Today, the Federal Circuit rejected petitions for rehearing en banc in ClearCorrect v. International Trade Commission. The three-judge panel’s November 10, 2015 opinion, which held that the International Trade Commission (ITC) does not have jurisdiction to block the importation of electronic transmissions that infringe U.S. intellectual property, therefore remains in effect. The Federal Circuit’s unusually detailed rejection, featuring both a lengthy dissent by Judge Newman and a lengthy concurrence by Judges Prost, O’Malley, and Wallach, underscores the importance of this issue and suggests grounds for a possible certiorari petition to the Supreme Court.

Background

ClearCorrect v. ITC is an appeal to the Federal Circuit of the Commission’s final determination 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 the Same, Inv. No. 337-TA-833 (“Digital Models”). In that investigation, complainant Align Technology, Inc. asserted that electronically transmitted models of dental repositioning devices were “articles” under 19 U.S.C. § 1337 (“Section 337”). On April 3, 2014, the Commission ruled that electronic transmissions were “articles” subject to the ITC’s jurisdiction. In a November 10, 2015 opinion authored by Chief Judge Prost, the Federal Circuit reversed the Commission’s determination and held that the term “articles” in Section 337 is limited to “material things.” Our ITC blog article discussing the background of Digital Models and Chief Judge Prost’s opinion is available here; our blog article summarizing the Federal Circuit oral arguments is available here; and our blog article on the Commission’s final determination is available here. Our blog article discussing the petitions for en banc review is available here.

The Dissent and Concurrence

The Federal Circuit rejected both the ITC’s and intervenor Align’s petitions for en banc rehearing. The November 10, 2015 ruling of the three-judge panel that the term “articles,” as used in Section 337, is limited to “material things” therefore remains in effect. The ruling effectively means that the ITC has no jurisdiction to block importation of electronic transmissions (such as downloadable software) that infringe U.S. patents.

Judge Newman, who also dissented from the November 10, 2015 opinion, suggested in her dissent that the ITC’s jurisdiction should not depend on the “mode of importation,” but depends on “whether the imported goods infringe a patent or copyright or trademark or design.” ClearCorrect Operating, LLC v. Int’l Trade Comm’n, No. 2014-1527, Dkt. No. 180 at *8 (Mar. 31, 2016) (Newman, J. dissenting). In support, Judge Newman discussed a number of decisions and references from the International Trade Commission (id. at *7-8), the Court of International Trade (id. at *8-9), and other tribunals, and listed 30 different dictionary definitions of “article” supporting her view. Id. at *16 fn. 2. Like her previous dissent, Judge Newman’s argument also noted the ramifications should Section 337 remain stagnant as technology evolves. Id. at *6-7.

The concurrence of Judges Prost, O’Malley, and Wallach critiqued Judge Newman’s dissent. Characterizing Judge Newman’s precedents as “a hodgepodge of other legislative enactments,” the concurring judges argued that none were relevant to Congress’ intent regarding Section 337. Id. at *2 (Prost, C.J., O’Malley and Wallach, JJ., concurring). According to the concurrence, the question of infringement is distinct from that of whether a “thing . . . is an ‘article’” for purposes of Section 337. Id. at *3. The panel majority’s definition of “articles” to mean “material things,” per the concurring judges, was “the one that is mandated by the plain meaning of the word, the context of 19 U.S.C. § 1337(a) and the entire statutory scheme, and the legislative history.” Id. at *3-4.

Ramifications

Given the lengthy arguments present in the Federal Circuit’s denial of en banc review, it seems likely that the ITC or Align will file a certiorari petition with the Supreme Court. Should the Supreme Court accept review, it could redefine “articles” so that the ITC gains jurisdiction over electronic transmissions.