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ITC Says Digital Goods are Articles, Electronic Transmission is Importation for IPR Probes

Wednesday, April 09, 2014
Sandler, Travis & Rosenberg Trade Report

The International Trade Commission announced this week its determination that digital products are articles, and that electronic cross-border transmissions constitute importation, for purposes of Section 337 intellectual property rights infringement investigations. The ITC’s decision could have significant implications for industries such as software and media in which digital imports are prevalent. The decision, which one source says is lengthy and addresses the input of numerous interested parties, and the dissent of one commissioner are expected to be made public in the coming weeks.

Following its determination, the ITC ruled in investigation 337-TA-833 that electronic transmissions of certain digital models, digital data and treatment plans for use in making incremental dental positioning adjustment appliances are violating certain patents owned by Align Technology Inc.

The ITC then took the unusual step of imposing as a remedy to this infringement cease and desist orders without an accompanying exclusion order. These orders direct the two respondents to halt the infringing digital imports but provide an exemption for activities related to treatment of existing patients in the U.S. Cease and desist orders are enforced by the ITC rather than by U.S. Customs and Border Protection, and violations can be met with heavy fines. Exclusion orders direct CBP to exclude infringing articles from entry into the U.S., but the digital nature of the articles at issue appears to have precluded consideration of such a remedy in this case.

The cease and desist orders will take effect in 60 days unless overturned by the White House. An appeal of the ITC’s decision to the Court of Appeals for the Federal Circuit is expected.

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