The document discusses a Federal Circuit case, Motiva v. ITC, which makes it difficult for non-practicing entities (NPEs) to obtain exclusion orders from the ITC. The case involved Motiva seeking an exclusion order against Nintendo's Wii system. The ALJ and Federal Circuit found that Motiva's litigation activities were insufficient to satisfy the domestic industry requirement, as the litigation was aimed at financial gains rather than commercializing the patents. The Federal Circuit affirmed that a real licensing program must exist alongside litigation for NPEs to gain access to the ITC. Simply extracting a license in litigation settlement is not enough.

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LITIGATION ACTIVITIES MAY BE INSUFFICIENT TO OBTAIN AN
EXCLUSION ORDER: MOTIVA v. ITC
By Michael A. Shimokaji
Patent owners often initiate concurrent proceedings against infringers
in US district court and the International Trade Commission (ITC). The
district court provides an avenue for an award of damages. The ITC
provides an avenue for an order excluding the importation of infringing
goods into the US.
The Federal Circuit, in Motiva v ITC, continues to create a barrier to
jurisdiction before the ITC for those patent owners, such as Non-Practicing
Entities (NPEs), whose business is focused on licensing and litigation.
Motiva sought to initiate an ITC proceeding against Nintendo over its
Wii video game system. Nintendo argued that the domestic industry
requirement for jurisdiction was not satisfied.
Under 19 U.S.C. §1337, it is unlawful to import articles in the US that
infringe a US 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." The “industry” requirement can be satisfied by “(A)
significant investment in plant and equipment; (B) significant employment
of labor or capital; or (C) substantial investment in its exploitation, including
engineering, research and development, or licensing.”
The administrative law judge (ALJ) found that Motiva did not meet
the industry requirement. The ALJ found that the district court litigation
against Nintendo was the “only activity that could be related to
commercializing the technology covered by the [patents-in-suit] at the time
the complaint was filed.” “That activity . . . 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.” Further, “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” of the patents.

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On appeal to the Commission, the matter was sent back to the ALJ
because, 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.’”
Upon returning back, 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 “Motiva was not
‘concerned with taking swift actions to remove Nintendo from the market"
through litigation; it was only interested in extract[ing] a monetary award
either through damages or a financial settlement.’"
The ALJ additionally found that the “size of Motiva's investments 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.”
On review by the Federal Circuit, the court noted that the ALJ found
the district court litigation was “not directed at developing such a licensing
program.” The court further noted that 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.”
According to the Federal Circuit, “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.”

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Finally, the Federal Circuit stated “[t]here 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.’
What Motiva can mean to NPEs and other patent owners is that a real
and substantial licensing program must exist alongside a litigation
enforcement program to gain entrance to the ITC. Simply extracting a
license in settlement of litigation does not appear sufficient.

4. MICHAEL A. SHIMOKAJI
Mr. Shimokaji is a shareholder in the law firm of Shimokaji & Associates,
P.C., located in Irvine, California. The firm is engaged in intellectual property
litigation and the procurement of patent rights domestically and abroad.
For more than 25 years, Mr. Shimokaji has supported clients in industries as
diverse as aerospace, apparel, chemicals, computer software, household
products, medical devices, photo imaging, and semiconductors. His expertise
includes infringement litigation, patent and trademark portfolio development,
and intellectual property monetization. He has lectured for local and national
organizations in the US, as well as abroad, on various intellectual property
topics.
He has been a member of the Steering Committee for the California Minority
Counsel Program. He was a founding director of the Orange County
Japanese-American Lawyers Association and has served as an instructor in
the paralegal program at the University of California, Irvine. Mr. Shimokaji is a
past president of the Orange Coast Optimist Club which is part of an
international organization that supports programs for children. He served for
three years on the Executive Committee for the California State Bar
Intellectual Property Section, and another three year term on the California
State Bar Federal Courts Committee. Mr. Shimokaji has been a member of
the editorial board for The Journal of the Association of University Technology
Managers. For the Pro Bono Civil Rights Panels of the US District Courts in
California, Mr. Shimokaji is a volunteer attorney. Mr. Shimokaji has been
formally trained at the Straus Institute for Dispute Resolution and is a
mediator for the Los Angeles County Superior Courts.
He is the author of articles that include “Inducement and Contributory
Infringement Theories to Regulate Pre-Patent Issuance Activity” 37 IDEA 571
(1997); “Type of Use Determines Whether Use of Web Content Will Be
Infringing” L.A. Daily Journal, August 22, 2002; and “Cease and Desist Letters
May Contain Some Hidden Perils” L.A. Daily Journal, February 27, 2003;
“Contingency Defense in Patent Lawsuits” L.A. Daily Journal, August 1, 2006;
“Putting Designs to the Test” L.A. Daily Journal, October 30, 2008; “Mind Over
Matter” Los Angeles Lawyer, April 2009.
Following graduation from the University of California, Irvine with a bachelor’s
degree in chemistry, Mr. Shimokaji received his Juris Doctorate degree from
Southwestern University School of Law. In law school, Mr. Shimokaji was an
executive editor for the school’s law review. He has served as a judicial
extern for the Honorable Robert M. Takasugi, Judge, United States District
Court. Mr. Shimokaji is admitted to the California Bar and the United States
Patent and Trademark Office.