Quantitative Analysis: A Must for Domestic Industry

Author: Abhay A. Watwe, Ph.D.
Editor: Lauren J. Dreyer

In Lelo Inc. v. International Trade Commission, No. 13-1582 (Fed. Cir. May 11, 2015), the Federal Circuit held that qualitative factors alone cannot satisfy the “significant investment” or “significant employment” requirements to establish domestic industry under § 337 of the Tariff Act. The statute requires a claimant to show “(A) significant investment in plant and equipment; (B) significant employment of labor or capital; or (C) substantial investment in its exploitation, including engineering, research and development, or licensing” in the United States. 19 U.S.C. § 1337(a)(3). The statutory terms “significant” and “substantial,” according to the Court, refer to an increase in quantity or to a benchmark in numbers, signaling a quantitative analysis. And International Trade Commission cases where qualitative factors established domestic industry did so only when quantitative factors were also considered. Because qualitative factors alone are insufficient under the statute, the Court found that the mere fact that the claimant purchased purportedly crucial components from third-party U.S. suppliers alone did not show a “significant investment” or “significant employment of labor or capital.” Instead, the Court held that to establish domestic industry, a claimant must furnish quantitative evidence connecting the cost of the components to an increase of investment or employment in the United States.

 

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