The ITC Has Jurisdiction Over Digital File Transmissions Under Section 337

Apr 21, 2014

On April 3, 2014, the U.S. International Trade Commission has issued a notice in 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 Same, Inv. No. 337-TA-833, determining that electronic files are “articles” within the meaning of Section 337(a)(1)(B) and that transmission of such files constitutes “importation” under Section 337(a)(1)(B).  As the movement of digital data over various mediums across the U.S. border continues to grow in today’s global economy and as electronic downloading has become a critical channel for the purchase and delivery of software and entertainment goods, this decision may lead to more infringement claims involving electronic transmissions.

The ITC instituted the investigation based on a complaint filed by Align Technology, Inc., the developer of the Invisalign teeth-straightening system.  Align accused ClearCorrect Operating, LLC and ClearCorrect Pakistan, Ltd. of infringing patents directed to teeth straightening technology.  Align invoked the jurisdiction of the ITC by pointing to digital data and treatment plans that were electronically imported from Pakistan to make the physical models used to fabricate dental aligners.

In his initial determination, Judge Rogers found that Respondents infringed six of the seven asserted Align patents by their importation of the electronic data sets for creating models of a teeth-straightening system.  Judge Rogers noted that in Certain Hardware Logic, the Commission concluded that “[t]he scope of section 337 is broad enough to prevent every type and form of unfair practice, including the transmission of infringing software by electronic means, electronic transmission of software and/or data that induces an infringing use of an imported product . . . .”1

It is worth noting that the ITCs Office of Unfair Import Investigations supported a finding that electronic transmissions are articles within the meaning of Section 337.  It argued that the plain language and legislative history of Section 337 provide a basis for interpreting articles to cover electronic transmissions, and that ITC precedent supported a finding that the Commission’s authority extends to data electronically transmitted to recipients in the United States.

In addition, third parties Google and the Motion Picture Association of America, Inc. (MPAA) squared off against each other in briefs filed in response to the ITC’s request for comments on whether electronic transmissions are articles within the meaning of Section 337.  Google argued that the ITC should only recognize physical objects—and not digital materials—as articles that can violate patents being asserted in the ITC.  The MPAA countered that Google itself refers to its intangible software offerings like Chrome and Android as “products,” a word the MPAA says is interchangeable with articles.

Align only requested that cease and desist orders be issued because Commission precedent refused to issue an exclusion order barring electronic transmissions out of deference to difficulty U.S. Customs and Border Protection would have in enforcing such an order.  The ITC Office of Unfair Import Investigations also argued that the ITC generally does not issue cease and desist orders to foreign entities that do not have a domestic inventory due to the difficulty of enforcing such an order.  Nevertheless, citing Certain Abrasive Products,2 Judge Rogers found support for the issuance of a cease and desist order against a foreign entity without domestic inventory.3  He recommended a cease and desist order against ClearCorrect and its Pakistani co-respondent, prohibiting them from electronically importing data sets.4

The Commission affirmed the decision that digital importation is within the jurisdiction of the ITC.  The Commission issued cease and desist orders directed to both ClearCorrect and ClearCorrect Pakistan, with an exemption for existing patients in the United States.  The respondents can be liable for fees of up to $100,000 per day if they violate the cease and desist orders by continuing to digitally import the infringing electronic files.

This is not the first time the ITC concluded that it has jurisdiction to reach digital data that electronically transmitted to a recipient in the United States.5  The decision in Certain Digital Models is important, however, because it applies the ITC’s authority to issue relief against electronic importation of infringing products to purely digital goods rather than digital components integrated into a physical product.6  It is also important that the ITC confirmed its power to issue a cease and desist order against a foreign respondent without inventory in the United States because there was no physical component that was imported to which an exclusion order could attach.

1   Certain Hardware Logic Emulation Systems and Components Thereof, Inv. No. 337-TA-383.

2   Certain Abrasive Products Made Using A Process For Powder Pre-Forms, and Products Containing the Same,  Inv. No. 337-TA-449, Commission Opinion on Remedy, the Public Interest, and Bonding (Jul. 26, 2002).

3   Certain Digital Models, Digital Data, and Treatment Plans for Use, in Making Incremental Dental Positioning Adjustment Appliances Made Therefrom, and Methods of Making the Same (Dental II), Inv. No. 337-TA-833, Initial Determination on Violation of Section 337 and Recommended Determination on Remedy and Bond, 2013 WL 3167893, at *503. (May 6, 2013); see also Certain Abrasive Products, 2002 WL 31093610, at *4 (Jul. 26, 2002).

4   Dental II, at *504.

5   See, e.g., Certain Hardware Logic, Commission Opinion on Remedy, the Public Interest, and Bonding, 1998 WL 307240, at *11 (Mar. 1, 1998) (established that software is an article, and that the electronic transmission of such software satisfies the importation requirement); Certain Incremental Dental Positioning Adjustment Appliances, Inv. No. 337-TA-562, Commission Opinion, at *7 (Jan. 23, 2013) (enforcement action confirming digital data is an article subject to its jurisdiction).

6   See, e.g., Certain Systems for Detecting and Removing Viruses or Worms, Components Thereof, and Products Containing Same, Inv. No. 337-TA-510 (2005) (the offending software could be installed on physical hardware either before or after importation into the United States); Certain Biometric Scanning Devices, Components Thereof, Associated Software, and Products Containing the Same, Inv. No. 337-TA-720 (2011) (digital components were integrated with a physical product after importation by a domestic entity).

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