Background
Align Technology, the maker of Invisalign dental aligners, filed a Section 337 complaint at the ITC against ClearCorrect. The dispute involved a novel business arrangement: ClearCorrect had dental scan data from U.S. patients’ teeth transmitted to Pakistan, where ClearCorrect Pakistan processed the data and generated digital treatment plans and 3D models. Those digital files were then transmitted back electronically to the United States, where the aligner molds were printed and the physical aligners manufactured. Align Technology claimed ClearCorrect’s process infringed its patents covering computer-implemented systems and methods for repositioning teeth and producing dental appliances.
The ITC found a Section 337 violation and issued an exclusion order, asserting that the electronic transmission of the digital data files from Pakistan to the United States constituted importation of “articles” that infringed Align’s patents. The ITC relied on a broad reading of Section 337 to extend its reach to digital data transmitted over the internet. ClearCorrect appealed, arguing that Section 337’s reference to “articles” means physical, tangible goods — not electronic data transmissions.
The Court’s Holding
The Federal Circuit reversed the ITC’s decision, holding in a 2-1 decision that the word “articles” in Section 337 refers to material things — tangible, physical goods that can be imported in the traditional sense. Electronic transmissions of digital data are not “articles” within the meaning of Section 337, regardless of whether those transmissions convey information that could be used to manufacture infringing products. The court analyzed the historical usage of “articles” in trade law and concluded that Congress had consistently used the term to mean physical merchandise that crosses borders as tangible goods.
The majority rejected the ITC’s argument that its interpretation was a reasonable one entitled to Chevron deference, finding the statutory text sufficiently clear. Judge Newman dissented vigorously, arguing that the majority’s narrow interpretation created a loophole allowing foreign competitors to infringe patents with impunity by transmitting digital data rather than physical goods — a result she found contrary to the statute’s anti-unfair-trade-practice purpose. The Federal Circuit denied en banc rehearing in March 2016.
Key Takeaways
- The ITC’s Section 337 jurisdiction is limited to physical, tangible “articles” of importation — it does not extend to electronic transmissions of digital data across the internet.
- Companies that infringe U.S. patents by transmitting digital files into the U.S. (3D printing files, software, digital designs, dental plans) cannot be reached by ITC exclusion orders under current law — only district court remedies are available.
- The decision created a potential regulatory gap: as manufacturing shifts to digital transmission and 3D printing models, the ITC’s traditional border-enforcement role becomes harder to apply because the “importation” may be an intangible data transmission rather than a physical shipment.
- The ruling has significant implications for industries transitioning to digital manufacturing — dental devices, pharmaceuticals using digital synthesis data, and any sector where the manufacturing information travels electronically before physical production occurs in the U.S.
Why It Matters
ClearCorrect v. ITC exposed a fundamental tension in the ITC’s role as a trade enforcement body in a world of digital manufacturing and cloud-based services. Section 337 was designed for a world of physical goods crossing borders — it was not written with the internet in mind. As manufacturing increasingly relies on digital files, design data, and cloud-based services transmitted across borders, the physical-goods limitation in ClearCorrect means the ITC cannot intercept infringing “imports” that travel electronically.
For patent holders in industries moving toward digital manufacturing — including medical devices (dental aligners, orthopedic implants), semiconductor design, consumer products using additive manufacturing — the decision is a strategic setback. They can still seek damages or injunctions in district court, but they cannot use the ITC’s powerful and fast exclusion-order remedy to block digital transmissions at the border. The decision also highlights a potential legislative gap: as Congress updates the patent system for new technologies, the question of whether Section 337 should be extended to cover digital data transmissions remains open and debated. Subsequent proposals to amend Section 337 to cover electronic imports have been considered but not enacted as of the current date.