In an interesting decision handed down by the Federal Circuit this week, it has been found that electronic transmissions of digital data are not “articles” which the International Trade Comissision (ITC) has jurisdiction to exlcude under 19 U.S.C. 1337.  ClearCorrect Operating, LLC v. International Trade Commission, Fed. Cir., No. 2014-1527 (Nov. 10, 2015).  After an interpretation of both the literal text of the statute as well as the legislative history, the Federal Circuit reversed the ITC’s prior determination, and found the term “articles” to clearly mean only “material things”.

Section 337 of the Trade Act of 1930, codified as 19 U.S.C. 1337, has served as an important tool for plaintiffs in intellectual property infringement actions, by providing an alternate and friendlier mechanism in blocking the importation of goods found to be in violation of the statute, e.g., such as those goods which infringe upon a patent or trademark. 

In order to prove a violation of 19 U.S.C. 1337, a complainant needed to establish (1) unfair competition or an unfair act, e.g., patent or trademark infringement, (2) importation, sale for importation, or sale after importation into the United States of the accused products, and (3) the existence of a domestic industry relating to the product in question.  If this burden can be met, an exclusion order would then be issued to the U.S. Customs and Border Protection (part of the Dept. of Homeland Security), for excluding the referenced products from the United States.

The ClearCorrect decision, however, does not appear to be an all-sweeping pronouncement against digital goods.  In this case, the patents-in-question involved a process for 3D scanning of a patient’s tooth arrangement in order to transmit and print teeth aligners for the patient, and the only importation here is a set of digital 3d blueprints for a 3D printer.  Construed narrowly, this decision would then only stand for the proposition that the ITC does not have jurisdiction where the only imported item is a digital good or electric transmission, and in Judge O’Malley’s words, the ITC has no authority to regulate over the Internet.

It should also be noted that a parallel case in the Southern District of Texas is still pending against ClearCorrect, which had been stayed pending the ITC decision.

The full opinion of this case can be found at the following link.