A U.S. appeals court has issued a mixed ruling in a case involving the importation of artificial eyelash extensions that allegedly infringe Lashify’s patents. In a decision on March 5, the U.S. of Appeals for the Federal Circuit vacated a key part of a ruling from the International Trade Commission, holding that the trade agency applied an overly narrow interpretation of what qualifies as significant economic activity in the U.S. related to the patented technology. At the same time, the court affirmed the International Trade Commission (“ITC”)’s finding that Lashify failed to satisfy the technical prong for its utility patent, a common pitfall in ITC proceedings.
The Background in Brief: Eyelash extension kit-maker Lashify initiated a Section 337 complaint before the ITC in 2020, alleging that several companies – including KISS Nail Products, Inc., Ulta Beauty, Walmart, and CVS – were importing and selling eyelash extension products that infringe a trio of its patents, namely, Patent No. 10,721,984 (a utility patent covering a method for manufacturing eyelash extensions using heat fusion techniques), No. D877,416 (a design patent covering the ornamental design of a storage cartridge for eyelash extensions), and No. D867,664 (a design patent covering the ornamental design of an eyelash extension applicator).
To succeed in a Section 337 case, a complainant must prove that a domestic industry exists related to the asserted patents. This requires satisfying the Economic Prong, under which a company must show significant investment in plant and equipment, labor or capital, or research and development related to the patented articles; and the Technical Prong, which means that the company’s own products must make use of the asserted patent claims.
The ITC ruled against Lashify on both prongs, finding that its warehousing, sales, marketing, and quality control expenses did not qualify as “significant employment of labor or capital” under the economic prong because there were “no additional steps required to make these products saleable” upon arrival in the U.S., and the quality-control measures were considered routine importer practices; and its products did not meet the “heat fused” limitation in its utility patent, meaning it failed the technical prong.
The ITC ruled against Lashify on both prongs, finding that its warehousing, sales, marketing, and quality control expenses did not qualify as “significant employment of labor or capital” under the economic prong. It reasoned that no additional steps were needed to make the products saleable, quality control was routine, and Lashify had not demonstrated sufficient qualifying expenditures elsewhere.
Lashify appealed the ITC’s decision to the Federal Circuit, arguing that the agency misapplied the domestic industry test and misinterpreted its utility patent claims.
Federal Circuit’s Ruling: A Mixed Decision
The Federal Circuit vacated the ITC’s ruling on the economic prong but affirmed its ruling on the technical prong, effectively limiting Lashify’s case to its design patents. At a high level, the Federal Circuit judges held …
> ITC Used an Incorrect Legal Standard for the Economic Prong: The Federal Circuit ruled that the ITC applied an overly narrow legal standard by excluding marketing, sales, warehousing, and quality control expenses from its domestic industry analysis. The court clarified that Section 337(a)(3)(B) does not require a manufacturing component, meaning investments in sales and marketing can satisfy the economic prong.
Citing its previous decision in Wuhan Healthgen Biotechnology Corp. v. International Trade Commission, No. 2023-1389 (Fed. Cir. Feb. 7, 2025), in which marketing and sales, alone, were deemed sufficient, the court vacated the ITC’s ruling and remanded the case for reassessment under the correct legal framework.
> Lashify Failed the Technical Prong for its Utility Patent: While Lashify won on the economic prong, the Federal Circuit upheld the ITC’s finding that Lashify’s own products did not meet the “heat fused” limitation in its utility patent. The ITC decided (and the Federal Circuit agreed) that Lashify’s lashes were adhered using heated adhesive rather than heat fusion, meaning they did not form a single bonded structure as required by the patent claims.
Because Lashify failed the technical prong (a much more common point of failure for ITC complainants than the “economic prong,” per Mintz), it can no longer seek an import ban based on its utility patent, leaving only its design patents in play.
The Federal Circuit remanded the case to the ITC to reevaluate whether Lashify’s investments in warehousing, sales, marketing, and quality control qualify as “significant employment of labor or capital.”
THE BOTTOM LINE: The Federal Circuit’s ruling is a significant that it expands the types of activities, investments, or expenses that a party may point to in order to satisfy the economic prong of the domestic industry requirement, which is a win for companies seeking to enforce their rights before the ITC. The decision also “reinforces the notion that the economic prong analysis considers whether investments or expenses are significant and substantial enough relative to the company’s US footprint, and not the absolute dollar values of the investments themselves,” according to ArentFox Schiff’s Taniel Anderson and Peter Busch.
They note that the Federal Circuit’s decision is “not limited to U.S. companies, as it potentially allows a foreign company to satisfy the domestic industry requirement if it invests in US distribution and marketing efforts.”
The case is Lashify, Inc. v. International Trade Commission, 23-1245 (Fed. Cir.).
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