The Commission issued an Opinion finding a violation of Section 337 in Certain Air Mattress Systems, Components Thereof, and Methods of Using Same, Inv. No. 337-TA-971. Of note, the Commission reversed a part of ALJ Bullock’s initial determination (ID) which had found that Complainant did not satisfy the economic prong of the domestic industry requirement.
We have previously posted on the ID in this investigation, where the ALJ, in spite of finding two asserted patents (U.S. 5,904,172 and 7,389,554) valid and infringed, nevertheless found no violation of Section 337 because Complainants failed to properly allocate domestic expenses between the asserted patents. At the time, we questioned why there cannot be overlap in the allocation of domestic expenditures if some Domestic Industry (DI) products practiced both asserted patents. The Commission Opinion now confirms that indeed such double dipping of the allocation is allowed. The Commission found a violation of Section 337 based on the importation of products that infringe the ’172 patent, but found that the accused products do not infringe the ’554 patent. Accordingly, the Commission’s analysis of the economic prong was limited to the ’172 patent.
To meet the economic prong of the domestic industry requirement, the complainant must establish that at least one of the criteria listed in subparagraph (a)(3) is satisfied “with respect to the articles protected by the patent.” The ID found that it was unacceptable to allocate 100 percent of rental and employee expenses to the ’172 domestic industry products, and then a portion of those same expenses to the ’554 patent DI products. Commission Opinion at 36.
Complainants argued that their investments in plant and equipment, as well as in labor and capital, satisfy the economic prong of the domestic industry requirement with respect to both patents. Id. at 37. The ’172 patent, entitled “Valve Enclosure Assembly,” generally relates to an improved valve enclosure assembly. Id. at 2. The ’554 patent, entitled “Air Sleep System With Dual Elevating Air Posturizing Sleep Surfaces,” relates to an air sleep system with a pair of air posturizing sleep surfaces, which may be individually inclined and air adjusted. Id. Complainants explained that control units and split-top mattresses are a single product, and while 100 percent of their air mattress systems include an air controller system, the mattress construction may be different for various models of the air mattress system. Id. at 37.
Staff agreed asserting that the “articles” at issue in this investigation for both patents are “air mattress systems,” and argued that the ID erred in adopting the Respondents’ arguments regarding the “articles” at issue in this investigation and concluding that the “articles” are “control units with air pumps” (for the ’172 patent), and “split-top mattresses” (for the ’554 patent). Id. Staff argued that under Commission precedent, whether a particular product is an article of commerce, and therefore an article within the scope of 19 U.S.C. § 1337(a)(2), depends on the realities of the marketplace in which it exists. Id.
The Commission concluded that the articles of commerce that are protected by the ’172 patent are “air mattress systems,” because relevant claim language of the ’172 patent indicates that the claimed invention is for use in an “air inflatable mattress” and that the air control units represent a component of the air mattress system. Id. at 41-42. Commission noted that the record shows that all of the Complainants’ air mattress systems at issue in this investigation have air controllers. Id. at 42. Furthermore, the record shows that the patented articles at issue, i.e., the air controllers covered by the ’172 patent, are not themselves actual articles of commerce, but are physically incorporated as components in downstream articles of commerce, i.e., Complainants’ air mattress systems employing these air controllers. Id. at 43. Since the record shows that the “articles protected by the patent” are properly defined as “air mattress systems,” all of which contain control systems for air controllers covered by the ’172 patent, Complainants properly accounted for their investments with respect to the ’172 patent. Id. at 44.
Where complainant asserts multiple patents in a 337 investigation, it is possible for one asserted patent to cover an article of commerce that is a components of another article of commerce covered by another asserted patent. In this scenario, it may be possible for investments in a single product to count towards the domestic industry of each patent that the product practices. While complainant must allocate investments between patents, there can be overlap in those investments. As was the case in this investigation, the language of the patent claims will likely determine the scope of the domestic industry products.