From the WSJ:
A U.S. appeals court this month will consider whether federal tariff law gives the International Trade Commission the power to order a halt to foreign digital transmissions into the U.S. when those communications infringe U.S. intellectual property. Traditionally, the ITC has intervened only to stop the importation of physical goods.
In a proceeding closely watched by tech companies and the movie, music and publishing industries, the commission expanded its approach last year while reviewing a trade dispute over orthodontic devices. The ITC decided it could take action against virtual material coming into the U.S. and ordered a Texas-based company, ClearCorrect, to stop receiving digital models and data from Pakistan for the manufacture of teeth aligners, invisible mouthpieces used as an alternative to braces.
The ITC had said ClearCorrect was infringing patents held by larger rival Align Technology Inc., a San Jose, Calif., company that generated more than $700 million in revenue last year from its Invisalign devices.
The U.S. Court of Appeals for the Federal Circuit will hear arguments on ClearCorrect’s appeal in Washington on Aug. 11.
...ClearCorrect’s manufacturing process starts with a physical model of a patient’s teeth in the U.S., which is scanned digitally. The file is uploaded and received by technicians in Pakistan who create virtual models of a patient’s teeth moving into straight positions. The files are transferred back to the U.S. electronically, where ClearCorrect prints 3-D models that are used to make aligners.
The ITC in court papers said ClearCorrect hoped to skirt U.S. patent law by farming out part of its process to Pakistan. The commission argues it would be unreasonable to say it could block physical dental molds at the border yet do nothing to stop digital ones.
Relatedly, would a finding that Section 337 can be used to block digital imports lead to challenges to Section 337's consistency with WTO obligations?
