The U.S. International Trade Commission (“ITC”) is seeking an en banc rehearing of the Federal Circuit’s recent Lashify v. ITC decision, contending that the panel’s statutory interpretation focused on the statute’s terms in isolation and failed to take into account 19 U.S.C. § 1337’s (“Section 337”) broader statutory scheme of establishing a domestic industry. As domestic industry is a required finding to obtain Section 337 remedies at the ITC for unfair competition in importation, the Federal Circuit’s Lashify decision and this ITC request for en banc rehearing are critically important to ITC Section 337 practice going forward.
On May 21, 2025 the ITC filed an appeal calling for a full panel review from the Federal Circuit; seeking clarification of two essential questions:
- Under 19 U.S.C. §§ 1337(a)(2) and (a)(3)(B), does the statutory language require that “labor or capital” include only labor or capital that establishes an “industry,” consistent with the statute’s plain language and purpose to provide trade relief to only U.S. industries, or does the statute require inclusion of all labor or capital?
- Did the panel overlook certain relevant tools of statutory interpretation by reading the terms labor and capital in isolation without regard to the whole text and overall statutory scheme of 19 U.S.C. § 1337, contrary to King v. Burwell, 576 U.S. 473 (2015), and Hibbs v. Winn, 542 U.S. 88 (2004), thus rendering the statutory term “industry” meaningless?
The ITC argues that the Federal Circuit’s decision “overlooks ‘the cardinal rule that statutory language must be read in context [since] a phrase gathers meaning from the words around it.’” See Lashify, Inc. v. ITC, 23-1245, Dkt. 117 at 19 (Fed. Cir. May 21, 2025) (citing Hibbs v. Winn, 542 U.S. 88, 101 (2004). In effect, the ITC contends that the Federal Circuit’s review failed to account for the context of the statute in view of the statutory scheme as a whole, and thereby reads the terms “labor or capital” in isolation, rendering the statute’s overall purpose “meaningless.” Id. at 2. Thus, the ITC seeks a new ruling on the fundamental question of “whether ‘labor or capital’ includes only labor or capital that establishes an ‘industry.’” Id. at 19.
The ITC’s request stems from the Federal Circuit’s March 5, 2025 decision in Lashify v. ITC (No. 23-1245) holding that Section 337 does not exclude categories such as sales, marketing, warehousing, or other related activities from qualifying alone to establish the economic prong of the ITC’s domestic industry requirement. Prior to the Federal Circuit’s recent Lashify decision, the Commission had “cautioned that ‘evidence of sales and marketing investments alone are not sufficient to demonstrate the existence of a domestic industry.’” Certain Artificial Eyelash Extension Systems, Products, and Components Thereof; Inv. No. 337-TA-1226, FID at 124 (Oct. 28, 2021) (citing Certain Collapsible Sockets for Mobile Elec. Devices & Components Thereof, Inv. No. 337-TA-1056, Comm’n Op. at 19-20 (July 9, 2018)). In doing so, the Commission warned that it may not consider very large expenditures for advertising alone as satisfying the economic prong because “[w]ere we to hold otherwise, few importers would fail the test of constituting a domestic industry.” Schaper Mfg. Co. v. U.S. Int’l Trade Comm’n, 717 F.2d 1368, 1373 (Fed. Cir. 1983).
The Federal Circuit’s three judge panel decision in Lashify altered the Commission’s longstanding practice denying consideration of expenses relating to sales, marketing, warehousing, quality control, and distribution under the economic prong of § 1337(a)(3)(B). Under the Federal Circuit’s Lashify decision, there is a wider scope for establishing the economic prong of domestic industry and Complainants who may lack U.S. manufacturing, research, or design, but conduct US sales and marketing, may still be able to assert their intellectual property rights at the ITC in pursuit of orders to exclude infringing imports.
The ITC’s appeal will therefore be closely followed, and a rehearing on the issue could determine the fate of many would-be complainants at the ITC.
[View source.]
