How the US Tried and Failed To Block the 'Import' of Digital Data Violating Patents

This is another example of the law falling behind the reality of contemporary global commerce. Most current statutes address the import and export of physical assets, not digital ones.

Enterprises and the governments that support them were, in this case, attempting to say that there is no longer any difference. The court ruled the opposite: that the statutes have to change to reflect the difference between e-commerce and traditional commerce.


The practical effect is likely to make it easier to violate patents - for the time being. JL

Jon Brodkin reports in ars technica:

Electronic transmissions have some physical properties—for example an electron’s invariant mass is a known quantity—but commonsense dictates that there is a fundamental difference between electronic transmissions and ‘material things. Electronic transmissions “do not pass through United States ports and cannot be excluded. Lines must be drawn if the product of intellectual processes rather than manufacturing processes are to be included
A federal appeals court panel struck down an International Trade Commission (ITC) ruling in a patent case that attempted to block electronic transmissions of digital data from overseas.
The ITC’s authority to prevent importation of “articles” applies only to material things, not digital transmissions, the US Court of Appeals for the Federal Circuit ruled. (Consumer advocacy group Public Knowledge posted the ruling’s text.)

The smartphone wars are increasingly fought in a trade office.

“The Commission’s decision to expand the scope of its jurisdiction to include electronic transmissions of digital data runs counter to the ‘unambiguously expressed intent of Congress,’” Chief Circuit Judge Sharon Prost wrote for the court in a 2-1 decision.
"This decision is a big win for the open Internet,” said Charles Duan, director of Public Knowledge’s Patent Reform Project. “By rejecting the ITC's attempt to expand its jurisdiction, the Federal Circuit helps to ensure that Internet users have unfettered access to the free flow of information that has proved so useful for innovation and free expression.”
The case began with Align Technology alleging that ClearCorrect violated patents related to orthodontic appliances known as aligners, which are placed on patients’ teeth in order to straighten them.
ClearCorrect’s process for making the aligners involves facilities in both the US and Pakistan, which is where the digital importation comes in.
“ClearCorrect US scans physical models of the patient’s teeth and creates a digital recreation of the patient’s initial tooth arrangement,” today’s ruling explained. “This digital recreation is electronically transmitted to ClearCorrect Pakistan, where the position of each tooth is manipulated to create a final tooth position.”
ClearCorrect Pakistan then creates digital data models and “transmits these digital models electronically to ClearCorrect US. ClearCorrect US subsequently 3D prints these digital models into physical models.”
This process allegedly violates patents including one that describes a "method for making a predetermined series of dental incremental position adjustment appliances." This method involves obtaining a digital data set of a patient's initial tooth arrangement, creating repositioned tooth arrangements that can be turned into digital data sets, and then using those data sets to make appliances that fit in a patient's mouth and shift tooth positions.

Digital transmissions are not “articles”

The ITC ruled in April 2014 that ClearCorrect infringed Align’s patents. Infringement that occurred in the United States alone was not a violation of Section 337 of the Tariff Act of 1930, which covers “Unfair methods of competition and unfair acts in the importation of articles.”
But the commission decided that it had authority over electronically imported data under Section 337 and that the “importation” of the digital models violated the law.
The ITC pointed to various dictionary definitions of the word “articles” to argue that it could include digital information, but the court rejected the commission’s reasoning.
“We recognize, of course, that electronic transmissions have some physical properties—for example an electron’s invariant mass is a known quantity—but commonsense dictates that there is a fundamental difference between electronic transmissions and ‘material things,’” the court ruling said.
Electronic transmissions “do not pass through United States ports and cannot be excluded by Customs,” the ruling further noted. If the law’s use of the word “articles” really included electronic transmissions of digital data, that “would mean that Congress included an entire set of commodities in the statute without providing a method to curtail their importation.”
Any expansion of the statute should be left to lawmakers, the court decided, writing that “Congress is in a far better position to draw the lines that must be drawn if the product of intellectual processes rather than manufacturing processes are to be included within the statute."
The ITC had stayed its cease and desist order issued to ClearCorrect until the appeal was resolved. Today’s ruling reverses and remands the commission’s decision, with the court concluding that “the Commission does not have jurisdiction over this case.”
The Motion Picture Association of America (MPAA) is disappointed with the ruling. "This ruling, if it stands, would appear to reduce the authority of the ITC to address the scourge of overseas web sites that engage in blatant piracy of movies, television programs, music, books, and other copyrighted works," the group said. The MPAA said it is hoping for an "en banc review," in which the case would be heard by all the judges of the court instead of a three-judge panel.