# 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.,
Intervenor s.

______________________

2012

- 1252

______________________
Appeal from the United State s International Trade Commission in Investigation No. 337

- TA

- 743

.

______________________

Decided: May 13, 2013

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C HRISTOPHER D. B ANYS , The Lanier Law Firm, of Palo Alto , California, argued for appellant.

C LARK S. C HENEY , Attorney, Office of General Cou nsel, United States International Trade Commission, of Washington, DC

, argued for appellee. With him on theMOTIVA
, LLC v. ITC 2

brief were D OMINIC B IANCHI , Acting General Counsel, and
W AYNE W. H ERRINGTON , Assistant General Counsel. Of
counsel was J AMES M. L YONS

.

M ARK S. D AVIES , Orrick, Herrington & Sutcliffe LLP, of Washington, DC, argued for intervenors. With him on the brief was K ATHERINE M. K OPP . Of counsel on the brief
were E. J OSHUA R OSENKRANZ
, P ETER A. B ICKS and A LEX V. C HACHKES , of New York, New York, and J OSEPH S.
P RESTA and R OBERT W. F ARIS , Nixon & Vanderhye, P.C., of Arlington, Virginia.

______________________

Before N EWMAN
, P ROST
, and O'M ALLEY
, Circuit Judges.

P ROST
, Circuit Judge.

Motiva, LLC (“Motiva”) appeals the decision of the I nt ernational Trade Commission ( “Commission”) that Nintendo Co., Ltd. and Nintendo of America, Inc. (colle ctively “Nintendo”) did not violate § 337 of the Tariff Act of 1930 by import ing, selling for importation, or selling certain video game systems and controllers. Because the Commission properly determined that a domestic indu stry does not exist nor is in the process of being established for U.S. Patent Nos. 7,292,151 (“’151 p at ent ”) and 7,492,268 (“’268 p atent”), we affirm.

I. B ACKGROUND
Motiva owns the ’151 and ’268 patents. The ’ 151

p atent issued in November 2007 and is titled “Human Movement Measurement System.” It generally relates to a “system for . . . testing and traini ng a user to manip ulate 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 p atent a bstract . The ’ 268 p atent issued in February 2009 and was a continuat ion of theMOTIVA
, LLC v. ITC 3
application for the ’ 151. It generally relates to the same subjec t matter as the ’151 p atent.
In 2008, Motiva filed suit against Nintendo in the United States District Court for the Eastern District of Texas accusing Ninte ndo’s Wii video game system (“Wii”) of infringing the ’ 151 p atent. The case was later tran sferred to the United States District Court for the Wester n District of Washington . In June 2010, that district court stayed the case pending completion of reexamination of the ’ 151 p atent 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 i nfrin ged the ’151 and ’268 p atents and , therefore, that Nintendo’s importation into, selling for importation into, and selling of the Wii in the United States violated Se ction 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 fi led 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, rela ting to the articles protected by the patent . . . exists or i s 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 Commi ssion’s investigation and all appeals.MOTIVA
, LLC v. ITC 4
[A]n industry in the United States shall be co nsidered to exist if there is in the United States, with respect t o the articles protected by the p atent, copyright, trademark, mask work, or design concerned
— (A) significant investment in plant and equi pment;
(B) significant employment of labor or capital; or

(C) substantial investment in its exploitation, i ncluding en gineering, 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, t here were no commercialized products inco rporating 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

assert ed that litigation was n ot a significant or substa ntial 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 p atents at the time the complaint was filed. That activity, as the ALJ saw it, was insufficient to satisfy the domestic industry requirement because it wa s not adequately directed toward licensing activities related to the practical applic ation of the patents’ claimed inventions. T he ALJ also found that Motiva was not engaged in any licensing activities: Motiva never offered to license, never receivedMOTIVA
, LLC v. ITC 5

a re quest to license, and never in fact licensed either the

’ 151 p atent or th e ’268 p atent.
On appeal

, the Commission vacated the ALJ’s su mmary 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 in ventions of the patents at issue .” J. A

. 7866 . According to the Commi ssion, 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 t he ability of a patentee to derive revenues from patented technology by engaging “potential man ufacturers, investors, and licensees who were not already inv olved in existing production.” Id. The Commission directed the ALJ to further explore the relation ship of the Wii to Motiva’s licensing efforts , determine how produ ction- 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 evide ntiary hearing, the ALJ once again ruled that Mot iva 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 di d not infringe e ither of the asserted patents

— a determination that Motiva challenges on appeal

. Because that decision is not bin ding 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.MOTIVA
, LLC v. ITC 6

ALJ concluded that Motiva likely made substantial i nvestments from 2003 to 2007 to commercia lize the paten ted technology but ended those activities by January 2007 before a final product was ever produced or ever “close to being produced. ” Motiv a’s old development activities were “far too remote to be considered for purposes of demo nstrating that a domestic industry exists.” J. A

. 7826. Thus, the ALJ found that Motiva had to rely on the di strict court litigation against Nintendo as its only evidence of an investment that would satisfy the domestic industry requirement.

According to Motiva, th at litigation against Nintendo was “a necessary step to preserve and hasten [its] licen sing opportunities, which would otherwise remain co mpletely 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 system s , potential partners would be willing to invest in and license Motiva’s patented technology. It believed that the costs of li tigation against Nintendo were, therefore, a substantial investment adequate to satisfy the economic prong of the domestic industry r equirement. However, b ased on the testimony of witnesses and documentary evidence, the ALJ disagreed.

T he ALJ found tha t the litigation costs related to the district court proceedings were not relevant to the dome stic 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 p atent was ne ver asserted against Nintendo in district court.MOTIVA
, LLC v. ITC 7
being “production

- ready” at any point. J. A

. 7820. Mot iva’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 compli ance 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 t o exist was directed at “excluding Nintendo from the market, not utilizing Motiva’s patent tec hnology” in a product. J. A

. 7812.

Moreover, a ccording to the ALJ, t he Wii would not

even compete with Motiva’s potential product s because they were in different markets. Motiva’s product was an “expensive tool” designed for “exercise, athletic perfo rmance 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, t he ALJ reasoned that the presence of the Wii

— and the possibility of its removal from the market by

suc cessful litigation —d id not and would not affect Mot iva’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 inte rested in “extract [ing] aMOTIVA
, LLC v. ITC 8
monetary award either through damages or a financial settlement.” J. A

. 7823. The ALJ found support for this conclusion from e mails between the inventors of the ’ 151

p atent discussing financial gains from litigation , Motiva’s dec ision 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. T he ALJ therefore found that Motiva failed to prove that a n industry for its patented technology existed or was in the process of being estab lished: there is “no reason to believe that manufacturers of fitness and rehabilitation equi pment will suddenly become interested in the [patented]

tec hnology because Nintendo [is] excluded from the ma rket.” 4 J. A

. 7835.

On appeal, the Commission adopted the ALJ’s dec ision 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 i nvestments 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 litigati on 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” accor ding to the ALJ, and t he value of the time Motiva emplo yees spent on the litigation

— approximately $17,000

— was insignificant by itself.

5 The Commission provided some minor clarific ations and vacated one portion of the ALJ ’s decision r egarding 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

. 78 74.
Motiva filed a timely appeal of the Commission’s decision

. II. D I SCUSSION
Although the question of whether the domestic indu stry requirement is satisfied presents issues of both law and fact, this appeal presents only factual issues which we review for substantial evidence. See John Mezzali ngua Assocs. v. Int’l Trade Comm’n , 660 F.3d 1322, 1327 (Fed. Cir. 2011).

The Commission found

— and Motiva does not di spute

— that Motiva’s investments in developing a domestic industry for the ’151 and ’ 268 p atents were limited after 2007 to the litigation against Nintendo. Indeed, Motiva argues on appeal that its invest ment 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 ess ential to develop ing a succ essful “product

- driven licensing bus iness” that would encourag e partners to develop and adopt its patented technology , which was “ready for a manufa cturer to pick it up and incorporate it into a successful product.” Appellant’s Br

. 44, 47.

Motiva’s investment in the litigation against Ninte ndo c ould indeed satisfy the economic prong of the domestic industry requirement if it was substantial and directed toward a licensing program that would encourage ado ption and development of articles that incorporated Mot iva’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.3dMOTIVA
, LLC v. ITC 10

at 1328

- 29 (discussing how the “Commission is fundame ntally a trade forum, not an intellectual property forum” and holding that litigation expenses directed at preven ting instead of encouraging manufacture of articles inco rporating patented technology does not satisfy the domestic industry requirement of Section 337).

However, t he ALJ found t hat Motiva’s litigation against Nintendo was not directed at developi ng such a licensing program

. Relying on extensive documentary evidence and witness testimony , t he 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 inco rporating 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 mult itude of development and testing steps remained prior to finalizing a product for production. Moreover, the ev idence demonstrat ed that Motiva’s litigation was targeted

at financial gain s , not at enco uraging 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 manufactu rers. Motiva also never asked for a preliminary inj unction fr om the district court, a nd it waited three years before seeking relief from the Commission

— eve n 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 su pports the Commission’s finding that Motiva’s litigation against Nintendo was not an investment in commerciali zing 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 howMOTIVA
, LLC v. ITC 11
litigation expenses should not automatically be considered a substantial investment in licensing, even where litig ation leads to a license). There is simply no rea sonable likelihood that

, after successful litigation against Ninte ndo

, Motiva’s patented technology would have been l icensed by partners who would have incorporate d it into “goods practicing the patents.” See InterDigital

, 707 F.3d

at 1299

. III. C ONCLUS ION

T he ALJ thorough ly review ed the evidence in this

case , and the Commission adopted the ALJ’s conclusion that Motiva’s litigation activities did not s atisfy the economic prong of the domestic industry requirement of Section 337. Because t hat 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 indu stry requirement of S ection 337 was satisfied. See Ba lly/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
in dustry). Although Motiva may have been fully engaged in developing a domestic industry for its patented tec hnology 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 reason ably found, Motiva’s old development activi ties 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

. MotivaMOTIVA
, LLC v. ITC 12

AFFIRMED

simply has not shown t hat its old development activities contributed to a market that existed or was in the process of being created at the time of its complaint.