ClearCorrect v. Align (Fed. Cir. 2016)
In its panel opinion, the Federal Circuit held that the USITC jurisdiction over the importation of “articles that infringe” does not extend to the “electronic transmission of digital data”. Rather, 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). See Dennis Crouch, Federal Circuit Bites Back against USITC Expansion into Electronic Importation, Patently-O (November 10, 2015). That original panel included Chief Judge Prost who wrote the majority opinion along with Judge O’Malley who also issued a concurring opinion and Judge Newman in dissent.
Following that decision, both the ITC and the patentee (Align) petitioned for en banc rehearing with the following questions:
ITC: Must the term “articles” … be limited to physical products, such that section 337 can be evaded by a respondent that 3D prints products in the United States using imported datasets representing those products
Align: Whether the U.S. International Trade Commission has jurisdiction under 19 U.S.C. § 1337 over the importation or sale of digital articles.
In addition to the statutory language, the briefs particularly focus on two cases: Nat’l R.R. Passenger Corp. v. Boston & Me. Corp., 503 U.S. 407 (1992) (on statutory interpretation), and Suprema, Inc. v. ITC, 796 F.3d 1338 (Fed. Cir. 2015) (en banc) (ITC has power to stop infringing imports if those imports are going to be used to induce infringement of a patent method of use).
With an order issued today, however, the Court has denied the en banc petition. The vote appears to be 11-1.
Judge Newman dissented from the en banc denial:
The court now holds that the word “article” in Section 337 of the Tariff Act cannot include digital goods, although “article” is the general term used throughout judicial and agency rulings for goods in trade, including digital goods. Digital goods are included in the tariff laws; they are imported, bought, and sold; they are subject to the patent laws, and have been the subject of many infringement suits. Infringement does not depend on whether the digital goods are carried on a hard substrate, or electronically.
Section 337 does not depend on the mode of importation; it depends on whether the imported goods infringe a patent or copyright or trademark or design. The amici curiae point out the consequences of the court’s change of law, for infringing imports of books, motion pictures, and other products subject to transmission in digital form. The disruption that this ruling is already causing warrants en banc attention.
The dissent also includes an interesting footnote listing thirty definitions of the term “article” — suggesting that the definition is not so clear.
Chief Judge Prost also drafted an opinion joined by Judges O’Malley and Wallach to “address certain points newly raised by the dissent.” The basic point is that it is Congress’s failure to “bridge the gap between the non-digital world and the digital world.” As such, the solution should come from Congress as well.
Addressing the thirty definitions, Chief Judge Prost argues that “only a handful” of the definitions support the dissent’s approach.