Guest Post by Sapna Kumar. Prof. Kumar is an Associate Professor at the University of Houston Law Center, where she teaches patents and administrative law. Her most recent article, Regulating Digital Trade, discusses the ClearCorrect decision at length and is available on SSRN.
Some interesting developments have arisen this past week regarding ClearCorrect Operating, LLC v. USITC. In this case, the Federal Circuit will decide whether the ITC has jurisdiction over digital information (see Patently-O Archives for my previous post about this case).
The Suprema En Banc Opinion
The first development is the Federal Circuit’s en banc decision in Suprema v. USITC. Both parties in ClearCorrect will file supplemental briefs to discuss what impact Suprema has on their case.
Back in 2011, I argued in a law review article that the ITC should be entitled to Chevron deference when it determines whether an article infringes a valid and enforceable patent. Prior to Suprema, the Federal Circuit had never granted deference to the ITC for a patent-related decision outside of dicta. In Suprema, the Federal Circuit belatedly steps on the Chevron bandwagon, granting the ITC deference for its interpretation of “articles that infringe.”
Although the Suprema decision affirmed the ITC, it nevertheless supports a reversal in ClearCorrect. The Suprema majority treats the terms “articles” and “goods” as interchangeable throughout the opinion. Black’s Law Dictionary, both at the time the Tariff Act was passed and at present, shows that “goods” generally refers to tangible property.
The four-judge dissent in Suprema was even more explicit, maintaining that “articles” refers to physical objects. This is notable, given that dissenting judges Prost and O’Malley are both on the ClearCorrect panel. Nothing from the majority’s decision will prevent the ClearCorrect panel from holding that “articles” are limited to tangible property.
Another notable feature of the Suprema decision is how the court chose to apply the Chevron test. Chevron has two steps. First, the reviewing court asks whether Congress has directly spoken to the precise question at issue. If Congress hasn’t, the court moves to Step Two, where it asks whether the agency’s answer is based on a permissible interpretation of the statute.
In most circuits, Step Two is relatively toothless, with just about any answer being treated as reasonable. The only notable exception is in the D.C. Circuit, where Step Two is a searching standard that is analogous to hard-look review. In Suprema, the court adopted an approach that is close to the D.C. Circuit, conducting a detailed review of the statutory text, policy, and legislative history of § 337. If this robust Step Two is applied in ClearCorrect, the ITC’s decision will be struck down due to liberties that the agency takes with the legislative history.
ClearCorrect Oral Argument
Also this week, a three-judge panel (Prost, O’Malley, and Newman) heard oral arguments for ClearCorrect. The panel expressed concern about where to draw the line for electronic transmissions. The ITC’s attorney conceded that not all imports of information are under its jurisdiction, but was unable to tell the panel where the ITC believes the line should be drawn. The panel observed that the digital models in this case were not bought and sold in commerce, but were instead used to create molds that were then used to create plastic aligners.
Prost and O’Malley also scrutinized the ITC’s statutory interpretation. They noted that dictionary definitions from the 1920s seemed to support a much narrower interpretation than what the ITC was seeking.
My article Regulating Digital Trade was also discussed by the panel. Prost raised my argument that the Commission Opinion misquoted a key 1922 Senate Report. The Senate Report states:
The provision relating to unfair methods of competition in the importation of goods is broad enough to prevent every type and form of unfair practice.
The Commission Opinion quoted this language without the limiting phrase “in the importation of goods,” and failed to use an ellipses. Both Prost and O’Malley questioned whether the ITC’s position was still valid given the narrower language.
To date, the Supreme Court has never granted certiorari on a § 337 case. Given that the Federal Circuit is now grappling with important issues of jurisdiction, it may be time for the Supreme Court to get involved.