US Appeals Court Rules ITC Overstepped Its Bounds in ClearCorrect Case

The US Court of Appeals for the Federal Circuit has rejected the International Trade Commission (ITC) attempt to block ClearCorrect’s transmissions of digital data. The Court held that the ITC overstepped its authority with its “decision to expand the scope of its jurisdiction to include electronic transmissions of digital data runs counter to the ‘unambiguously expressed intent of Congress.’”

The decision comes after the ITC previously found in April 2014 that both ClearCorrect Operating LLC, based in Houston, and ClearCorrect Pakistan Ltd, based in Lahore, infringed on the valid patents of San Jose, Calif-based Align Technology Inc. The ITC issued a cease-and-desist order at that time. In June 2014, the ITC temporarily stayed the enforcement of the cease-and-desist order on procedural grounds pending a determination on ClearCorrect’s appeal of the Commission’s decisions to the Federal Court.

The Texas-based ClearCorrect sends digital scans of US-based patients’ mouths to ClearCorrect Pakistan. ClearCorrect Pakistan in turn creates treatment plans that are sent back to the United States as digital files. The orthodontic aligner is then physically manufactured by ClearCorrect in the United States.

The most recent 2 to 1 decision reversed the ITC’s earlier ruling that the ITC had jurisdiction over the case. The decision expressly did not address or alter the substantive merits of the ITC’s prior determination that ClearCorrect infringes 18 claims of five valid Align patents. The panel’s decision this week is limited to the ITC’s jurisdiction to resolve disputes involving transmission of digital data over the Internet. The decision states that the ITC’s jurisdiction does not extend to transmissions of digital data and is instead limited to importation of tangible goods.

This recent decision has drawn the attention of the Motion Picture Association of America and other media companies concerned about piracy of movies, TV shows, music recordings, books, and software, and the ability of the ITC to regulate digital data transmissions.