Federal Circuit Holds That The ITC Lacks Jurisdiction Over Electronic Transmission Of Digital Data

On November 10, 2015, the Federal Circuit held that the United States International Trade Commission ("ITC") lacks authority over the importation of electronically transmitted digital data. See ClearCorrect Operating, LLC v. ITC, 2014-1527 (Fed. Cir. Nov. 10, 2015). While this decision arose in the context of patents related to orthodontic alignment technology, the Federal Circuit's narrow interpretation of the ITC's jurisdiction has serious implications for the ITC's ability to enforce both software patents and copyrights.

Section 337, 19 U.S.C. § 1337(a), describes the ITC's authority as covering importation or sale of "articles." At issue in the case was whether the meaning of "articles," first codified in the Tariff Act of 1922, is broad enough to cover the more recent phenomenon of electronically transmitted digital data. The ITC held that it did, but the Federal Circuit, in a split decision, disagreed. The majority relied on the following in reaching its decision: (i) dictionaries from the 1920s and 1930s, many of which define "articles" as "material things"; (ii) the use of the word "articles" in other sections of the Act, which assume that "articles" are physical things and which, as originally enacted, would not have been able to provide a proper remedy for transmission of intangible electronic data; (iii) the Harmonized Tariff Schedule of 1930, which also listed only material objects; and (iv) the Federal Circuit's earlier opinion in Bayer AG v. Housey Pharm., Inc., 340 F.3d 1367 (Fed. Cir. 2003). Judge Newman dissented, arguing that the statute should be allowed to evolve with evolving technology.

Ramifications of the Decision

The Federal Circuit's holding limits the ITC's ability to enforce any IP rights in electronically transmitted digital datawhether in the patent or copyright context. Its potential impact is...