Today games, movies and music are transmitted electronically over the Internet and imported into the United States. Cases-in-point: Candy Crush Saga, created in the United Kingdom, and Angry Birds, created in Finland; both were imported into the United States by being uploaded to a server in the United States. For counterfeit copies of movies and music, the pirated digital file of a film is copied abroad and transmitted via the internet into the United States. The same is true for three-dimensional (“3-D”) print files. A 3-D print file may be transmitted electronically and uploaded to a server/printer located in the United States and used to fabricate an infringing physical article in the United States. The cross-border transmission of pirated music and movies, infringing gaming software and infringing digital 3-D print files are within the International Trade Commission’s (“ITC’s”) jurisdiction. Thus, a patent, trademark or copyright owner may take advantage of the ITC’s fast track to get injunctive relief to stop infringers.
In the International Trade Commission’s recent opinion addressing the scope of “articles,” Certain Digital Models, Digital Data, and Treatment of Plans for Use In Making Incremental Dental Positioning Adjustment Appliances, the Appliances Made Therefrom, and Methods of Making the Same, Inv. No. 337-TA-833, Comm’n Op. (April 10, 2014) (“the Align case”), the ITC determined that “articles” as stated in section 337 are not limited to tangible goods. It found that imported articles must be inclusive of articles in any form, particularly the digital data files at issue in the Align case.
A Digital Data File Is an “Article”
The imported “article” in the Align case is similar to a digital data file used for 3-D printing. The respondents in the Align case were found to have created in Pakistan digital data files for modeling dental aligners, and to have electronically transmitted those files to a server in the United States where the files were uploaded to fabricate dental aligners according to the imported data file. Align, at 17, 21. The respondents, arguing for a narrow definition of article, asserted that the legislative history suggests that Congress intended articles to cover only tangible goods, such as merchandise and commodities. The complainant argued for a broad definition under which articles would include any form. Interested third parties, Google and the Motion Picture Association of America (MPAA), also weighed in on whether an “article” should include a digital data file.
After many rounds of briefing on the issue, the ITC found that there was no support in the statute or legislative history for narrowly defining “article” as a tangible good. Specifically, the ITC examined the 1922 Tariff Act, the predecessor to Section 337, which recited the term “articles” with respect to importation and/or sales of articles as an act of unfair competition. The term, which was never defined in the statute, remained when the statute was amended in the Tariff Act of 1930.
In 1922 or 1930, Congress did not have foresight to know that imported articles would one day include digital files composed of only zeros and ones. But, apparently Congress did envision an evolution of technology. In the Align case, it is pointed out that “a Congressional Report accompanying the Tariff Act of 1930 recognizes that many new goods and manufacturing processes had been invented and brought to the U.S. market since the 1922 Act, and anticipates that many new goods and processes would come in the future.” Align, at 47. Perhaps Congress intentionally omitted defining the term “article” to accommodate changes in technology that could not have been foreseen.
The ITC’s analysis of the statute and its history is detailed and seems reasonable. Because the statute and legislative history do not indicate that “articles” should be limited to tangible goods, all types of forms, i.e., digital and physical, are included within the definition of “articles.”
Stopping the Importation of Digital Data Files
The Align case also addressed the issue of whether the ITC has to ability to enforce its remedial orders to stop the importation of digital data files. Generally, if the ITC determines that there is a violation of Section 337 the remedy is an exclusion order prohibiting the importation of the infringing article. Customs and Border Patrol (“Customs”) is tasked with enforcing the ITC’s exclusion orders. Customs can stop digital data files at the border when the files are stored on a physical medium, such as a DVD or hard drive. However, when digital files are imported via an electronic transmission as in the Align case, Customs is incapable of inspecting and stopping the importation. In spite of this limitation, the ITC’s remedial powers still have teeth in the context of infringing digital files.
Section 337 gives the ITC the power to issue cease and desist orders against a respondent that has been found to violate the statute. 19 U.S.C. §1337(f). Specifically, a cease and desist order prohibits a respondent from engaging in unfair methods or acts. Those acts include importation, distribution, sale and marketing in the United States. In the Align case, the foreign and domestic respondents were ordered to cease and desist from importing (through electronic transmission or otherwise) digital data files that infringe the claims of the patents. Because Customs is not enforcing the cease and desist order and the ITC does not have cease and desist watch dogs, the complainant must monitor the respondent’s activities for violations.
If the complainant believes that there is a violation of the cease and desist order, the ITC will enforce the order through an enforcement proceeding. An enforcement proceeding is initiated by a complaint that alleges a violation of any ITC remedial order. If it is determined after an investigation that the cease and desist order has been violated, then the violator may be ordered to pay civil penalties. 19 U.S.C. §1337(f). The civil penalties that the ITC is authorized to order are substantial.
By statute, the ITC may order a violator to pay for each day an importation or sale occurs up to $100,000. 19 U.S.C. §1337(f)(2). For example, the ITC recently ordered MaxLite, Inc., a respondent that was found in an enforcement proceeding to have violated a consent order, to pay a $10,000 per day civil penalty. See Dimmable Compact Fluorescent Lamps and Products Containing Same, 337-TA-830. Similar results would be expected if the respondent in the Align case continued or resumed importing data files for the dental appliances, or selling, distributing or advertising the dental appliances made from the imported data files in violation of the cease and desist order.
Detecting Importation of Infringing Data Files
It is relatively easy to detect if an importer is importing infringing tangible goods. There are several port watch services available. It is also fairly easy to detect if pirated movies and music are being imported into the United States, by monitoring the Internet. There are several watchdog services available for this mode of transmission. However, the electronic transmission of digital data files to a server for use with a 3-D printer is far more difficult to detect. The transmission will likely occur over a secure private network. In the Align case, the 3-D data file was created in Pakistan, transmitted over a network and uploaded to a server located in Texas. Align, at 17, 21. The dental appliances made based on the 3-D data files were fabricated in the United States. Id. at 17.
As a practical note, the injunctive relief in a cease and desist order is only as effective as the watchful eye of the patent, trademark or copyright owner. The owner must be diligent and immediately initiate an enforcement proceeding if it believes that the cease and desist order is being violated. The ITC has historically been an excellent forum for protecting intellectual property rights, and now digital data is clearly within the crosshairs of the ITC.
The author is a former Senior Investigative Attorney at the U.S. International Trade Commission, Office of Unfair Import Investigations.