On November 10, 2015, the U.S. Court of Appeals for the Federal Circuit issued its precedential opinion in ClearCorrect Operating, LLC v. ITC (2014-1527).  This was an appeal from the International Trade Commission’s (“the Commission”) determination finding a violation of Section 337 in Certain Digital Models, Digital Data, and Treatment Plans for Use In Making Incremental Dental Positioning Adjustment Appliances Made Therefrom, and Methods of Making the Same (Inv. No. 337-TA-833).

By way of background, the International Trade Commission instituted this investigation on March 20, 2012 based on a complaint filed by Complainant Align Technology, Inc. (“Align”). In the Complaint, Align alleged that Respondents ClearCorrect Operating, LLC and ClearCorrect Pakistan (Private), Ltd. (collectively, “ClearCorrect”) violated Section 337 in the importation into the U.S. and sale of certain digital models, digital data, or treatment plans for use in making incremental dental positioning adjustment appliances that infringe—or are made, produced, or processed by means of a process that infringes—one or more claims of various U.S. patents.  See our March 2, 2012 and April 6, 2012 posts for more details on the complaint and Notice of Investigation. 

ALJ Robert K. Rogers, Jr. issued an Initial Determination (“ID”) in the investigation finding a violation of Section 337 and recommended issuing cease and desist orders to stop ClearCorrect from electronically importing digital models into the U.S.  See our June 24, 2013 post for more information on the ID.  After the Commission also found a violation of Section 337 (under modified reasoning) where it determined that the importation of articles requirement of Section 337 could be met by digital data, both Align and ClearCorrect appealed various aspects of the Commission’s opinion to the Federal Circuit.

The Federal Circuit resolved the appeal by holding that the Commission does not have jurisdiction over the original investigation in view of the accused digital models.

According to the opinion, the term “articles” is not defined in the statute, and the Federal Circuit held its ordinary or natural meaning of “material things” was appropriate, as evidenced by numerous dictionaries.  The Court confirmed that the manner in which “articles” is used throughout Section 337 is consistent with a definition encompassing only “material things,” pointing to, inter alia, provisions addressing forfeiture and seizure.  Although it was deemed unnecessary to turn to the legislative history, the Court addressed the Commission’s arguments, holding that nothing in the legislative history mandated a broader definition of “articles.”

The Court explained that the Commission’s definition did not warrant deference, stating that the “Commission’s analysis of dictionary definitions evidences the irrationality of the Commission’s interpretation of the term ‘article’ and that “the Commission’s definition cannot be found in any dictionary cited by the Commission and the Commission’s conclusion is not logically connected to any of the definitions cited by the Commission.”

The Court also chastised the Commission for using the legislative history in a “highly misleading” manner, because “not only was a key portion of the quote omitted, but it was omitted without any indication that there had been a deletion” (emphasis in original).

As such, the Federal Circuit reversed and remanded the case, finding that the Commission “repeatedly and unreasonably erred in its analysis of the term ‘article,’” and that the Commission does not have jurisdiction over the case.

Judge O’Malley issued a concurring opinion emphasizing the importance of open access to the Internet and concluding that Congress would have explicitly delegated regulation of the Internet to the Commission if it had so intended.

Judge Newman issued a dissenting opinion.  In her dissent, Judge Newman argued that new technologies of the Information Age were not imagined at the time Section 337 was originally drafted and that interpreting “articles” as “articles of commerce” rather than tangible goods best achieves the Commission’s goal of protecting American commerce.