In ClearCorrect Operating, LLC v. International Trade Commission, Appeal No. 2014-1527, the Federal Circuit held that the ITC could not block the import of infringing digital files because the ITC lacked jurisdiction. According to the Federal Circuit, the term “articles” as described in 19 U.S.C. § 1337 is defined as “material things” and does not include electronically transmitted digital data.
The ITC has the authority to block importation of infringing articles under § 1337, but the ITC has previously only used the power to block physical goods. In this dispute, however, the ITC expanded that jurisdiction and held that it had the authority to stop ClearCorrect from importing digital files that were used to create infringing versions of Invisalign clear braces.
Disagreeing with the ITC’s interpretation of the term “article,” the Federal Circuit applied the two steps ofChevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). Under step one of the Chevron test, the Federal Circuit examined the term’s literal meaning in contemporaneous and modern dictionaries, the term’s context in § 1337 and its subsections, and the term’s role in the totality of the statutory scheme, including tariff schedules. The Federal Circuit held that all constructions of the term “article” point to Congress’s unambiguous intent that “articles” means tangible or material things and does not extend to ClearCorrect’s electronically transmitted digital models.
Because Congress’s intent was clear, the Federal Circuit acknowledged it did not need to address step two of the Chevron test. Nonetheless, the Federal Circuit held that the ITC “repeatedly and unreasonably erred in its analysis” when the ITC irrationally analyzed various dictionaries, misquoted the legislative history, and improperly cited current Congressional debates. Finally, the Federal Circuit noted its deference to Congress on this issue.