Internet Pirates Need Not Fear the ITC—For Now

Untitled1By Mackenzie Olson

Imagine that you are the CEO of an entertainment company such as TimeWarner or Disney, and illegal downloading costs your company millions in lost revenue each year. How do you solve this problem? Do you change your business model? HBO is the creator of Game of Thrones, the most pirated TV show in the world. Some viewers who download the show illegally have explained that they pirate the program because they do not want to pay for a full cable subscription to watch one show. This year, HBO debuted a stand-alone streaming service that does not require a cable subscription. Currently, this may be HBO’s best option for reducing the rate of piracy of its programs in the United States; the US Court of Appeals for the Second Circuit recently ruled that the United States International Trade Commission (ITC) does not have the authority to prosecute foreign websites that contain pirated content in ClearCorrect Operating, LLC v. ITC.

The case arises from a patent infringement dispute between Align Technology and ClearCorrect, both of which produce clear orthopedic aligners that invisibly straighten the wearer’s teeth. ClearCorrect US scans physical models of patients’ teeth and then digitally recreates the tooth arrangement. It sends this digital copy to ClearCorrect Pakistan, which creates digital models of intermediate tooth positions, and electronically transmits these models to ClearCorrect US. ClearCorrect US then 3D prints these models into physical molds for use in manufacturing the aligners.

The ITC asserted that ClearCorrect Pakistan’s actions infringed certain Align patents, and that it could prosecute ClearCorrect Pakistan because it had authority to regulate electronic transmissions of digital data. Accordingly, the ITC adjudicated the dispute, and initially issued an order (later stayed) that directed ClearCorrect to cease importation of the digital models. However, on appeal, the Court has held that the ITC does not have jurisdiction to regulate the electronic transmission of digital data because it only has authority to regulate “material things”, pursuant to 19 U.S.C. § 1337(a).

The Court’s ruling is a victory for open Internet advocates, such as Google and Facebook. In a Bloomberg Business article, Abigail Slater of the lobby group Internet Association says that the case “has enormous implications for cloud computing, the free flow of information between countries, and the future of a free and open Internet.”

Movie, music, and publishing companies are not thrilled with the decision, which saw ITC authority over such electronic transmissions as a potential means of fighting online piracy. Though the ITC only claimed authority over digital files last year, the Motion Picture Association of America filed an amicus brief also arguing that the ITC should have authority over digital files. They asserted that with such authority, the ITC could help protect copyright holders from piracy.

Though the case could receive en banc review, and thus elicit a new ruling, as of now, foreign online pirates remain outside the scope of the ITC’s jurisdiction. However, these pirates should watch the actions of the courts and Congress with a wary eye: should the courts or Congress extend the ITC’s jurisdiction to include electronic transmissions, it will surely pursue these lawbreakers with all available means. If the ITC receives such authority, Game of Thrones likely won’t lose its core audience—but perhaps its notoriety as the most pirated TV show in the world.

Image source: http://www.techspot.com/images2/news/thumbs/2011/06/2011-06-23-teaser2.gif

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