The Federal Circuit’s recent decision in Lashify, Inc. v. International Trade Commission presents a critical development in the enforcement of intellectual property rights through the International Trade Commission (ITC). The ruling revisits the interpretation of the domestic-industry requirement under Section 337 of the Tariff Act of 1930.
ITC enforcement is a powerful tool with injunction-like remedies against infringing imports. This opinion may make ITC enforcement available to many businesses previously considered ineligible.
The Case at a Glance
Lashify, Inc. filed a complaint with the ITC, alleging imported eyelash extension products infringed its utility and design patents. The ITC denied relief, ruling that Lashify failed to meet the economic-prong requirement of the domestic-industry test. The ITC determined Lashify’s investments in sales, marketing, warehousing, and distribution were not qualifying expenditures.
On appeal, the Federal Circuit disagreed. In other words, the Federal Circuit held investments in sales, marketing, warehousing, and distribution may count toward the economic prong.
Key Takeaway for Intellectual Property (IP) Litigators
The key takeaway for this case is the Federal Circuit’s expanded interpretation of the economic prong or domestic industry requirement. In doing so, the Federal Circuit emphasized that a complainant may satisfy the domestic-industry requirement through significant investment in labor (e.g., “human activity”) or capital (e.g., “stock”), even when expenditures are directed toward sales, marketing, warehousing, and distribution.
This clarification provides greater flexibility for complainants whose manufacturing occurs outside the U.S. as other substantial domestic economic activity may be sufficient. This decision eliminates a significant hurdle (e.g., domestic manufacturing) previously imposed by the ITC and is expected to lead to a significant increase in the number of cases filed at the ITC, as businesses that primarily engage in sales, marketing, and distribution can now qualify for relief.
Remedies of the ITC
Exclusion orders preventing importation of infringing products are the primary remedy providing injunctive-like relief to a complainant. Although, monetary damages are not available through the ITC exclusion orders are a powerful tool to favorably resolving and settling a dispute.
Strategic Implications for Future ITC Complainants
Lashify opens the door to the ITC for many companies that previously were ineligible, particularly for businesses that rely on foreign manufacturing as long as they have sufficient other domestic investments. Lashify also serves as a reminder that the economic prong is not the only proof required as Lashify failed to demonstrate the technical prong to leverage Section 337.
Given the ITC’s powerful exclusionary remedies, this decision may make the ITC venue a more important tool for IP patent enforcement.
