Motiva, LLC v. International Trade Commission , 716 F.3d 596 ( 2013 )

United States Court of Appeals
for the Federal Circuit
______________________
MOTIVA, LLC,
Appellant,
v.
INTERNATIONAL TRADE COMMISSION,
Appellee,
AND
NINTENDO CO., LTD., AND
NINTENDO OF AMERICA, INC.,
Intervenors.
______________________
2012-1252
______________________
Appeal from the United States International Trade
Commission in Investigation No. 337-TA-743.
______________________
Decided: May 13, 2013
______________________
CHRISTOPHER D. BANYS, The Lanier Law Firm, of Palo
Alto, California, argued for appellant.
CLARK S. CHENEY, Attorney, Office of General Coun-
sel, United States International Trade Commission, of
Washington, DC, argued for appellee. With him on the
2 MOTIVA, LLC v. ITC
brief were DOMINIC BIANCHI, Acting General Counsel, and
WAYNE W. HERRINGTON, Assistant General Counsel. Of
counsel was JAMES M. LYONS.
MARK S. DAVIES, Orrick, Herrington & Sutcliffe LLP,
of Washington, DC, argued for intervenors. With him on
the brief was KATHERINE M. KOPP. Of counsel on the brief
were E. JOSHUA ROSENKRANZ, PETER A. BICKS and ALEX V.
CHACHKES, of New York, New York, and JOSEPH S.
PRESTA and ROBERT W. FARIS, Nixon & Vanderhye, P.C.,
of Arlington, Virginia.
______________________
Before NEWMAN, PROST, and O'MALLEY, Circuit Judges.
PROST, Circuit Judge.
Motiva, LLC (“Motiva”) appeals the decision of the In-
ternational Trade Commission (“Commission”) that
Nintendo Co., Ltd. and Nintendo of America, Inc. (collec-
tively “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 indus-
try 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.
I. BACKGROUND
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 manipu-
late 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
MOTIVA, LLC v. ITC 3
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 trans-
ferred 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. 1 Motiva asserted that the Wii in-
fringed the ’151 and ’268 patents and, therefore, that
Nintendo’s importation into, selling for importation into,
and selling of the Wii in the United States violated Sec-
tion 337 of the Tariff Act of 1930. Based on Motiva’s
complaint, the Commission initiated an investigation into
whether Nintendo had violated Section 337.
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, relat-
ing 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.
1 After the complaint was filed, the district court
granted a second stay pending resolution of the Commis-
sion’s investigation and all appeals.
4 MOTIVA, LLC v. ITC
[A]n industry in the United States shall be con-
sidered to exist if there is in the United States,
with respect to the articles protected by the pa-
tent, copyright, trademark, mask work, or design
concerned—
(A) significant investment in plant and equip-
ment;
(B) significant employment of labor or capital; or
(C) substantial investment in its exploitation, in-
cluding engineering, research and development, or
licensing.
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 incor-
porating 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 substan-
tial 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 applica-
tion 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
MOTIVA, LLC v. ITC 5
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 sum-
mary 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 Commis-
sion, 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 manu-
facturers, 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 produc-
tion-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 Moti-
va had not shown that the economic prong of the domestic
industry requirement of Section 337 was satisfied. 2 The
2 The ALJ also held that the Wii did not infringe ei-
ther of the asserted patents—a determination that Motiva
challenges on appeal. Because that decision is not bind-
ing precedent and we affirm on other grounds, we need
not—and decline to—reach its merits. Other decisions of
the ALJ, including those regarding inequitable conduct,
the technical prong of the industry requirement, and
various invalidity defenses are not raised on appeal.
6 MOTIVA, LLC v. ITC
ALJ concluded that Motiva likely made substantial in-
vestments from 2003 to 2007 to commercialize the patent-
ed technology but ended those activities by January 2007
before a final product was ever produced or ever “close to
being produced.” Motiva’s old development activities were
“far too remote to be considered for purposes of demon-
strating that a domestic industry exists.” J.A. 7826.
Thus, the ALJ found that Motiva had to rely on the dis-
trict court litigation against Nintendo as its only evidence
of an investment that would satisfy the domestic industry
requirement.
According to Motiva, that litigation against Nintendo
was “a necessary step to preserve and hasten [its] licens-
ing opportunities, which would otherwise remain com-
pletely 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 re-
quirement. 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 domes-
tic industry analysis because the litigation itself was not
“in any way related to the exploitation of the patents.” 3
J.A. 7831. The ALJ concluded that the Wii had no effect
on Motiva’s attempt to create a market for the patented
technology. Regardless of the Wii, Motiva’s patented
technology, according to the ALJ, was not even close to
3 The ALJ also noted that the ’268 patent was nev-
er asserted against Nintendo in district court.
MOTIVA, LLC v. ITC 7
being “production-ready” at any point. J.A. 7820. Moti-
va’s only remaining prototype of its patented technology
had “exposed circuit boards, wiring, and sensors.” J.A.
7819. And in its discovery responses, Motiva stated that,
before the patented technology could be commercialized,
contracts had to be obtained, the product had to go
through final product and packaging design, and the
product had to undergo beta, safety, and compliance
testing. J.A. 7820.
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 perfor-
mance 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 Moti-
va’s attempts to commercialize its patented technology.
The ALJ concluded that Motiva was not “concerned with
taking swift actions to remove Nintendo from the market”
through litigation; it was only interested in “extract[ing] a
8 MOTIVA, LLC v. ITC
monetary award either through damages or a financial
settlement.” J.A. 7823. The ALJ found support for this
conclusion from emails between the inventors of the ’151
patent discussing financial gains from litigation, Motiva’s
decision not to seek immediate injunctive relief from the
district court, and Motiva’s decision to delay filing a
complaint with the Commission for more than three years
after the allegedly devastating launch of the Wii. The
ALJ therefore found that Motiva failed to prove that an
industry for its patented technology existed or was in the
process of being established: there is “no reason to believe
that manufacturers of fitness and rehabilitation equip-
ment will suddenly become interested in the [patented]
technology because Nintendo [is] excluded from the mar-
ket.” 4 J.A. 7835.
On appeal, the Commission adopted the ALJ’s deci-
sion as its final determination on the investigation. 5 It
did not address the domestic industry holding in detail
but did comment that the reliance on the filing date of the
complaint to determine whether a domestic industry
4 The ALJ also found that the size of Motiva’s in-
vestments in litigation were not substantial. Because of a
contingency fee arrangement, Motiva had yet to pay “any
attorneys’ fees or expenses related to Motiva’s litigation
against Nintendo” and never had to pay those costs unless
Motiva obtained a recovery as a result of the litigation.
J.A. 7831. Because Motiva might never pay any fees for
the litigation, its investment was too “speculative” accord-
ing to the ALJ, and the value of the time Motiva employ-
ees spent on the litigation—approximately $17,000—was
insignificant by itself.
5 The Commission provided some minor clarifica-
tions and vacated one portion of the ALJ’s decision re-
garding invalidity. Those aspects of the Commission’s
decision are not relevant to our disposition of the case.
MOTIVA, LLC v. ITC 9
existed under Section 337 was not erroneous “in the
context of this investigation.” J.A. 7874.
Motiva filed a timely appeal of the Commission’s
decision.
II. DISCUSSION
Although the question of whether the domestic indus-
try requirement is satisfied presents issues of both law
and fact, this appeal presents only factual issues which
we review for substantial evidence. See John Mezzalin-
gua Assocs. v. Int’l Trade Comm’n, 660 F.3d 1322, 1327
(Fed. Cir. 2011).
The Commission found—and Motiva does not dis-
pute—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 busi-
ness” that would encourage partners to develop and adopt
its patented technology, which was “ready for a manufac-
turer to pick it up and incorporate it into a successful
product.” Appellant’s Br. 44, 47.
Motiva’s investment in the litigation against Ninten-
do could indeed satisfy the economic prong of the domestic
industry requirement if it was substantial and directed
toward a licensing program that would encourage adop-
tion and development of articles that incorporated Moti-
va’s patented technology. See InterDigital Commc’ns,
LLC v. Int’l Trade Comm’n, 707 F.3d 1295, 1299 (Fed. Cir.
2013) (clarifying that efforts directed toward licensing a
patent can satisfy the domestic industry requirement
where they would result in the production of “goods
practicing the patents”); cf. John Mezzalingua, 660 F.3d
10 MOTIVA, LLC v. ITC
at 1328-29 (discussing how the “Commission is fundamen-
tally a trade forum, not an intellectual property forum”
and holding that litigation expenses directed at prevent-
ing instead of encouraging manufacture of articles incor-
porating patented technology does not satisfy the
domestic industry requirement of Section 337).
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 incor-
porating 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 multi-
tude of development and testing steps remained prior to
finalizing a product for production. Moreover, the evi-
dence 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 manufactur-
ers. 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 sup-
ports the Commission’s finding that Motiva’s litigation
against Nintendo was not an investment in commercializ-
ing 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
MOTIVA, LLC v. ITC 11
litigation expenses should not automatically be considered
a substantial investment in licensing, even where litiga-
tion leads to a license). There is simply no reasonable
likelihood that, after successful litigation against Ninten-
do, Motiva’s patented technology would have been li-
censed by partners who would have incorporated it into
“goods practicing the patents.” See InterDigital, 707 F.3d
at 1299.
III. CONCLUSION
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. 6
6 We also affirm the Commission’s use of the date
of the filing of Motiva’s complaint in this case as the
relevant date at which to determine if the domestic indus-
try requirement of Section 337 was satisfied. See Bal-
ly/Midway Mfg. v. U.S. Int’l Trade Comm’n, 714 F.2d
117, 1120 (Fed. Cir. 1983) (holding that the date of filing
of a complaint with the Commission was the appropriate
date at which to analyze the existence of a domestic
industry). Although Motiva may have been fully engaged
in developing a domestic industry for its patented tech-
nology until early 2007, there is no evidence in the record
relating that development activity to Motiva’s efforts to
establish a domestic industry at the time Motiva chose to
file its complaint three years later. As the ALJ reasona-
bly found, Motiva’s old development activities did not
result in production-ready technology that would have
been incorporated into domestic goods practicing the
patents through Motiva’s licensing activities in which it
was engaged at the time it filed its complaint. Motiva
12 MOTIVA, LLC v. ITC
AFFIRMED
simply has not shown that its old development activities
contributed to a market that existed or was in the process
of being created at the time of its complaint.