Microsoft Prevails in Software Patent Dispute with ATT


Microsoft prevailed in its defense of a patent infringement
claim by AT&T related to copies of the Windows operating system sold
overseas. The matter is Microsoft Corp. v. AT&T Corp., No. 05–1056. The technology at issue was codecs, which is software used to
compress speech signals into data, in copies of Windows shipped and sold
overseas. AT&T claimed that the codec infringed on its registered patents,
and should result in damages paid to AT&T.


The law at issue was explained by the Court in its opinion:


It is the general rule under United States patent law that
no infringement occurs when a patented product is made and sold in another
country. There is an exception. Section 271(f) of the Patent Act, adopted in
1984, provides that infringement does occur when one “suppl[ies] . . . from the
United States,” for “combination” abroad, a patented invention’s “components.”
35 U. S. C. §271(f)(1).


The Court came to three main conclusions. First, the Court
held that “A copy of Windows, not Windows in the abstract, qualifies as a “component”
under §271(f). Section.” Second, the Court found that Microsoft did not
“supply” the technology at issue from the United States. Third, the Court noted
the presumption in favor of foreign law for resolution of issues that arise in
foreign lands.


The Court additionally addressed the concern that certain
loopholes would exist for software manufacturers and distributors, apparently
contemplating a circumstance where a domestic manufacturer could copy patented
software, distribute it internationally, and force the patent owner to seek
redress in numerous foreign lands. The resolution of this concern, however, was left to Congressional will.


The 7-1 opinion in favor of Microsoft, written by one of the
Court’s more liberal members, Ruth Bader Ginsburg, hints at the likelihood that
the Court will begin to take a more conservative view of patent infringement, particularly in
the software world.


Software has long been a battleground for patent rights. Many
commentators feel that software of almost any type is simply not unique or
novel enough to protect under patent law, because of the elative ease of
writing, developing, and modifying software technologies. This is in contrast
to the classic contrary case of pharmaceuticals patents, where protections tend
to be quite strong because of the substantial monetary and scientific resources
invested in the development of new drugs.


The appeal to the Supreme Court came from U.S. Court of
Appeals for the Federal Circuit, which handles many intellectual property
matters, such as copyright and trademark disputes. Accordingly, the reversal of
the Federal Circuit’s opinion will likely be felt in future matters heard in
the Federal Circuit.


Bottom Line:
Microsoft’s victory is likely the first in a line of upcoming victories for information
technology defendants in patent infringement cases. In particular, software
patent holders should be ready to accept broad defeats in patent infringement
litigation barring extreme factual circumstances.

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