Feb 15 2014, 12:14pm CST | by Forbes
An obscure fight over dental retainers before a little-noticed federal agency in Washington has set up a battle between movie studios and publishers on one side and Internet giant Google on the other.
The argument comes down to whether the International Trade Commission, which polices the nation’s trade channels for illegal goods like fake Rolex watches and patent-infringing devices, should also take on the job of policing the Internet for illicit electronic transmissions.
Google thinks word “articles” in Section 337 of the Tariff Act of 1930 means physical objects, the kind of stuff U.S. Customs agents have seized from shipping containers and air-cargo warehouses for decades. But the Motion Picture Association of America thinks “articles” encompasses movies, TV shows, musical recordings and software that can cross borders with the click of a mouse.
The case that has divided the two involves both types of article: Clear plastic dental retainers, produced in Houston on 3-D printers utilizing engineering data transmitted electronically from Pakistan.
Align Technology, a San Jose, Calif. manufacturer, has been engaged in a long-running fight with a former executive who went into the business in Pakistan, producing what Align says are retainers that violate its patents. After it won an order from the ITC prohibiting the importation of the offending products into the U.S., Align says, the competitor, ClearCorrect Pakistan (Private) Ltd., switched to sending engineering documents to the U.S. in digital form and producing them here.
“Our argument is that the digital files being sent over are articles,” said said Thomas Counts, a partner with Paul Hastings in San Francisco who represents Align. “ They are articles of commerce.”
After more than a year of deliberation an administrative law judge agreed, recommending a cease-and-desist order prohibiting ClearCorrect from “importing” its digital files.
Align is also suing ClearCorrect in for patent infringement in federal court, but Counts said the ITC provides much quicker relief for companies facing illegal competition. A typical patent case may take years and millions of dollars in legal fees to resolve and exposes both sides to the whims of a jury that may not be expert in patent law, he said, while the administrative law judges at the ITC handle only intellectual property issues and typically can reach a decision within 18 months.
Administrative law judges can’t enact their own recommendations, however. They require the approval of the six-member ITC board, politically appointed commissioners split between Republicans and Democrats. The review was supposed to have been completed six months ago, Counts said, but it has dragged on as the commissioners apparently have debated whether the ITC should get into the business of policing electronic transmissions.
At the end of January, the commission put the question out for public comment. Within days it had responses from MPAA, Google, book publishers and even cellphone-technology company Nokia.
“The surprise we got was Google,” Counts said. “ It’s not clear exactly what Google’s interests are, but it’s clear they are opposed to the ITC’s jurisdiction over digital articles imported by electronic transmission.”
Google’s filing says “articles” should be restricted to physical objects, and it isn’t hard to see why. The company is already barraged with subpoenas by other federal agencies and litigants seeking the contents of its e-mail servers. Adding a new federal agency to the list would make it subject to even more requests that it hand over the private data flowing over its network.
Nokia is on the other side, however. In a Feb. 10 filing, the company, which sold its physical cellphone business to Microsoft last year to focus on network equipment, says courts have already determined that electronically transmitted software can be a “component” of patent-infringing goods and therefore should be covered by the ITC’s enforcement powers. Since telecommunications network equipment runs on patented software, it makes sense Nokia would want broad federal authority to block competitors from transmitting infringing technology.
No one, even Align, is suggesting the ITC could actually monitor the global Internet for infringing data transmissions (although Edward Snowden’s revelations make it more plausible than previously believed.) But armed with a court order, competitors can find infringing files on a company’s computers as Align did with ClearCorrect.
“We identified what files were being transmitted,” Counts said. “They admitted the files were used to print the molds to make the aligners.”
For Counts, the question is whether the ITC can assert its jurisdiction over “articles” that are merely a stream of digital data.
“With the advent of 3D printing, you can just email that digital file over, and then the person prints out that exact same infringing product,” Counts said. “While the law always lags technology, it’s interesting that this issue hasn’t been resolved already.”
Source: Forbes Business
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