ITC: The New Digital Cop?
ITC: The New Digital Cop?
ITC: The New Digital Cop?

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    This blog post was originally published on Mytheos Holt is an associate fellow of the R Street Institute.

    Do you know where your e-mail account is located? No, “the Internet” is not a valid answer. More specifically, do you know on which of Google's many servers your Gmail account is physically located?

    If you're a U.S. user whose account is hosted in, for example, Singapore, then congratulations: Every time you download an e-mail, you're “importing” digital goods that are subject to the authority of the International Trade Commission. That's the precedent set by a recent ITC decision, currently under appeal before the U.S. Court of Appeals for the Federal Circuit as Clearcorrect v. ITC.

    The case stems from an obscure patent lawsuit over teeth-straightening technology. But hidden in its inaccessible tangle of legal minutiae is a broad assertion of authority by the ITC — namely, that the 1930 Tariff Act, which gives it the authority to regulate “articles of importation,” covers digital goods and not just physical ones. If upheld, the “electronic transmission of digital data” would fall under the same rules as crates full of knock-off jeans.

    It isn't that the ITC has never enforced intellectual-property rules. If a Chinese company were found trying to export to the United States bootleg DVDs of U.S.-made films, the ITC very clearly could and would intervene. But what if, instead of trying to sell copies of Gone Girl, the company instead wired (via telegram or telegraph) across international borders the text of the movie's script?

    According to a more-than-century-old precedent, regulations pertaining to physical goods are “entirely inapplicable” to electronic messages. As the Supreme Court put it in the 1887 commerce-clause case Western Union Telegraph Co. v. Pendleton:

    Although intercourse by telegraphic messages between the states is thus held to be interstate commerce, it differs in material particulars from that portion of commerce with foreign countries and between the states which consists in the carriage of persons and the transportation and exchange of commodities, upon which we have been so often called to pass. It differs not only in the subjects which it transmits, but in the means of transmission. Other commerce deals only with persons or with visible and tangible things.

    But the telegraph transports nothing visible and tangible; it carries only ideas, wishes, orders and intelligence. Other commerce requires the constant attention and supervision of the carrier for the safety of the persons and property carried. The message of the telegraph passes at once beyond the control of the sender, and reaches the office to which it is sent instantaneously. It is plain from these essentially different characteristics that the regulations suitable for one of these kinds of commerce would be entirely inapplicable to the other.

    So why is the commission suddenly meddling in an area that's traditionally been off-limits? The ITC argued in its original decision that, because the Tariff Act of 1930 was written “at a time when Internet downloads were not in existence,” its authors could not have foreseen the idea of data as commerce — and the interpretation of the term “articles of importation” must change with the times.

    Charles Duan at Public Knowledge eviscerated this argument in an amicus brief:

    First: although internet downloads did not exist in 1930, plenty of other transmissions of telecommunications data, including cross-border transmissions, did exist and were certainly known to Congress at that time. Trans-Atlantic telegraph cables were laid and sending messages as early as 1858. Guglielmo Marconi sent the first radio transmission from the United States to the United Kingdom in 1903. A telephone call between Arlington, Virginia and Paris, France was completed in 1915. . . .

    Second: These developments in technology were certainly recognized as within the scope of commerce when section 337 was enacted. Numerous cases in the Supreme Court recognized telegraphy as a form of commerce. Between 1910 and 1933, telephone, telegraph, and cable companies were within the jurisdiction of the Interstate Commerce Commission — a commission with the very word “commerce” in its name. . . .

    Third: concern for intellectual property rights in the face of electronic transmissions is no new problem, contrary to the Commission's view. Radio broadcasts posed the same problems to intellectual property owners in the early 1900s as music files do today.

    Duan has also noted that treating digital data as “articles of importation” would open the door to the ITC fielding complaints — and opening investigations — relating to all phone calls, audio streams, television broadcasts, and other telecommunications that could cross borders, with the potential for Internet-service providers, phone companies, or even individual Internet users' being called before the commission as importers or exporters.

    Considered in this light, it's no surprise that actors such as the Motion Picture Association of America love the ITC's decision. IP owners can always can go to a regular district court if they think infringement has taken place. But the ITC's involvement is desirable for IP owners because the procedure is faster and stricter, the remedies are stronger, and the body's charter is trade protectionism. Thus, putting patent cases before the ITC when they don't belong there gives unnecessary favors to IP owners and upsets the expectations of existing businesses.

    The courts should cut this kind of abuse off at the knees. What's good for phone calls, radio, and telegrams is good for downloads, e-mail clients, and every other form of data transmission. Otherwise we might all soon be asking, “Where's my e-mail account?”

    The answer just might be, “the ITC has it.”