A Piece of Internet Freedom, in the Hands of an Appeals Court

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It may seem hard to believe that the future of the Internet is at the forefront of an “extremely boring case about invisible braces.” But that’s exactly what’s happening with a case called ClearCorrect v. International Trade Commission, which was argued this morning before the Court of Appeals for the Federal Circuit.

The International Trade Commission has power to stop importation of articles that infringe copyrights, patents, or other intellectual property rights. This case involves allegations of infringement over Invisalign-style plastic braces, but the interesting part is what “articles” are being imported. Not the plastic braces. Not even molds for the braces. The “imported articles” are electronic data files downloaded on the Internet.

The ITC decided that its power over “importation of articles” extended to Internet transmissions, because downloading files is apparently an act of importation.

Nonetheless, the idea that a little-known federal agency can block Internet data is concerning for open Internet advocates like us—and concerning for everyone else as well. The New York Times opposed the ITC’s decision, deeming it “bound to hamper the exchange of ideas and information on the Internet.” The Wall Street Journal characterized the case as a “clash over protecting a free-flowing Internet.” A letter of twenty-eight organizations and law professors warned against “unintended but troubling possibilities that may result from the decision” comparable to the despised SOPA and PIPA bills.

(And if you want to learn more, we’re trying to do a panel at South by Southwest on this case—go and vote it up!)

The oral argument today dealt with these important issues of Internet openness. But despite the fact that these modern issues of new technology are central to the case, the argument actually opened with one of the oldest communications technologies: the telegraph.

ClearCorrect's attorney, who opposed the ITC's decision, began by pointing out that electronic transmissions haven't really changed much in hundreds of years:

ClearCorrect: This transmission of information is no different than a telephone call, television signal, radio wave, Morse code. It’s the same thing: it is an electronic surge across a wire. That’s all it is. The character of the transmissions have not changed since the mid-1800's. Maybe the quantity of data has. But the character of these transmissions is no different. And congress never gave the Tariff Commission or the ITC the authority to regulate them.

And how would the Commission even begin to exclude data transmissions?  ClearCorrect noted that traditionally “[a]rticles in the context on this statute means something that can be intercepted at the customs house, stamped with trademark, broken in transit, put on a rail car.” This simply is not the case for data. Data has no physical form capable of being intercepted by customs, making enforcement by traditional means impossible.

The ITC stressed that their jurisdiction over goods would only extend to “digital goods” and not services. However this distinction is lacking in the ITC’s decision. Data transmission could potentially mean anything “bought and sold in commerce.” Trying to cut cloud services out of the ITC’s range (as the Internet Association raised big concerns about), the ITC's attorney argued that “strong arguments could be made that…cloud storage…looks an awful lot like the services” in question. But Judge O’Malley found that hard to believe:

Judge O’Malley: But anything that would be data streamed, for example, that would be bought and sold in commerce?

ITC: Well it might or might not be. It depends on the nature of it. I’m not here to tell you exactly where the line is between goods and services.

That’s a cop-out: the ITC is asking the Federal Circuit to draw a line, and then refusing to say where the line is.

One important concern in this case was whether the ITC's supposed powers over digital data could be leveraged into site-blocking orders in the ITC. Chief Judge Prost started off questioning with this exact issue:

Chief Judge Prost: I don’t quite understand how you’re trying to cabin what’s going on here [where you] say, if I’m understanding correctly, that these Internet service providers are all worried, but this isn’t that type of case, and kind of, don’t worry, we’ll get that case, and we’ll decide it on the facts and the record before us.

Again wanting to distance himself from that extreme possibility, the ITC attorney specifically disclaimed any possibility of going after ISPs:

ITC: We also have all the limitations of substantive law here, with regard to the ISPs, if the ISPs are what you’re concerned about. In a future case—the Commission applies all of the defenses, legal and equitable—the Commission would apply the DMCA safe harbors to the extent that ISPs are immune from liability in the district courts. They would be immune from liability in the Commission.

It's questionable whether the ITC's statement would hold water in a future case brought against an ISP, but if nothing else we at least know that the ITC has said on the record that Internet service providers are outside of the Commission's scope.

In a somewhat unexpected turn of events, Chief Judge Prost discovered that the ITC had actually misquoted a part of a Senate report, leaving out some key words:

Chief Judge Prost: If you go back, the Commission cited a provision of the legislative history, found in a Senate report, and you repeated it in your brief, but the Commission relied on it pretty heavily in its opinion. Well it turns out that when you look back to the source of that Senate report, the words “in the importation of goods” has been deleted from a quote that’s been found in that Commission report…

I’m talking about the Commission’s opinion in this case relied on that quote, with the term “goods” extracted without an ellipsis or anything, right?

She and Judge O’Malley were concerned that the missing words could have changed the outcome of the ITC’s decision. The ITC’s attorney profusely apologized, and stumbled to argue that the change was insignificant:

Judge O’Malley: If you weren’t afraid of that phrase, then why did it get ellipsed out—or not ellipsed out?

ITC: I was not working on the case at that point, I can’t imagine why that is. I can apologize on behalf of the Commission but there was no ill intent in that. But “goods” were defined broadly…

The ITC and Align (who supported the ITC) raised some very technical arguments to support their sweeping interpretation of the term “articles” to cover electronic transmissions. They argued that dictionary definitions from the 1930s were expansive enough to cover digital data, and that a case decided yesterday demanded that the ITC get deference to define its powers in the way the ITC wanted. But the Federal Circuit judges were much more interested in the wider implications. As they pointed out, the practical effect of giving the ITC jurisdiction here was just to give Align powers on top of powers to block all the things:

Judge O’Malley: Isn’t there just enough opportunity for you to enforce the patent laws through your actions in Texas?

Align: Yes, but the remedy is here…It really makes no sense to suggest that the substantive prohibition is somehow restricted by the original grant of remedies, even though those have been expanded…

Judge O’Malley: But again, this is not a circumstance like in Suprema, where the argument was…that somehow there’s a gap in the statute and that there’s a porous border. Here, you have a situation where, according to your argument,…all of that activity is completely actionable in the United States. You don’t have any “gap” in this statute or coverage.

Ultimately, what drove the argument were questions about the broad effects the case could have on the Internet. As Chief Judge Prost said to the ITC attorney (echoing language in PK and EFF's amicus brief):

Chief Judge Prost: You make the very salient statement that we shouldn’t lose sight of the fact that this is a case about teeth. Well, Markman was a case about dry cleaning. But no one thinks of Markman as standing for anything about dry cleaning. It stands for an important legal principle, and in my view, so does what the Commission has done here. So I don’t quite understand how you’re trying to cabin what’s going on here…

It does seem to me that if we were to affirm the Commission here, we would be saying that the ITC has jurisdiction over electronic transmissions. I don’t see very many limiting principles that would apply to future cases.

ClearCorrect’s attorney agreed, saying that Congress was the right place to decide these difficult questions like digital copyright piracy:

ClearCorrect: Congress has a lot of balls in the air about what we’re going to do about this streaming information. And when it decides these issues…they’re going to have their theories and their evidence and their lobbyists and bills and draft bills, amendments, all that good stuff, to come up with the rule that we can work with, and all live by hopefully.

So the point is well taken that instead of the ITC just unilaterally expanding its own power to try and cope with this brave new world, which I suggest is really no different from the old world, this is a matter that should be left to Congress.

Will the Federal Circuit agree and leave the policy to policymakers, or allow this Commission to become what some have called “the new digital cop”? We’ll find out when the decision comes out, probably in the next few months.

This post was written by Foster Dobry and Charles Duan. Image credit: U.S. Court of Appeals for the Federal Circuit.

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