On January 27, 2016, both the International Trade Commission (ITC or “Commission”) and Align Technology, Inc. (“Align”) petitioned the Federal Circuit foren banc review of the panel’s decision in ClearCorrect v. ITC. A three-judge panel of the Federal Circuit ruled in November 2015 that the ITC’s jurisdiction under Section 337 is limited to “material things” and does not extend to electronically transmitted data. The panel’s decision means that the ITC cannot block the importation of data transmissions (such as downloadable software) that infringe U.S. patents. Reconsideration of that decision would allow the full Federal Circuit to examine the legal and policy implications of excluding electronic transmissions from the ITC’s jurisdiction.

Background

The Federal Circuit case ClearCorrect v. ITC is an appeal 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 case, complainant Align asserted that electronically transmitted models of dental repositioning devices were “articles” under Section 337. On April 3, 2014, the Commission ruled that electronic transmissions were “articles” subject to the ITC’s jurisdiction. On November 10, 2015, the Federal Circuit released an opinion, written by Chief Judge Prost, reversing the Commission’s determination and holding that the term “articles” is limited to “material things.” Our blog post discussing the background of Digital Models and Chief Judge Prost’s opinion is available here; our article summarizing the Federal Circuit oral arguments is available here; and our article on the Commission’s final determination is available here.

The Petitions for En Banc Review

The Commission’s petition for en banc review faults the Federal Circuit panel for its interpretation of the term “articles” and for its application of the two-step Chevronanalysis.

Regarding the panel’s definition of “articles,” the Commission argues that the panel’s “narrow” interpretation of “articles” as “material things” is “an ordinary meaning … not the ordinary meaning” of “articles” in the statute.[1] Specifically, pointing to numerous dictionary definitions and evidence of statutory context, the Commission argues that the panel’s definition is  improperly limited.[2] According to the Commission, the panel’s definition of “articles” is an “‘open invitation to foreign entities … to circumvent’ the Commission’s authority under section 337.”[3]

As to the panel’s Chevron analysis, the Commission’s petition faults the panel for “[f]ailing to recognize ambiguity in the term ‘articles’” and declining to afford deference to the Commission’s decision.[4] In Suprema v. ITC, the en banc Federal Circuit stated that the Commission’s interpretation of the phrase “articles that infringe” as used in Section 337 was to be afforded deference.[5] In its ClearCorrectpetition, the Commission argues that because the term “articles” is at least somewhat ambiguous, the Commission’s interpretation of that term should have similarly been afforded Chevron deference.[6] The Commission also argued that the panel’s Chevronanalysis was legal error because it did not evaluate the reasonableness of the Commission’s definition of “articles,” rather, the panel simply “identi[fied] certain supposed errors in the Commission’s analysis.”[7]

Align’s petition for en banc review tracks the arguments made by the Commission. Align critiques the Federal Circuit panel for “selectively harvesting only certain definitions [of ‘articles’] from contemporaneous dictionaries … and improperly discounting canons of interpretation of generic language, Supreme Court jurisprudence on the scope of articles of commerce, and principles of agency deference.”[8] Align further argues that without the ability to regulate electronic transmissions as “articles”, the Commission will be unable to “address every type and form of unfair trade practice.”[9]

Potential Ramifications

The Federal Circuit panel’s decision in ClearCorrect has been criticized for arguably creating a loophole in the Commission’s jurisdiction. As noted in Judge Newman’s dissent, the panel’s ruling allows the Commission to stop importation of a CD-ROM (a “material thing”) containing infringing data, but prevents the Commission from blocking importation of that same data if transmitted into the U.S. electronically.[10] Should the Federal Circuit hear the ClearCorrect appeal en banc, it would decide whether the ITC’s jurisdiction will remain limited to “material things” or should encompass infringing electronic transmissions as well. The en banc court may also clarify the application of Chevron deference to ITC decisions, given the arguable inconsistency between how that doctrine was applied in ClearCorrect and inSuprema.