Google and the Motion Picture Association of America, a Washington trade group, filed comments to the U.S. International Trade Commission taking different sides on whether the agency’s power to block imports for infringing patents applies to digital files -- such as movies or music.
The intervention of Silicon Valley and Hollywood raised the stakes in a case about teeth-straighteners. Align Technology Inc. (ALGN), maker of the Invisalign dental system, claims ClearCorrect Operations LLC infringes its patents. It asked the ITC to block ClearCorrect’s transmissions of computerized dental plans from an office in Pakistan to a 3-D printer in the U.S.
“As we sit here today, this is a comparatively small universe of commerce, but as commerce becomes pure information it will become more important,” said Rodney Sweetland, a patent lawyer with Duane Morris in Washington who isn’t involved in the dispute. “You’ll see that 3-D printing information will increase.”
The commission today ruled that ClearCorrect’s transmissions do qualify under the law, according to a notice on its website. The commission’s full opinion will become available after both sides get a chance to redact confidential information, and the commission’s decision is subject to review both by President Barack Obama and an appeals court.
It’s clear if it’s a physical product the commission may punish patent-violators by blocking imports. The question is whether the same is true if the product is virtual.
The MPAA, whose members include Sony Pictures Entertainment Inc. and Warner Bros. Entertainment Inc., says current law must include electronic transmissions, since bootleggers have moved away from CDs and DVDs in pirating copies of movies, music and books. Google, owner of the most widely used search engine, says the opposite: the law, which dates back to the Great Depression, didn’t include digital files even when revised in the 1980s.
This isn’t the first time Google and the movie industry have clashed. Google was one of the Internet companies that persuaded Congress in 2012 to scrap Hollywood-backed proposals that would have put new requirements on Internet-service providers, search engines, payment processors and online ad networks to block the sale or sharing of counterfeit goods.
Likewise, a 2011 draft plan that would have given the ITC new powers over foreign websites accused of trafficking in pirated content was dropped after concerns the agency, in the midst of handling complicated disputes over smartphones, had neither the manpower nor the time to add to its workload.
Align’s case against ClearCorrect is crucial to the San Jose, California-based company’s ability to limit competition. The Invisalign system accounted for about 93 percent of Align’s $660 million in revenue last year, the company said in its annual report. Invisalign uses clear plastic molds to straighten a patient’s uneven teeth.
Electronic scans are taken of the teeth and transmitted to technicians who design the series of aligners, which are replaced every two weeks and move the teeth in small increments without causing pain or gum damage. A digital file is then sent to a printer for creation of a series of plastic molds.
ClearCorrect’s technicians are in Pakistan, while the actual dental molds are made at the company’s main office in Houston. ITC Judge Robert Rogers in May found that ClearCorrect infringed six patents. ClearCorrect maintains that the patents are invalid and not infringed.
The commission has been reviewing the judge’s decision since July, gathering public comments on whether electronic data qualifies as an import and may therefore be banned from the U.S. Its final decision was initially scheduled to be released in November and was postponed several times over the digital transmission question.
“If you bring a CD-ROM across the U.S. border or a USB drive, those would clearly be importations,” said Jamie Underwood, a patent lawyer with Alston & Bird in Washington who submitted arguments on behalf of Nokia Oyj (NOK1V) siding with Align. “It would be illogical to say if your product comes across the U.S. border via a ship, it’s infringing, but if it’s coming across by the air, it’s not subject to the law.”
Refusing to block electronic transmissions that originate overseas “would deprive many important U.S. industries of one of the most powerful remedies against international unfair acts available under U.S. law,” the movie industry trade group said in its Feb. 3 filing.
Google, meanwhile, said in its Feb. 3 filing the trade commission “is not an appropriate forum for software patent litigation wherein the accused products are non-tangible electronic transmissions into the United States.”
Michael Myers of McClanahan Myers Espey in Houston, who represents ClearCorrect, said there’s no reason for the ITC to get involved in these types of cases because “U.S. district courts are not impotent to protect intellectual property rights.”
“While there is this hue and cry that ITC has got do this because of digital printers, nobody is doing it,” Myers said. “Nobody is really screaming we need more ITC oversight except Align and the MPAA, which doesn’t go to the ITC anyway.”
Tom Counts of Paul Hastings, who represents Align, said organizations like the movie industry “want to keep their options” when it comes to finding ways to combat piracy.
“You have a greater likelihood now than 20 years ago that those infringing imports might be digital,” Counts said. “They are coming in by boat, or truck or train, or plane, and now they are digital. It does not matter the method of importation -- that should not be a controlling factor.”
The case is In the Matter of Certain Digital Models, Digital Data and Treatment Plans for Use in Making Incremental Dental Positioning Adjustment Appliances, the Appliances Made Therefrom and Methods of Making the Same, 337-833, U.S. International Trade Commission (Washington).
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