Two Things You Need to Know from Yesterday’s Oral Argument in ClearCorrect v. ITC

Can the ITC enjoin the importation of digital information via electronic transmissions?  This question was argued before the Federal Circuit yesterday in ClearCorrect Operating v. ITC, which some referred to as “the most important case nobody is talking about.”

Align—famed maker of the Invisalign® alternative to metal braces—sued its competitor ClearCorrect for infringing importations of digital representations of teeth aligners.  By ruling for Align, the ITC for the first time held that digital representations of products could be “articles that. . . infringe” under Section 337 of the Tariff Act of 1930.

By addressing digital representations, i.e., data, this case may not only involve the ITC’s authority over the telecommunications industry, it may address whether digital signals can infringe patent claims at all.  It also intersects with this week’s en banc decision in Suprema v. ITC.  There, the Federal Circuit gave Chevron deference to the ITC’s interpretation of its statute as to “articles that . . . infringe” with respect to induced infringement.  At yesterday’s arguments, the Court requested supplemental briefing on the impact of Suprema. Lastly, this case potentially implicates the ITC’s jurisdiction over online piracy of copyrighted works, like movies and music.

From the oral argument, the Court was interested in two general questions:

1) Does the ITC Have Jurisdiction Over Digital Information?

Both Chief Judge Prost and Judge O’Malley expressed concern with the ITC’s authority over digital information, stating that this was “what this case is about.” They questioned what, if anything, would be excluded from the ITC’s jurisdiction. The panel took exception to the ITC’s assertion that this case is merely about braces, not digital data. In fact, the panel reminded the parties that nobody thinks of Markman v. Westview Instruments as a case limited to dry-cleaning. On the merits, the ITC maintained that digital services and phone calls were not subject to its jurisdiction, but that data streams could be. According to the ITC, digital goods would be subject to 337 jurisdiction while digital services would not, even though the ITC acknowledged the difficulty in distinguishing goods from services and the need for a case-by-case evaluation.

The Court also grappled with how to enforce an exclusion order directed to electronic transmissions. The ITC’s suggestion to use a cease and desist order followed by an enforcement proceeding did not appear to satisfy the panel’s concern. Cease and desist orders were meant to be supplements, not substitutes, for exclusion orders, according to the panel.

2) Did Congress Intend Section 337 To Include Digital Transmissions?

Chief Judge Prost noted that the world has changed rapidly since section 337 was enacted in 1930. Because Congress has subsequently debated how to treat the importation of various transmissions, it may believe the statute covers digital transmissions. But at least Judge O’Malley seemed uncomfortable deciding this issue in the wake of Congress’s current debate about regulating internet service providers.