The scope of the United States International Trade Commission’s ability to prevent infringement from abroad may have just been significantly reduced. On March 31, 2016, the Federal Circuit Court of Appeals issued an order denying petitions by the International Trade Commission (“ITC”) and Align Technology, Inc. seeking a rehearing en banc of the Federal Circuit’s November 10, 2015, opinion in ClearCorrect v. Intl Trade Commn, 810 F.3d 1283 (Fed. Cir. 2015), which had held that the ITC’s jurisdiction under 19 U.S.C. section 1337 extended only to “material things,” and did not cover the electronic transmission of digital data. (For further discussion of the November 10 ClearCorrect Opinion, see my previous post here, and Lisa Baird’s post in Reed Smith’s Life Sciences Legal Update here). The Order was nearly unanimous, with only Judge Pauline Newman filing a lengthy dissent. With a rehearing and potential reversal by the full Federal Circuit bench now officially off the table, only a reversal by the Supreme Court or an Act of Congress can bring digital transmissions within the ITC’s jurisdiction. And a petition to the Supreme Court may be forthcoming. Shortly after the Order was issued, Align Technology released a statement to its investors, indicating that Align was “conferring with the Commission regarding appropriate next steps, including the possibility of seeking review from the Supreme Court.”
Should it stand, the effect of the Federal Circuit’s ruling may be wide-reaching. Investigations by the ITC have long been a useful, expedient alternative to the Federal Courts for intellectual property rights-holders seeking to block importation of infringing products into the United States. But, if the ClearCorrect opinion survives any further challenges, infringing digital files (so long as they are transmitted electronically and not imported in a physical medium, like a physical electronic device or thumb drive) will be placed beyond the ITC’s reach. Digitally transmitted copies of copyrighted works, such as movies, music, television shows, video games, and books, will now be immune from the threat of an ITC exclusion order. Further, thanks to the growing availability of 3D scanners and printers, goods once fixed firmly in the tangible world may now be scanned into a digital file outside of the United States, transmitted into the country electronically, and printed on 3D printers, thereby moving an infringing physical article into the United States without ever falling within the ITC’s jurisdiction. Indeed, the technology at issue in the ClearCorrect case involved designing customized orthodontic retainers abroad, and then printing them in the United States on 3D printers.
Of course, even if the ClearCorrect ruling stands, rights-holders will still have the option of filing infringement suits in Federal Court – Align Technology is currently pursuing a parallel lawsuit against ClearCorrect. But as 3D printers become cheaper and more available to consumers, the manufacture of many patent and copyright-protected articles may, at least for some products, become decentralized and distributed – creating enforcement issues akin to those felt by the recording industry a decade ago. In those cases, plaintiffs who find a way to prevent the distribution of the infringing 3D printable-files, before they end up in the hands of individual printers, will be the most likely to successfully and effectively protect their IP rights. But unless the Supreme Court or Congress steps in, those plaintiffs will have to find a way to do so without the help of the ITC.
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.