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March 02, 2007

Microsoft v. AT&T Argued in the High Court

We've been following the patent litigation in Microsoft Corp. v. AT & T Corp., now in the U.S. Supreme Court.  The relevant statute, 35 U.S.C. § 271(f), forbids “supplying” a “component” of a patented invention with intent that it be “combined” with other components overseas in a way that would be illegal if done domestically.  Microsoft sent “golden master disks” of its Windows operating system, including speech compression object code infringing AT & T’s patents, to be copied abroad and the copies installed in computers which were then shipped to the United States.  But the masters themselves were not installed, and the devices were all made abroad.  Did Microsoft’s conduct violate § 271(f) or not?

The case was argued on February 21, 2007.  The Chief Justice took no part in the argument, and Justice Stevens presided.  Ted Olson argued for Microsoft and Seth Waxman for AT & T; both are former Solicitors General.  Daryl Joseffer, Assistant to the Solicitor General, argued for the United States as amicus curiae, supporting Microsoft.   

Microsoft's position was that code itself is not a component – as Olson said, to be a component it “has to be put together with a machine and made into a usable device.”  The actual components were “replications” of the master, but those were made abroad, not supplied from the United States.  Olson conceded infringement as to copies made domestically, but maintained that the copies made abroad were beyond the reach of the statute.  As Joseffer put it, the golden disk – which Justice Scalia thought had “a certain Scheherazade quality that really adds a lot of interest to this case” – was more like a blueprint than a component, and like a blueprint (but unlike a component) it was not itself a part of the product.

Waxman insisted that the code contained on the golden disk was a component, because “precisely the same sequence, which runs to millions of lines of binary digits, will be installed and stored … in foreign computers precisely so that they may practice AT & T’s invention.”  He argued that the distinguishing factor was “not just how it’s supplied.  It’s not just how it’s combined.  It’s how it interacts dynamically within the computer.”  But he found this a difficult position to maintain, and his presentation, at least from the transcript, was less clear than Olson’s and Joseffer’s.

In his rebuttal, Olson returned to basic principles, arguing that ideas, such as the sequences of 1s and 0s in the code, “have no physical form.  They’re in the air.  The words … ‘supplied from’ tell us that it must be a physical thing combined with.  Ideas don’t combine with physical things to make a patented invention.  Physical things do.”

The justices’ questions were nimble and penetrating, and showed a thorough familiarity with the most difficult issues.  One of Justice Breyer’s comments was especially interesting to IP lawyers.  The Federal Circuit has held that “software code alone qualifies as an invention eligible for patenting.”  Eolas Technologies, Inc. v. Microsoft Corp., 399 F.3d 1325, 1339 (Fed.Cir. 2005).  This holding was an important element of the decision below, but Justice Breyer appeared to question the premise. 
JUSTICE BREYER: I take it that we are operating under the assumption that software is patentable.  We have never held that in this Court, have we?
MR. JOSEFFER: No, but as I was saying before –
JUSTICE BREYER: So what should we do here?  Should, if we are writing this, since it’s never been held that it’s patentable in this Court –
MR. JOSEFFER: I think if –
JUSTICE BREYER: If I were writing something, should I say on the assumption that it’s patentable?  Since the issue isn’t raised?
Joseffer said no, because the patented invention in this case was not software but the “computer that has software loaded into it,” and the components of a patented invention do not themselves have to be patented.  But Justice Stevens, too, thought it important enough to ask Joseffer (after his time had elapsed) whether software was patentable (he said that standing alone it was not).  No one knows yet whether the justices’ evident interest in this question foreshadows a decision on the point.
The case is Microsoft Corp. v. AT & T Corp., No. 05-1056.  The opinion below appears as AT & T Corp. v. Microsoft Corp., 414 F.3d 1366 (Fed.Cir. 2005); the discussion of Eolas appears at 1369, and a transcript of the Supreme Court oral argument appears on the Court’s website.

Today's Blogger:  Nan Joesten

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