The rumor mill has been spinning overtime, so let's make a few things clear:

• Align has not won any of their suits against us.
• We are still making aligners.
• Nothing has changed.

First, a quick recap. As you probably know, our good buddies at Align have a long history of suing their competitors. This doesn't usually work out that well for them—Align has had patent claims invalidated and they've paid out tens of millions of dollars in settlements.

But old habits die hard, and they've stuck to this strategy against us. In March 2011, Align sued us in California and Texas, and in March 2012, they filed two complaints with the ITC. These cases take a long time to play out: nothing significant has happened in the California case, and the Texas case is on hold. The first ITC complaint was decided in our favor this January.

This week, Administrative Law Judge (ALJ) Rogers issued his initial determination for the second ITC complaint. His opinion was that ClearCorrect did not violate Align's product claims, but Align's method claims were violated. Naturally, we disagree with that opinion. Regardless, here's what you need to know:

1. This is not the final ruling on the case. The ALJ's initial determination will be reviewed by the ITC before they make their final decision, scheduled for September 2013. Then that decision is likely to be appealed in the U.S. Court of Appeals for the Federal Circuit. The ultimate conclusion is probably still years away.
2. In the previous complaint, the ITC reversed this same judge's initial determination and ruled in our favor.
3. We don't have to do anything differently right now. There's no effect on our day-to-day operations until the ITC makes their final decision.
4. This initial determination has been incorrectly reported as "a ruling to block U.S. imports of a competing product by ClearCorrect." We make our aligners right here in Houston, Texas, so it's impossible for the ITC to block us from "importing" them. The only "imports" at stake in this case are digital files transmitted by diagnostic technicians in Pakistan. (We've argued that data transmissions shouldn't even be considered imports.)
5. Align's legal VP recently claimed to investors that if the ITC ruling went their way, "ClearCorrect will be excluded from the domestic market." That's simply not true. Even if the ITC rules completely in Align's favor, we can continue manufacturing and selling aligners in the U.S. The only thing the ruling will determine is how and where we can stage the treatment plans.

In short, don't panic. We're sticking around. We've just invested in scaling up our production capacity by 30%, and we've got a really cool announcement to share with you tomorrow. Until next time…

Update: Align put out a second press release shortly after this was posted, but nothing has changed. The "cease and desist orders" they refer to are just the ALJ's recommendations from his initial determination. As explained above, the ITC is not expected to make a decision until September. If the ITC does issue cease & desist orders, they will apply only to imported data—our ability to design, manufacture, and sell aligners in the U.S. is not at risk.

ClearCorrect's US operation remains unrestricted; Align Technology's litigious campaign remains unsuccessful

ClearCorrect, LLC announced today that it received notice of an initial determination in the patent infringement complaint filed by Align Technology, Inc. with the US International Trade Commission (ITC).

Align's complaint, filed in March 2012, alleged that ClearCorrect and ClearCorrect Pakistan (Private) Ltd. ("ClearCorrect Pakistan") infringed claims of seven Align patents and sought to have ClearCorrect excluded from the US market. Administrative Law Judge (ALJ) Rogers' initial determination presents his opinion that ClearCorrect did not infringe any of Align's product claims, but that Align's method claims (those claims concerning the way a certain process is performed) were infringed. The ALJ's opinion will be one of the factors that the ITC will take under consideration when making its final ruling, expected in September 2013. In Align's previous ITC complaint against ClearCorrect, the ITC decided to reverse ALJ Rogers' initial determination and found no wrongdoing by ClearCorrect.

"We view the preliminary ruling on the product claims as a big win and look forward to the Commission's review of the method claims," said Jarrett Pumphrey, ClearCorrect CEO. Indeed, the ITC's own staff attorneys have interpreted US patent law to mean that ClearCorrect does not infringe most of Align's method claims and ClearCorrect will present that interpretation when it asks the Commissioners to find no infringement of any of Align's patents. "We're hopeful the Commission will view the law as both we and their staff attorneys do," continued Pumphrey, "but even if the Commission upholds the Judge's recommendation in full, it won't have any material impact on our company or our ability to make aligners. That's what counts." In fact, ClearCorrect recently invested in increasing the production capacity of its US-based manufacturing facility by another 30%. "Business has been good lately," Pumphrey added, "and we're happy we can continue servicing our doctors who have all been so supportive."

The notice of the initial determination did not include the recommended remedy. However, the worst-case scenario for ClearCorrect would simply be the exclusion of computer data prepared by ClearCorrect Pakistan. Because ClearCorrect manufactures its aligners in the US, there are no aligner imports for the ITC to block. Though only last month Align boasted "ClearCorrect [would] be excluded from the domestic market," the reality is ClearCorrect is still allowed to service its customers in the US and will continue to do so. The preliminary decision thus falls squarely in line with Align's other failed efforts to prevent competition through litigation. Align's highly-publicized case against Ormco Corporation resulted in the invalidation of Align's patent claims and a settlement that paid Ormco tens of millions of dollars, including 10% of Align's stock. Align's first ITC case against ClearCorrect resulted in complete victory for ClearCorrect. And now Align's second ITC case has failed to prevent ClearCorrect from competing in the US market.

"ClearCorrect fully intends to press the investigation further and ask the Commission to find that Align's patents are invalid because of the vast amount of prior art," said Mike Myers, ClearCorrect's legal counsel. "ClearCorrect has always held that orthodontists taught Align about clear aligners, not the other way around, and, if necessary, ClearCorrect will pursue its arguments all the way up to the Federal Circuit Court of Appeals, the same court that held Align's patents invalid in the Ormco case."

Notice Regarding Initial Determination on Violation of Section 337 and Recommended Determination on Remedy and Bond

As we've experienced firsthand, it's pretty lousy to be accused of IP infringement when it's not true. OXO, the New York-based consumer product design company best known for its popular kitchen utensils, provides a master class in how to respond to such accusations the right way: http://www.oxo.com/quirkyresponse.aspx.

(via: Jason Fried, 37signals)

ClearCorrect, LLC, announced today it received notice that the US International Trade Commission (ITC) has terminated an investigation brought by Invisalign maker Align Technology, Inc.

On January 4, 2013, the Commission issued notice that it had terminated the March 2012 enforcement complaint filed by Align against ClearCorrect Operating, LLC, (“ClearCorrect USA”) and ClearCorrect Pakistan (Private), Ltd., (“ClearCorrect Pakistan”). Align’s enforcement complaint sought to bind ClearCorrect USA and ClearCorrect Pakistan to the terms of a 2006 Consent Order between Align and former competitor OrthoClear, because certain employees of ClearCorrect Pakistan once worked for OrthoClear. The ITC, however, found that there has been “no violation of the consent order” by ClearCorrect USA or ClearCorrect Pakistan and terminated the case.

“We’re very happy with this decision from the ITC,” said Jarrett Pumphrey, ClearCorrect’s CEO. “We think the decision validates what we’ve been saying all along: we’re not OrthoClear.”

Still on the table is the patent infringement complaint Align also filed with the ITC. Bolstered by its victory in the enforcement case, ClearCorrect is as confident as ever that it does not infringe any valid intellectual property, and in fact, looks forward to invalidating the overly-broad patent claims Align has served up.

“ClearCorrect's recent victory does not end its pursuit of judicial findings that Align's patent claims are invalid because they merely claim what orthodontists have been doing for decades,” said Mike Myers, ClearCorrect’s legal counsel. “The validity of Align's patent claims was last tested in its litigation against Ormco Corporation when the United States Court of Appeals for the Federal Circuit invalidated every Align patent claim it reviewed.“

Notice of Commission Determination to Review and Reverse an Initial Determination of the Presiding Administrative Law Judge; Termination of the Enforcement Proceeding (PDF)

Some doctors have told us that they've been contacted by a company called Yodle, who claims to be affiliated with ClearCorrect.

Yodle's claims are not true. We have no affiliation with Yodle.

We had never heard of them before we started getting these complaints. We did not share your personal information with them, and we did not authorize them to contact any of our providers. 

In fact, we have repeatedly asked Yodle to stop misrepresenting themselves this way, but we continue to hear other reports of this behavior. 

We are currently in talks with our legal counsel to resolve this issue. In the meantime, if you are contacted by Yodle, or any company who claims to be affiliated with ClearCorrect, please contact us immediately at (888) 331-3323.

It’s been a while since I’ve updated you on the legal proceedings between us and Align. Don’t let the lack of updates fool you—all is progressing well. In fact, I’m very happy to say I’ve got some great news to share with you.

First, a refresher: Align sued us in February, 2011, alleging we infringed several of their patents. We’ve said all along that we don’t infringe any of their valid intellectual property and countersued them in May, 2011, asking the Court to declare the claims in their patents invalid.

Now, fast-forward a year. Just this past May, our legal team filed a motion with the US District Court to stay the case when Align filed overlapping complaints with the International Trade Commission (ITC), the agency responsible for regulating the trade of international goods. Despite Align’s objections, the Court recently ruled in our favor and granted the motion, effectively stopping the case indefinitely and virtually guaranteeing we can continue operating our US-based manufacturing facility without restriction for the foreseeable future.

Needless to say, this is a big win for us. We can now take attention off the federal case and put it on what really matters to us—servicing our providers and helping others where we can.

Next up for our legal team is making our case to the ITC. Bolstered by this win in the US District Court, we’re as confident as ever that we’ll see similar success in the international arena. We'll, of course, keep you posted as that case proceeds. 

Thank you so much for your continued support. I can't possibly express what a difference it's made.

If you have any questions at all, please feel free to ask. I’m happy to answer them.

ClearCorrect, LLC, a manufacturer of clear aligners, received notice that Align Technology, Inc., (the maker of Invisalign®) has filed another round of lawsuits alleging patent infringement, this time in two complaints to the US International Trade Commission (ITC).

The first complaint alleges ClearCorrect is infringing seven patents related to methods of planning and implementing orthodontic treatment with aligners. Several of the patents-in-issue overlap patents from Align's federal suit against ClearCorrect filed just last year. Though filing complaints with the ITC is a clear favorite from Align's "how to beat your competition" playbook, ClearCorrect remains unfazed.

"We're certain we don't infringe any valid patents," said Jarrett Pumphrey, ClearCorrect CEO. "It doesn't matter how many times they sue us or where they sue us -- that won't change. The only thing this changes is who we'll be proving that to."

In fact, according to ClearCorrect's legal counsel, Mike Myers, ClearCorrect welcomes the ITC action, "The ITC process is generally faster, so ClearCorrect can makes its case sooner rather than later. ClearCorrect has always maintained that orthodontists taught Align how to straighten teeth, not the other way around. In its first two cases, Align was never able to show that ClearCorrect does anything other than practice the vast prior art developed by orthodontists over the last 70 years, which ClearCorrect is free to do. The new filings should allow ClearCorrect to promptly demonstrate the scope of its work and thereby continue to focus on servicing its customers distraction-free."

The second complaint seeks enforcement of a Consent Order granted in 2006 from an ITC action between Align and OrthoClear. Though ClearCorrect is not OrthoClear, Align is apparently asking the ITC to recognize them as the same company and enforce a Consent Order that would otherwise not apply.

Per Align, certain employees of ClearCorrect Pakistan (Private) Ltd., a company started in Lahore, Pakistan, to support the domestic and international growth of ClearCorrect, are in violation of the Consent Order. Align contends that those employees previously worked for OrthoClear and are now engaging in alleged "infringing activities." The employees of ClearCorrect Pakistan use the process developed in the US by ClearCorrect, which does not infringe any of Align's valid patents. This is simply another way Align is attempting to use the courts to scare doctors and disrupt fair and legitimate competition.

"Align has been trying to convince doctors that we're OrthoClear for years. This is just more of the same," said Pumphrey. "The truth is, as we've planned and positioned for international growth, we found a motivated and passionate workforce in Pakistan to support it -- just like Align did, once upon a time. But that doesn't make us OrthoClear or Align. We're ClearCorrect."

Yesterday, we filed our response to Align Technology’s patent infringement suit. In our response, we’re countersuing Align and asking the Court to declare all 408 claims in 10 of their patents invalid.

We’re posting the entirety of the 246-page response here, along with the text of Align’s original suit against us.

You’ll find in the response, among other things, much of the evidence raised in Align’s previous patent case against Ormco, which resulted in a federal court ruling that 11 of Align’s patent claims were invalid.

We want to hear what you think. Share your thoughts in the comments.

Seth Godin on the free market:

There's no question that an unfettered authoritarian corporate regime is more efficient and effective—in the short run. In the long run, though, the free market triumphs, as long as it isn't destroyed by those that get to play first.

The free market is a great idea, which is why we need to be careful when market incumbents lobby to make it un-free.

Amen.

Another thing we value here is economy, doing more with less. It’s a value consistent with our goal of making clear aligners more affordable. We apply it wherever we can: Economy in our thinking, in our treatment protocols, in the design of our products, in our manufacturing processes—in our payroll.

Case in point—the average total annual compensation of Align Technology’s CEO is more than we paid our entire executive structure last year: