In a decision that will have considerable interest for the entertainment, tech and 3D printing industries, the Federal Circuit, in a split decision in Clearcorrect Operating, LLC v. International Trade Commission, 2014-1527, today overruled an earlier ruling of the International Trade Commission, in which the Commission blocked the importation of digital files that would permit operators of U.S. 3D printing facilities to manufacture dental braces that infringed the patents on the well known "Invisalign" brand of clear braces. The Federal Circuit concluded that the ITC's power to block "articles" that infringed U.S. intellectual property rights was limited only to material things, and did not include digital transmissions. The ITC decision gained attention because it signaled a potential new governmental interest in regulating internet traffic, perhaps even a way to provide additional intellectual property remedies for the entertainment and music industries. This new avenue of enforcement, however, appears to be closed for now.
The issue for the Federal Circuit was one of statutory construction. The legislation creating and empowering the ITC permits it to block infringing "articles." The Federal Circuit interpreted the term "articles" to apply only to material things, and not digital transmissions. The court found this definition to be clearly expressed both with respect to the literal text, as well as the context in which the term "articles" was used within the statute. Because the digital files at issue were not articles, the ITC lacked jurisdiction to prevent their importation.
While it is too early to tell whether the Federal Circuit's decision will be appealed to the U.S. Supreme Court, it would be a long shot to expect the Supreme Court to reverse a ruling on statutory interpretation here, where Congressional intent appears to be clearly expressed within the four corners of the statute.
As 3D printing becomes more prevalent and spreads to a wider range of industries, the need to fix this gaping hole in the U.S. border with continue to grow unless and until Congress takes action, either by amending the statute or passing additional legislation. Having an effective border strategy for dealing with transmission of infringing files is particularly important in situations where, as here, the manufacturing facilities to produce infringing products – 3D printers and the materials needed to make the infringing goods – can be moved with relative ease from location to location in order to avoid detection. The growth of 3D printing poses a threat that infringement and counterfeiting will be accomplished faster and more easily. A nimble and thoughtful response at all levels of government to adequately protect intellectual property owner's rights under this changing landscape will be required.
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