ITC, ClearCorrect Debate Scope of Agency Jurisdiction
The International Trade Commission and ClearCorrect, maker of corrective orthodontic devices, during oral argument Tuesday in the U.S. Court of Appeals for the Federal Circuit mainly debated the scope of ITC jurisdiction and whether it's able to block importation of digital information. The case, heard by Judges Kathleen O'Malley, Sharon Prost and Pauline Newman, was brought to the court by ClearCorrect. It claims the ITC overreached its abilities to regulate goods when it released an order prohibiting the firm's Pakistan branch from sending alleged patent-infringing digital data to the company's headquarters in Houston. The ITC ruled ClearCorrect infringed on patents encompassing the plastic orthodontic molds used as an alternative to braces held by industry leader Align Technology. Many tech companies backed ClearCorrect.
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Michael Myers, attorney for ClearCorrect and partner at McClanahan Myers Espey, argued that Congress didn't grant the ITC the authority to govern or regulate electronically transmitted data and that the commission's actions of blocking the data were a "clear deviation of congressional intent." Myers compared the transmitted information, which is produced in Pakistan and used by ClearCorrect to make molds of its corrective aligners, to a phone call or any transfer of data that doesn't include a transaction. The plastic mold produced in Houston, not the data sent from Pakistan, is the purchased product, Myers said. He argued the data is three steps removed from the final product and shouldn't be interpreted as an actual product that is subject to the ITC's jurisdiction.
Sidney Rosenzweig, attorney adviser for the ITC Office of General Counsel, argued the commission has jurisdiction to prohibit the importation of digital goods, citing the term "articles" in the order authorizing the ITC's creation. Rosenzweig said the ITC interprets "articles" in this case to include digital goods and has discretion to issue a cease and desist order to companies engaging in the trade of goods it deems illegal. O'Malley questioned whether the ITC could enforce its jurisdiction on digital products and asked Rosenzweig to cite the commission's reasoning for its ruling against ClearCorrect that expanded ITC reach. He said the ITC interpretation of its purpose to control the trade and importation of "articles," for issues such as the ClearCorrect case, stretches into the digital realm.
The case has drawn significant interest from industry groups such as the Association of American Publishers (AAP), the MPAA, RIAA and BSA | The Software Alliance. In an amicus brief filed with the Federal Circuit, AAP said it supports the ITC ruling against ClearCorrect, and "no language anywhere in the statute narrows the term 'articles' to exclude digital data altogether."
After Tuesday's proceedings, Myers told us that he thought "nothing earth-shattering" or unexpected happened, and that he is optimistic that the Federal Circuit will rule in ClearCorrect's favor based on the arguments presented. "We look forward to getting the court's decision," he said. The ITC declined to comment.