Federal Circuit Rejects ITC Jurisdiction Over Electronic Transmissions In 'Digital Models'

On November 10, 2015, the Federal Circuit released its opinion in ClearCorrect Operating, LLC v. International Trade Commission, reversing the International Trade Commission's (the ITC or the "Commission") determination that electronic transmissions could be infringing "articles" within the ITC's jurisdiction. In a divided panel, Chief Judge Prost, writing for the majority, limited "articles" in 19 U.S.C. § 1337 ("Section 337") to "material things." The Federal Circuit's ruling thus prevents the ITC from issuing remedy orders against infringing products that are digitally-transmitted, potentially limiting the ITC's jurisdiction in protecting intellectual property rights at a time when digital commerce is growing in importance.

BACKGROUND

The decision in ClearCorrect v. International Trade Commission resulted from an appeal of the ITC's final determination In the Matter of Certain Digital Models, Digital Data, and Treatment Plans for Use in Making Incremental Dental Positioning Adjustment Appliances, the Appliances Made Therefrom, and Methods of Making the Same, Inv. No. 337-TA-833 ("Digital Models").

In Digital Models, the complainant, a manufacturer of dental repositioning appliances, asserted that respondents ClearCorrect Pakistan and ClearCorrect Operating, LLC ("ClearCorrect") were unlawfully importing - via the Internet - data used to create infringing dental repositioning appliances. In brief, ClearCorrect would receive orthodontic measurements from dentists in the United States, process those measurements in Pakistan to produce 3D-printable models of dental repositioning appliances, and then electronically transmit those infringing models to the United States for 3D printing.

In Digital Models, the Commission had held that electronically transmitted information was an "article" under Section 337. Section 337 prohibits "[t]he importation into the United States, the sale for importation, or the sale within the United States after importation by the owner, importer, or cosignee, of articles that . . . infringe a valid and enforceable United States patent." 1 While the Commission had over a decade ago concluded its jurisdiction extended to electronic transmissions as "articles," 2 it revisited the issue in Digital Models and ultimately reiterated that it had jurisdiction over electronic transmissions. (Morrison & Foerster's client alert on that earlier opinion is available here.)

THE FEDERAL CIRCUIT'S RULING

In the opinion by Chief Judge Prost, the Federal Circuit reversed the Commission's...