi-purpose software were “substantial” “with respect to the articles protected by the patent?"

The Case is Dkt. No. 24-180.

Attorneys: Matthew Joseph Rizzolo (Ropes & Gray, LLP) for Roku, Inc. Kirk Timothy Bradley (Alston & Bird LLP) for Universal Electronics, Inc. Elizabeth B. Prelogar, U.S. Department of Justice, for International Trade Commission.

Companies: Roku, Inc.; Universal Electronics, Inc.

News: Patent FedCirNews