Tuesday, October 13, 2015

CFP 2015: Internet content blocking by the ITC

Computers, Freedom & Privacy Conference 2015
Internet Content Blocking by the U.S. International Trade Commission.
In April 2014, a little-known agency called the U.S. International Trade Commission handed itself power to block data on the Internet. Internet companies fear for the future of cloud computing, civil society is worried about the openness of the Internet, and the MPAA wants to use the agency to implement SOPA-style website blocking. In this session, we’ll discuss how we got here, what might come of the decision, and what is being done about it.
Russell Brandom, The Verge (moderator): DNS/IP address blocking proposals; SOPA/PIPA defeated, but efforts to block content on the internet have now moved to ITC.  Invisalign has IP; dentist in Texas engages Pakistan firm to make the models, and he’ll print them in Texas.  If the Pakistan firm had printed the objects, Customs could have stopped them.  ITC determines that it can stop the data transfer as well.  MPAA is quite interested in this!  If info transmission can be blocked, will be powerful tool against copyright infringement as well.
Charles Duan, Director, Patent Reform Project, Public Knowledge: ITC’s powers cover “articles,” and opined that transmission of data over internet was “articles.”  ITC decisions are appealable to the Fed. Cir., which last month heard appeal primarily focusing on ITC’s determination about “articles.”  Regulation of information as it moves over international borders: a lot at stake. If the ITC has that power, other aspects of its functioning become troubling.
Jonathan Engler, Partner, Adduci, Mastriani & Schaumberg: Represented MPAA in intervention.  The importation of an article is required—the ITC has evolved into a specialized patent tribunal; about 20% of all patent trials in the US are held at the ITC.  Attractive: It’s fast—18 months—and it’s specialized.  Reversal rate at Fed. Cir. is much lower than average district judge.  ITC was always intended to provide a remedy for business torts generally.  Also has a series of cases about trade secret misappropriation abroad: ITC has enforced against it even though bad behavior was outside US jurisdiction. Antitrust; TM also familiar.  This case didn’t seem different to the ITC.
Brandom: b/c it’s a trade court, tends to move faster and have stronger remedies—thus it’s a preferred venue for patents.  Serious effect on trade policy.
Bill Watson, Trade Policy Analyst, Cato Institute: Remedy was total exclusion from US market, with rump unfairness jurisdiction.  US lost a challenge at what is now the WTO, where trade court decided that this was discrimination against imports, and they pointed out some of the things supporters like—speed, lack of jury.  There’s nothing meaningful about importation that makes infringement different/more difficult than domestic infringement.  Problem for US patent system: difficult to reform patent law b/c you have two statutes and two venues. eBay v. MercExchange—injunctive relief isn’t automatic, but that doesn’t apply to ITC, so patent trolls ran over there—problem needs to be fixed separately. 
Brandom: specialization = powerful home-court advantage for a lot of firms.
Mike Godwin, General Counsel, R Street Institute: We are pushed to treat IP right violations as if they were subject to theft laws, or in ITC some kind of unfair trade practice. But we don’t just use the internet to transmit stuff about goods/things people have legal rights in. Digital platforms are by nature, unless otherwise designed, transnational. Gov’ts aren’t very comfortable with that.  Natural economic impulse by industries to externalize costs of enforcement to government.  This was SOPA/PIPA—effort to impose costs of enforcement on platform providers; same here w/ITC.
Engler: agrees on convergence issue.  The biggest significance of this case is the first 3D printing case for the ITC—highly disruptive innovation, already grown into significant business.  Pirate Bay now has focus on CAD files that infringe TMs and patents as well as copyrights—can print out in your basement.  Going after basement-dwellers didn’t work out well for music, last time around. There are freedom of internet concerns, but also concerns for Caterpillar’s ability to control the production of spare parts for its tractors. Can’t look at transmission issue in a vacuum.
Brandom: classic response to that in ITC situation: if tomorrow, there were no ITC, there’d be other remedies available to Invisalign.  Infringer is in Texas, not in Estonia.
Duan: We’re usually talking about having 2 remedies.  Trying to shoehorn new problems into old categories.
Engler: Inducement—the ITC has long found that you can’t circumvent the remedy by doing domestically what you couldn’t do abroad.  They have a history of saying—you can’t bring in a server with infringing software, and you also can’t bring in a server and email yourself the infringing software to get around that.  Not pure shoehorning.
Godwin: We’re seeing legal evolution and we need to find a limiting principle.  We’re not seeing one here, which is the reason we’re marching out the prospect of everyone becoming an infringer once 3D printers are widespread.  Everyone’s a potential mass © infringer now; not anticipated when laws were crafted; the same is about to happen to patenting.  Even biopharma patents will be cheaply infringed.  Don’t want to convert specialist court to huge presence.
Watson: it’s not just bad actors involved. The Texas dentist isn’t sympathetic, but the impact of having this ability at the ITC isn’t just going to hurt him.  Internet companies deciding where to put servers won’t want to expose themselves/their customers to liability.  Distorts the market.
Brandom: biggest question mark is about enforcement.  Internet backbone companies?  Traditionally, a pallet of iPhones stays in the warehouse until the dispute is resolved, but in information industry that’s a catastrophic roadblock. 
Engler: there are limiting principles.  Maybe not optimal, but exist.  You have to name the person who you accuse; APA provides them the ability to come in and defend themselves. More than ½ the time, ITC finds for defendant. Even in ClearCorrect case (this one), they accused the dentist and ordered him not to print the files. No parade of horribles on remedy side.  Internet backbone: if under DMCA there’s immunity for the ISP from an injunction in the dct, so too in the ITC, almost certainly. He’s heard them say, in the Fed. Cir. argument, they’d feel bound by US limiting principles.
Duan: Interesting thing this points out is how different the internet is. Easy to ID one person doing a shipment.  As we’ve seen in other instances, there are unexpected pressure points on the internet.  Going after music downloaders; then shift of strategy to the intermediaries.
Engler: unlike a dct, ITC orders have to be approved by the President. There is a political venue for ITC cases to stop if they’re overstepping boundaries.

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