Appeals court: ITC can’t rule on Align Tech, ClearCorrect spat

The U.S. Court of Appeals for the Federal Circuit ruled today that the International Trade Commission has no jurisdiction in ruling on Align Technology‘s (NSDQ:ALGN) patent spat with ClearCorrect.

A 3-judge panel ruled that the ITC has no jurisdiction over the transmission of digital data over the internet, and only over the importation of “tangible goods,” according to Align Technology.

ClearCorrect’s aligners are created using digitally transmitted data and treatment plans imported from Pakistan, San Jose, Calif.-based Align Technology said.

“Accordingly, we reverse and remand the Commission’s decision and conclude that the Commission does not have jurisdiction over this case,” the judges wrote in their decision.

Last May an ITC judge issued an initial determination that ClearCorrect violated the patents using digital data and treatment plans imported from Pakistan. Per standard ITC procedure, the trade commission took the ruling under review.

“This is not a decision against Align and it is not a decision about patent infringement – it’s about jurisdiction. And if it is determined that the ITC cannot enforce the previously determined finding of infringement of Align’s patents then we will pursue relief in a venue that can. The panel’s opinion and the ITC jurisdictional issue have no bearing on Align’s stayed litigation against ClearCorrect in Texas, which Align will continue to pursue,” GC Roger George said in a press release.

The decision is the most recent in an ongoing battle between the 2 companies over orthodontic device technology. In June, The U.S. Patent & Trademark Office agreed to re-examine a trio of patents held by Align after ClearConnect requested it.

In April, the companies seemed to be closer to burying the hatchet with a deal to resolve their proceedings with the International Trade Commission. The agreement is subject to the outcome of an appeal in the U.S. Court of Appeals for the Federal Circuit.

“The Commission has concluded that it has jurisdiction over all incoming international Internet data transmissions. It reaches this conclusion despite never having purported to regulate Internet transmissions in the past, despite no reference to data transmissions in the statute under which it acts, despite an absence of expertise in dealing with such transmissions, and despite the many competing policy concerns implicated in any attempt to regulate Internet transmissions,” Circuit Judge O’Malley wrote in their concurring opinion. “If Congress intended for the Commission to regulate one of the most important aspects of modernday life, Congress surely would have said so expressly.”

“The new technologies of the Information Age focus on computer-implemented methods and systems, whose applications of digital science provide benefits and conveniences not imagined in 1922 and 1930. Throughout this evolution, Section 337 served its statutory purpose of facilitating remedy against unfair competition, by providing for exclusion of imports that infringe United States intellectual property rights. Until today. The court today removes Section 337 protection from importations that are conducted by electronic transmission. The court’s reason is that electronically transmitted subject matter is not “tangible,” and that only tangible imports are subject to exclusion. This holding is contrary to Section 337, and conflicts with rulings of the Supreme Court, the Federal Circuit, the Court of Customs and Patent Appeals, the Court of International Trade, the International Trade Commission, the Customs authorities, and the Department of Labor. I respectfully dissent,” wrote Circuit Judge Newman in their dissenting opinion.

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