2025 Federal Circuit IP Appeals: Lashify, Inc. v. Int’l Trade Comm’n, 130 F.4th 948 (Fed. Cir. 2025) (Prost, Taranto, Chen)

A complainant who seeks relief at the International Trade Commission (ITC) for patent infringement by an imported good must meet the “domestic industry requirement” of 19 U.S.C. § 1337(a)(3). Courts have interpreted this provision to contain a “technical prong,” which requires that a domestic industry article practice the patent, and an “economic prong,” which can be satisfied by (among other things) a showing that there is — with respect to the article — a “significant employment of labor or capital.” Id. § 1337(a)(3)(B).

In this case, Lashify brought a complaint at the ITC against multiple companies for infringing its patents. Lashify argued that it imported and then sold goods that practiced its patents. After a hearing, the administrative law judge (ALJ) held that Lashify had not satisfied the economic prong. In analyzing Lashify’s domestic investments, the ALJ excluded Lashify’s U.S. expenses related to warehousing, quality control, and distribution of the articles because there were “no additional steps required to make the products saleable” upon arrival in the United States and because the quality control measures were “no more than what a normal importer would perform.” The ALJ also excluded expenses related to sales and marketing because Lashify had not established significant qualifying expenses in other areas.

On review of this issue, the ITC split, with the majority affirming the ALJ but noting that such expenses might apply if some additional activities were present. The dissenting commissioners would have held that there was no statutory basis to exclude these expenses in determining whether the economic prong was met.

On appeal, the Federal Circuit disagreed with the ITC majority. The court held that the language of the statute did not carve out “employment of labor or capital” related to sales, marketing, warehousing, quality control, or distribution. And the court held that the language did not require U.S. manufacturing or other U.S. activities for such expenses to be counted in the economic-prong analysis. The court similarly concluded that nothing in the legislative history suggested that these expenses would not count under the statute. Finally, the court held that its prior decision in Schaper Manufacturing Co. v. ITC, 717 F.2d 1368 (Fed. Cir. 1983), did not address this issue and analyzed an earlier version of the statute regardless.

The Federal Circuit accordingly remanded the case to the ITC to take into account Lashify’s domestic expenses related to sales, marketing, warehousing, quality control, or distribution in determining whether Lashify satisfied the domestic industry requirement.

This article appeared in the 2025 Federal Circuit IP Appeals: Summaries of Key 2025 Decisions report.