By Dennis Crouch
In ClearCorrect v. ITC and Align Tech, the Federal Circuit reversed the ITC’s prior determination – holding instead that the Commission’s jurisdiction over the importation of “articles that infringe” does not extend to the “electronic transmission of digital data”. Rather, the court holds that the Section 337 of the Tariff Act is limited to “material things” as used in common parlance (i.e., beyond an “electron’s invariant mass” that may be associated with a digital transmission).
The opinion by the court was filed by Chief Judge Prost, although not strictly a majority opinion. Judge O’Malley joined in the holding that the ITC lacks jurisdiction over the case, but wrote a concurring opinion that differed as to issues of administrative law deference. Judge Newman wrote in dissent – arguing that the decision guts the future of Section 337 cases.
This is a 3D printer case involving teeth aligners. In this case, the accused infringer’s has a four-step process:
- Make a physical model of a US patient’s teeth;
- Use a 3D scanner to digitally recreate the patient’s initial tooth arrangement;
- Transmit the digital file to Pakistan where workers digitally determine a final tooth placement and generate the set of sequential aligners (digital files) to reach that result;
- Transmit the digital files of the aligners to the US; and
- Print the aligners out with a 3D printer and given to the patients.
Align alleged violation based upon a set of seven different patents, including U.S. Patent No. 6,217,325.
19 U.S.C. § 1337(a)(1)(B) provides the USITC with authority to take action against the the “importation … of articles that (i) infringe a valid and enforceable U.S. patent.” The only importation here was the set of digital 3d blueprints, but the USITC found that a digital article counts as an article and thus within the ambit of USITC authority.
The three opinions can roughly be characterized as follows:
Chief Judge Prost: Since Congress delegated authority to the USITC to resolve any ambiguity in Section 337, then the court must give deference to agency interpretations. However, there is no ambiguity about the definition of “articles” in that it should be interpreted to mean “material things” – and thus no reason to move to Chevron step two. Still, under a step-two analysis, the agency’s interpretation is unreasonable and not a permissible construction.
Judge O’Malley: This is an attempt by the USITC to regulate the Internet – an area over which it has no authority and thus need not be given deference.
Judge Newman: The ITC is designed to regulate unfair competition coming from foreign sources – that is what is going on here and should be within the agency’s authority.
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The case had potential major importance in the copyright realm. The ITC also has jurisdiction to act against importation of articles that infringe US copyrights. Allowing the ITC to take action against digital importers would create a heyday for copyright owners going after foreign streamers – especially because the USITC procedures are designed to handle the situation where the defendant is abroad.
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One thing to keep in mind is that the USITC’s jurisdiction is entirely duplicative of the federal district courts – it is simply an alternative (friendly) jurisdiction when the accused infringement involves the importation of articles. Here, the parallel lawsuit against ClearCorrect is still pending in the Southern District of Texas. That case has been stayed since 2012 pending the outcome of the USITC investigation.