United States: Federal Circuit's Clearcorrect Ruling Impacts ITC Ability To Police 3D Printing And Other Disputes Involving Digital Data Transmission

Last Updated: November 18 2015
Article by Matthew J. Shiels

The ITC does not have jurisdiction over digital data transmitted into the United States from abroad, according to a recent Federal Circuit ruling related to 3D printing.

On November 10, 2015, in a decision that could have a significant impact on the 3D printing and other industries, the Federal Circuit held in ClearCorrect Operating LLC v. Intl Trade Comm'n , No. 2014- 1527 (Fed. Cir., Nov. 10, 2015), that the International Trade Commission lacked jurisdiction over the electronic transmission of digital data. Writing for the panel in a 2-1 decision, Chief Judge Prost held that U.S.C. section 1337(a) gives the ITC jurisdiction only over unfair acts involving the importation of "articles," which the Federal Circuit interpreted to mean "material things." The court found that the ITC lacked jurisdiction over cross-border transmissions of digital data because digital data is not a "material thing."

The Federal Circuit's ruling overturned the underlying Commission opinion, which held that 19 U.S.C. section 1337(a) confers to the Commission jurisdiction over "all possible forms of infringement,"including jurisdiction over infringing electronic transmissions of digital data. Because the literal text of U.S.C. section 1337(a), when viewed in the context of the Tariff Act, is clear as to the meaning of the term "articles," the Federal Circuit found that the Commission's interpretation of its own jurisdictional reach was not entitled to deference under Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984).

Several interest groups representing copyright-intensive industries, including the MPAA and RIAA, filed amicus briefs with the Federal Circuit in support of the Commission's ruling. And while the ITC is not a traditional venue for disputes involving infringing digital data transmissions (this is the first ITC ruling where infringing data was not imported into the United States in some type of physical medium), the Commission's April 3, 2014, opinion had been seen by many as creating a new front in the struggle to protect intellectual property rights in an ever-evolving technological landscape.

In the underlying investigation at issue in ClearCorrect, the respondents and accused infringers (ClearCorrect Operating, LLC and ClearCorrect Pakistan, Ltd.) used 3D printers in the United States to manufacture orthodontic aligners using digital models created in Pakistan. The Administrative Law Judge ("ALJ") overseeing the ITC investigation found that the methods used to design and manufacture the aligners infringed the petitioner's (Align Technology, Inc.) patents, and issued cease-and-desist orders against ClearCorrect and ClearCorrect Pakistan forbidding the importation of infringing digital models. The Commission's approval of the ALJ's cease-and-desist order was particularly notable because it represented the first time that the ITC issued such an order against a foreign entity without any standing inventory in the United States. The Federal Circuit's ruling vacated the cease-and-desist order.

While the immediate result of the Federal Circuit's ruling in ClearCorrect is that ClearCorrect and ClearCorrect Pakistan are not currently barred from sending (potentially infringing) data from Pakistan to be manufactured via 3D printing in the United States, the ruling's impact is likely to be felt across the emerging 3D printing industry and other industries. Under ClearCorrect, foreign companies that design 3D printable products (medical devices or otherwise) abroad and manufacture them on 3D printers in the United States may not be subject to the jurisdiction of an ITC investigation. Align Technology and similarly situated future plaintiffs, however, are still free to seek injunctive relief and monetary damages in Federal Court or foreign venues.

If anything, the ClearCorrect ruling illustrates the uncertainty that exists in the legal landscape where intellectual property rights and new digital technologies intersect. Before the ruling, it appeared as though the ITC, with its fast and far-reaching investigatory power and potential for significant damages, could become the go-to venue for claims of infringement involving electronic data transfers. But if the Federal Circuit's ruling stands, intellectual property owners may have to find other ways outside of the ITC to keep up with the changing technological landscape.

For a further in-depth review of the legal issues raised by the emergence of 3D printing in the medical device industry, please see Reed Smith's White Paper on the subject, Reed Smith Launches White Paper on New Frontiers and Legal Risks in the 3D Printing of Medical Devices.

This article is presented for informational purposes only and is not intended to constitute legal advice.

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