A Case With Teeth? Federal Circuit To Review ITC Jurisdiction Over Digital 'Articles'

Next Tuesday, August 11, the U.S. Court of Appeals for the Federal Circuit will hear oral argument in ClearCorrect Operating, LLC v. International Trade Commission, a case that nominally involves a cease-and-desist order the International Trade Commission ( ITC ) imposed on a data file that contained a digital model of crooked teeth. As numerous amici in the case assert, however, the court's ultimate decision could have significance well beyond digital teeth images; it could establish standards for the Commission's jurisdiction over international trade in digitalized goods.

The case followed a routine path from ITC to the Federal Circuit. Align Technology complained to ITC that ClearCorrect was importing goods into the United States that infringed Align's patents. Both companies create patient-specific "aligners" to correct crooked teeth. ClearCorrect's facility in Texas would download data of a model created in Pakistan from a foreign-based server, and then use that data to create the aligner. Align alleged that the data "imported" from the foreign server constituted an "article," under 19 U.S.C. § 1337, over which ITC had jurisdiction.

The ITC Commissioners had to decide whether "articles" included intangible digital data or was limited to physical goods. Recognizing the potential larger implications of the case, numerous other parties weighed in at ITC with comments. The Commission decided on April 9, 2015, over the dissent of one Commissioner, that the digital images of the teeth that ClearCorrect downloaded were infringing "articles" under § 337, and it imposed a cease-and-desist order against further downloads. ITC appreciated the "difficulty" of the threshold jurisdictional issue, and took the unprecedented step of staying its order while ClearCorrect appealed to the Federal Circuit.

ITC's decision, and the Federal Circuit's consideration of ClearCorrect's appeal, occurs in the context of an ongoing digital revolution for many industries, especially those in the business of producing and marketing creative works such as movies, TV shows, music, and books. Digitalization has eased piracy of those creative works, and illegal trafficking of copyrighted content is pervasive and growing worldwide. For that reason, it's not surprising that those who profit from and support copyright protection for digital content would welcome the anti-piracy involvement of a government entity that is "highly regarded as independent and free from political influence." Entities with that perspective have weighed in on ITC's side in the Federal Circuit.

Other business interests and non-profit organizations that favor an "open Internet," or are averse to a purportedly new entrant to online regulation, have filed amicus briefs supporting ClearCorrect. One brief calls ITC's order "sweeping and unprecedented" and argues that the Commission's failure to define any outer limits to its authority over digital "articles" could lead to actions against Internet service providers. Another brief warns that ITC digital jurisdiction poses "sweeping implications for the Internet and the ability of companies to operate efficient, dependable, global networks."

The legal arguments of ClearCorrect and ITC, as well as the amici, battle over the meaning of a single word: "articles." The combatants cite to dictionaries, numerous sections of the U.S. Code, legislative history, federal caselaw, and the history of technological development. Each side interprets many of these authorities differently. ITC and its amici essentially argue that Congress intended a broad, flexible definition of "articles," one which could fit imported goods of any sort that infringed upon U.S. companies' intellectual property. ClearCorrect and its amici argue that Congress intended that only tangible products be considered "articles" under § 337, citing, among other things, the creation of other regulatory agencies with jurisdiction over telecommunications and other forms of data transmission.

The parties-in-interest in ClearCorrect v. ITC are obviously most interested in winning the case at hand, so they also attempt in their briefs to downplay the outcome's potential impact. In its brief, for instance, ITC urges the court to bear in mind that "the digital models here precisely represent tooth alignment in the same manner as physical molds," and that ClearCorrect "is about teeth" and does not "threaten to bring down the Internet." It adds that ClearCorrect's amici want the Federal Circuit to decide a case that is not currently before the court, and that the "Commission and the Court can confront those cases on a proper record before them."

The Federal Circuit's challenge of crafting an opinion that addresses the current situation without opening the proverbial Pandora's Box is a daunting one. It may, as ITC suggests, attempt to limit its holding to situations such as that presented in ClearCorrect, where the digital information was essential to the physical creation of the item that allegedly infringes Align Technology's property rights.

No matter what the three-judge panel hearing oral argument ultimately decides, that outcome may not be the last word. Given the extremely high stakes that amici spell out in their briefs, this is a case where the U.S. Supreme Court will likely have the final say.