Two developments regarding investigation under 19 U.S.C. § 1337 (Section 337) covering Unfair practices in import trade including ‘articles that infringe’ a valid enforceable US patent, are of interest.
Suprema Inc. v. ITC
‘Articles that infringe’ – are articles which may induce/assist infringement covered?
The United States Court of Appeals for the Federal Circuit (CAFC) in Supreme Inc. v. ITC, decided on 10-8-2015 has held that the United States International Trade Commission (ITC) can enter an exclusion order to bar entry to ‘articles that infringe’ on the basis of infringement of a method claim when the underlying direct infringement occurs post-importation. Certain fingerprint scanning devices were imported along with software developer kits and after importation customised software to work the scanning machines was developed and the scanners were sold in the US. The imported products as such were not infringing at the point of importation. The ITC interpreted ‘article that infringe’ to mean those article which may be used to infringe IP rights post importation. The Federal Circuit upheld this interpretation reasoning that the words of the statute do not expressly state so, there was ambiguity and the ITC could adopt an interpretation keeping in view the overall objective of preventing unfair practices.
Can the ITC act based on an importer’s intent to cause direct infringement at a later time?
However, the dissenting opinion argues that empowering ITC to act based on what may happen when the goods are used after importation is an overreach and not intended by the legislature. In fact the ITC itself has stated that its order extends to all scanners imported by the (alleged) infringer though it cannot determine which of the scanner might actually infringe the patents in question and relies on a finding that such infringement may take place.
The dissenters point out that the laws covering patents provides adequate remedy protection for intellectual property rights against infringers and Section 337 covers goods that infringe. They advance a view that the court should not try to reconcile the disparity arising from the in rem language of Section 337 and the in personam language of § 271 (Patent Act) and resort to an interpretation of trade laws which would enhance IP protection. It is argued that ITC is not vested with the power to issue an exclusion order based on an importer’s intent to cause direct infringement at a later time by completing the steps of a methods claim. It further argues that article connotes a physical object and in the instant case, no such infringing object/article exists at time of importation.
ClearCorrect (Investigation No. 337 –TA-833)
Are digital data sets articles?
In a case to be shortly decided by the CAFC, the issue is about the word ‘article’. While Suprema v. ITC holds that the ITC has jurisdiction over the article which may later be used to infringe patents and sell infringing goods, ClearCorrect and various ISPs question whether the ITC has jurisdiction over data sets transmitted electronically and later used to make goods by the process of 3D printing. They argue that ‘article’ covers tangible goods which are imported and electronic transmission like telecommunications have been kept out of purview of Section 337.
The (alleged) infringer ClearCorrect uploaded data of impressions of patients’ teeth which was processed by its subsidiary in a foreign country to plot projected movements of the teeth from their crooked position to the straight position approved by the orthodontist’s prescription. The processed files containing digital models, and data were downloaded in the US office and used to print 3D models over which sheet plastic was placed so the patients could wear them at various stages till the teeth were aligned.
The ITC has held that ‘article’ includes digital data sets.
Arguing that ‘article’ encompasses an identifiable unit of commercial value the patentee sought intervention by the ITC to check infringement of its patents. Though, in parallel prior dealing between the parties, covenant not to sue and numerous other grounds are raised, the decision that ITC get jurisdiction since digital data sets constitute ’article’ has drawn a lot of attention and Amici briefs for and against the proposition.
The ‘importer’ has argued that under US patent laws research data has been held as not being ‘material’ which infringes and in the strict sense no importation takes place when data are uploaded on to service. Unlike software recorded on discs which have been held to be ‘articles’ the digital data sets are not recorded on to a medium or sold. It has also contended that infringement attributed to the methods claims of the patentee which are allegedly carried out by it do not fall under the jurisdiction of ITC.
The dissenting opinion in the ITC order emphasises on the scheme of 337 and states that legislature did not intend to regulate data transmissions through customs entry procedures and the trade law is not an extension of patent, trademark and copyright laws and other trade laws are also limited to tangible goods. Also electronic transmissions are expressly exempt from the tariff schedule and they are not goods. It is argued that the language in 337 talks about, exclusion from ‘entry’, seizure and forfeiture which is not possible with electronic transmissions.