In a new R Street Policy Study released today, Charles Duan and I discuss a troubling new development at the International Trade Commission.  The Court of Appeals for the Federal Circuit is currently reviewing a decision by the ITC to issue an exclusion order against imports of cable boxes used by Comcast.  What makes the case remarkable is that the cable boxes don’t infringe any patents; they’re being blocked because Comcast was found to have induced its customers to infringe by providing them with a mobile app that operates their DVR.

The ITC had to develop a very broad interpretation of “importation . . . of articles . . . that infringe” in order to justify blocking staple, non-infringing products based solely on the domestic activity of an American service provider.  We warn in the paper:

Should the decision be left intact, the ITC could decide a great swath of domestic patent disputes that incidentally and unremarkably involve the use of imported products. In effect, the agency’s power to block imports will serve as an extra-judicial remedy for domestic patent infringement.

However, this is not a good outcome. No trade or patent policy goals are served by denying American companies accused of patent infringement in the United States the right to defend themselves in a court of law. This is particularly true as the ITC’s procedures and remedies lack many features of district court litigation that protect defendants from the abusive tactics of patent trolls. Further, expanding the ITC’s jurisdiction to cover domestic patent disputes will do nothing to prevent unfair trade, but it will needlessly expose American businesses to more litigation.

As a result of the Digital Video Receivers decision, a variety of domestic businesses could potentially come into the crosshairs of the ITC. For example, service companies that use imported equipment, retailers that stock imported goods and American manufacturers that use imported parts—even if those companies import nothing themselves—could now be hauled before the agency. In short, this takes an agency that should be highly limited in its purview over border control and allows that agency to insert itself into practically every aspect of the domestic American economy. This is a result not intended by Congress and not warranted by good policy.

Now go read the whole thing!