<b><i>Online Extra</b></i> Tech Players Line Up Against ITC Power to Ban Digital Files

Congress gave the U.S. International Trade Commission (ITC) the power to bar imports of products that infringe U.S. patents or otherwise offer their makers an unfair competitive edge. But should the ITC be able to block the flow of information as well?

The question is forcing the courts to deal with the legal ramifications of the digital age. And last month, it prompted a flood of amicus briefs from groups concerned that a ruling in an IP battle over orthodontic braces could give the ITC jurisdiction over the transfer of Internet data files.

The Internet Association, the Business Software Alliance, Public Knowledge and the Electronic Frontier Foundation filed amicus briefs with the U.S. Court of Appeals for the Federal Circuit on Friday, urging reversal of an ITC ruling that would ban the importation of digital files used to produce infringing products.

The briefs were filed in an appeal of an ITC opinion issued in April that found that electronically transmitted information fits the definition of an 'article' as described in the Tariff Act, and therefore the commission, which has the authority to bar infringing articles, has jurisdiction over electronic transmissions.

The case stems from a 2011 lawsuit in which Align Technology Inc. sued ClearCorrect Operating LLC for infringing its patents covering a method for making clear teeth-straightening braces. During discovery, Align discovered that ClearCorrect was generating digital models of patients' teeth in its overseas offices and transmitting the digital data to Texas, where 3D printers created molds used to make the braces-like appliances. In 2012, Align filed a complaint with the ITC.

It took more than a year for ITC Administrative Law Judge Robert Roberts to issue his initial determination ' an 815-page tome ' finding that ClearCorrect infringed Align's patents. He recommended that the ITC issue a cease-and-desist order to stop ClearCorrect's imports because an exclusion order can't apply to a nontangible good.

The full commission then reviewed Roberts' decision, but because of the novel issues involved, it postponed its ruling several times and even asked for public comment on the jurisdiction issue. The agency finally affirmed the decision in April 2014. In June, it stayed the cease-and-desist order pending the Federal Circuit appeal.

The Internet Association, whose members include Amazon.com Inc., AOL Inc., eBay Inc., Facebook Inc., Google Inc., Netflix Inc. and other major Internet companies, wrote in its amicus brief that the ITC isn't authorized to regulate the Internet on the premise that digital signals can be infringing 'articles.' The ITC opinion, the group said, illegally expands the agency's statutory authority and 'has sweeping implications for the Internet and the ability of companies to operate efficient, dependable global networks.'

The brief, written by a team led by John Thorne of Kellogg, Huber, Hansen, Todd, Evans & Figel, also argues that the ITC erred on certain legal issues in drawing its conclusions. It said the ITC opinion risks 'widespread disruption of the global Internet and to essential American economic interests.'

The amicus brief filed by the Business Software Alliance, which represents global software companies such as Adobe Systems Inc., Apple Inc., Dell Inc., International Business Machines Corp., Intel Corp., Microsoft Corp. and Oracle Corp., said the ITC's conclusion that digital transmissions are 'articles' within the meaning of the Tariff Act 'misconstrues the act's meaning, history and purpose.'

The ITC's jurisdiction extends only to the importation of tangible goods, the BSA argued, and Congress never intended to entrust regulation of electronically transmitted information and communications to the ITC. 'The changing technological landscape cannot justify the commission's interpretation of the word 'articles,” the BSA said in its brief, which was authored by Jeffrey Lamken of the Washington, DC, firm MoloLamken. 'The adaptation of otherwise unambiguous statutes in the face of technological change is for Congress, not agencies or the courts.'

Finally, Public Knowledge and EFF, two public interest groups concerned with preserving an open Internet and balancing intellectual property and the public interest, argue in their joint brief that the ITC doesn't and shouldn't have power over communications systems such as the Internet. Their brief, written by Public Knowledge counsel and patent reform project director Charles Duan, focuses on transmissions of telecommunications data, such as telephone calls, telegraph messages and television and radio broadcasts, which it fears could also be considered 'articles' and therefore fall under the ITC's jurisdiction if the ITC opinion stands.

The groups asked the Federal Circuit to reject the ITC decision and to provide limitations 'at least to ensure that the agency cannot assert power over all international telecommunications data transmissions.'

Paul Hastings attorney Thomas Counts, who represents Align Technology, said the arguments in the amicus briefs resemble those made earlier by Google, which filed its own amicus brief in support of ClearCorrect at the ITC. In contrast, Nokia, the Motion Picture Association of America and the Association of American Publishers filed amicus briefs in support of Align when the case was before the ITC, saying that denying the ITC the ability to block electronic infringing transmissions that originate overseas would deprive them of a powerful legal remedy.

Counts added that he expected amici to line up behind his client in the appeal as well. Lamken and Thorne weren't available to comment on the latest briefs.

In addition to Counts, Align is represented by Paul Hastings' Scott Flicker. ClearCorrect is represented by Gary Hnath of Mayer Brown and Michael Myers of McClanahan Myers Espey.

Lisa Shuchman writes for The Litigation Daily, an ALM sibling of e-Commerce Law & Strategy.

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Congress gave the U.S. International Trade Commission (ITC) the power to bar imports of products that infringe U.S. patents or otherwise offer their makers an unfair competitive edge. But should the ITC be able to block the flow of information as well?

The question is forcing the courts to deal with the legal ramifications of the digital age. And last month, it prompted a flood of amicus briefs from groups concerned that a ruling in an IP battle over orthodontic braces could give the ITC jurisdiction over the transfer of Internet data files.

The Internet Association, the Business Software Alliance, Public Knowledge and the Electronic Frontier Foundation filed amicus briefs with the U.S. Court of Appeals for the Federal Circuit on Friday, urging reversal of an ITC ruling that would ban the importation of digital files used to produce infringing products.

The briefs were filed in an appeal of an ITC opinion issued in April that found that electronically transmitted information fits the definition of an 'article' as described in the Tariff Act, and therefore the commission, which has the authority to bar infringing articles, has jurisdiction over electronic transmissions.

The case stems from a 2011 lawsuit in which Align Technology Inc. sued ClearCorrect Operating LLC for infringing its patents covering a method for making clear teeth-straightening braces. During discovery, Align discovered that ClearCorrect was generating digital models of patients' teeth in its overseas offices and transmitting the digital data to Texas, where 3D printers created molds used to make the braces-like appliances. In 2012, Align filed a complaint with the ITC.

It took more than a year for ITC Administrative Law Judge Robert Roberts to issue his initial determination ' an 815-page tome ' finding that ClearCorrect infringed Align's patents. He recommended that the ITC issue a cease-and-desist order to stop ClearCorrect's imports because an exclusion order can't apply to a nontangible good.

The full commission then reviewed Roberts' decision, but because of the novel issues involved, it postponed its ruling several times and even asked for public comment on the jurisdiction issue. The agency finally affirmed the decision in April 2014. In June, it stayed the cease-and-desist order pending the Federal Circuit appeal.

The Internet Association, whose members include Amazon.com Inc., AOL Inc., eBay Inc., Facebook Inc., Google Inc., Netflix Inc. and other major Internet companies, wrote in its amicus brief that the ITC isn't authorized to regulate the Internet on the premise that digital signals can be infringing 'articles.' The ITC opinion, the group said, illegally expands the agency's statutory authority and 'has sweeping implications for the Internet and the ability of companies to operate efficient, dependable global networks.'

The brief, written by a team led by John Thorne of Kellogg, Huber, Hansen, Todd, Evans & Figel, also argues that the ITC erred on certain legal issues in drawing its conclusions. It said the ITC opinion risks 'widespread disruption of the global Internet and to essential American economic interests.'

The amicus brief filed by the Business Software Alliance, which represents global software companies such as Adobe Systems Inc., Apple Inc., Dell Inc., International Business Machines Corp., Intel Corp., Microsoft Corp. and Oracle Corp., said the ITC's conclusion that digital transmissions are 'articles' within the meaning of the Tariff Act 'misconstrues the act's meaning, history and purpose.'

The ITC's jurisdiction extends only to the importation of tangible goods, the BSA argued, and Congress never intended to entrust regulation of electronically transmitted information and communications to the ITC. 'The changing technological landscape cannot justify the commission's interpretation of the word 'articles,” the BSA said in its brief, which was authored by Jeffrey Lamken of the Washington, DC, firm MoloLamken. 'The adaptation of otherwise unambiguous statutes in the face of technological change is for Congress, not agencies or the courts.'

Finally, Public Knowledge and EFF, two public interest groups concerned with preserving an open Internet and balancing intellectual property and the public interest, argue in their joint brief that the ITC doesn't and shouldn't have power over communications systems such as the Internet. Their brief, written by Public Knowledge counsel and patent reform project director Charles Duan, focuses on transmissions of telecommunications data, such as telephone calls, telegraph messages and television and radio broadcasts, which it fears could also be considered 'articles' and therefore fall under the ITC's jurisdiction if the ITC opinion stands.

The groups asked the Federal Circuit to reject the ITC decision and to provide limitations 'at least to ensure that the agency cannot assert power over all international telecommunications data transmissions.'

Paul Hastings attorney Thomas Counts, who represents Align Technology, said the arguments in the amicus briefs resemble those made earlier by Google, which filed its own amicus brief in support of ClearCorrect at the ITC. In contrast, Nokia, the Motion Picture Association of America and the Association of American Publishers filed amicus briefs in support of Align when the case was before the ITC, saying that denying the ITC the ability to block electronic infringing transmissions that originate overseas would deprive them of a powerful legal remedy.

Counts added that he expected amici to line up behind his client in the appeal as well. Lamken and Thorne weren't available to comment on the latest briefs.

In addition to Counts, Align is represented by Paul Hastings' Scott Flicker. ClearCorrect is represented by Gary Hnath of Mayer Brown and Michael Myers of McClanahan Myers Espey.

Lisa Shuchman writes for The Litigation Daily, an ALM sibling of e-Commerce Law & Strategy.

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