The recent Federal Circuit decision in Lashify, Inc. v. International Trade Commission has set a significant precedent by broadening the interpretation of the domestic industry requirement under Section 337 of the Tariff Act of 1930. This ruling is particularly impactful for inventors and companies that manufacture their products abroad but maintain substantial business operations within the United States.

Historically, to seek relief under Section 337 for unfair import practices, complainants were required to demonstrate the existence of a domestic industry related to the articles protected by the intellectual property in question. This requirement encompasses two prongs: the technical prong, which necessitates that the domestic industry relates to the patented articles, and the economic prong, which involves significant investment in plant and equipment, employment of labor or capital, or substantial investment in exploitation activities such as engineering, research and development, or licensing.

In the Lashify case, the company, which imports eyelash extension products manufactured abroad, alleged that other importers were infringing on its patents. The International Trade Commission (ITC) initially denied relief, interpreting the economic prong narrowly by excluding investments in sales, marketing, warehousing, quality control, and distribution activities from qualifying as evidence of a domestic industry. The ITC’s stance was that such activities did not constitute significant employment of labor or capital unless accompanied by domestic manufacturing or technical development efforts.

However, the Federal Circuit vacated the ITC’s decision, stating that the statutory text of Section 337 does not exclude any enterprise functions from consideration under the economic prong. The court emphasized that significant employment of labor or capital should be considered sufficient to satisfy the economic prong, regardless of whether these investments are directed toward sales, marketing, warehousing, quality control, or distribution. This interpretation aligns with the plain language of the statute, which does not impose a domestic manufacturing requirement or limit qualifying activities to technical development alone.

For those seeking protection under Section 337, this ruling expands the understanding of what qualifies as “substantial domestic activities.” It means that businesses that may not manufacture in the United States but engage in considerable operations domestically—such as hiring employees for sales, marketing, and distribution—can now argue that they meet the domestic industry requirement. Companies investing in nationwide warehousing and logistics to support the distribution of patented goods, employing quality control teams to oversee product integrity, or running extensive marketing campaigns to establish brand dominance in the U.S. market can use these activities as evidence of substantial economic investment. This ruling gives companies that heavily invest in domestic commercialization of their patented products the ability to seek protection against infringing imports through the ITC, even without a U.S.-based manufacturing presence.

This ruling is a pivotal development for inventors and companies that manufacture their products overseas but engage in substantial domestic activities related to their patented goods. It acknowledges that significant investments in non-manufacturing functions can establish a domestic industry, thereby granting such entities access to the ITC as a forum for enforcing their intellectual property rights against unfair import practices. Consequently, companies with robust U.S. operations in areas like sales, marketing, and distribution can now seek relief under Section 337, even in the absence of domestic manufacturing.

At The Plus IP Firm, we recognize the complexities that arise when protecting intellectual property, especially for businesses that manufacture abroad but maintain significant operations in the United States. Based in Florida, our firm is dedicated to assisting inventors and companies in navigating the intricacies of intellectual property law and leveraging legal avenues such as Section 337 to safeguard their innovations. Whether you need guidance on establishing a domestic industry under the revised interpretation or require representation in proceedings before the ITC, our team is equipped to provide expert legal counsel tailored to your unique circumstances.

If you are an inventor or business owner concerned about protecting your intellectual property rights in light of this new precedent, we invite you to reach out to The Plus IP Firm. Call Mark Terry at 786-443-7720 or email [email protected] to schedule a consultation. Let us help you navigate the evolving landscape of intellectual property law and ensure that your innovations receive the protection they deserve.