What Is Considered a Domestic Industry Under The Tariff Act?

MARK TERRY, ESQ.

The Federal Circuit’s decision in Lashify, Inc. v. International Trade Commission broadened the interpretation of the domestic-industry requirement under Section 337 of the Tariff Act of 1930. The ruling is especially important for companies that manufacture products abroad while maintaining substantial commercial operations in the United States.

To obtain relief at the International Trade Commission for unfair import practices, a complainant generally must establish a domestic industry connected to the protected intellectual property. This analysis includes a technical component relating the domestic industry to the patented articles and an economic component based on qualifying domestic investment.

The economic component may be shown through significant investment in plant and equipment, significant employment of labor or capital, or substantial investment in exploitation activities such as engineering, research and development, or licensing.

Lashify imports eyelash-extension products manufactured abroad. The ITC initially excluded investments in sales, marketing, warehousing, quality control, and distribution when evaluating domestic industry, reasoning that these activities were insufficient without domestic manufacturing or technical development.

The Federal Circuit rejected that narrow interpretation. It concluded that Section 337 does not categorically exclude ordinary enterprise functions from the economic analysis and that significant domestic labor or capital may qualify even when directed toward sales, marketing, warehousing, quality control, or distribution.

The decision gives companies with substantial U.S. commercialization operations a stronger basis for seeking ITC relief against infringing imports. Businesses should maintain detailed records of domestic payroll, logistics, warehousing, quality-control, sales, and marketing expenditures so that those investments can be demonstrated if enforcement becomes necessary.