Microsoft Welcomes Supreme Court Decision In AT And T Case

by Glen Shapiro, LawAndTax-News.com, New York

03 May 2007

Ruling on Monday by a 7-1 majority, the US Supreme Court found in favour of Microsoft in a patent infringement dispute with AT&T.

The case centred on whether software code containing infringing material included in computers shipped overseas constituted a 'component' of the computer.

Microsoft had previously been found to have infringed a patent owned by AT&T which covered the conversion of speech to software code. Under current US patent law, there is an rule which aims to prevent US firms from shipping "components" to foreign manufacturers, with the purpose of combining them to make a machine which infringes on patents held in the US.

However, there is no such restriction on the sending of 'blueprints' that could in theory be utilised by a foreign company to build a similar or identical product, and it was this latter that the Supreme Court decided on Monday was supplied by Microsoft when it shipped the Windows operating system overseas.

Commenting on behalf of her peers, Supreme Court Justice, Ruth Bader Ginsburg suggested that:

“If AT&T desires to prevent copying abroad, its remedy today lies in obtaining and enforcing foreign patents."

Welcoming the verdict, Senior Vice President and General Counsel Brad Smith announced on Monday that:

“Today’s Supreme Court decision is important for the entire information technology industry, adding clarity and balance to our patent system. This decision promotes a global patent system that works. The ruling ensures that U.S. courts, like courts elsewhere, can respect the patent laws of other countries, helping promote cooperation among patent systems worldwide."

“We’re also pleased that today’s decision applies the patent law to software in the same way it’s applied to other inventions. The patent system remains one of the country’s fundamental engines of economic growth. It is important for patent laws to continue to provide an incentive to innovate for software, just as it does throughout the rest of the economy. Today’s decision reinforces this result."

“This decision also adds to Microsoft’s successful record on appeal and has implications for many of our other patent cases. In particular, we believe the damage awards against Microsoft in both the Alcatel-Lucent and Eolas cases will be revisited in light of this ruling, and we welcome this result.”

This represents the second major patent dispute case that the Supreme Court has ruled on this week.

Also on Monday, the Supreme Court delivered a key decision on the role that the 'obviousness' of an invention which contains pre-existing technologies should have in the granting, or otherwise, of a patent.

The case of KSR International Co. v. Teleflex Inc centred on gas pedals manufactured and supplied by KSR to General Motors, which contain technology allowing them to be adjusted according to the height of the driver, in addition to containing an electronic engine control system.

Teleflex took infringement action against KSR in 2002, arguing that it owned the patent for such a combination of technologies. KSR countered that the obviousness of the combination should invalidate Teleflex's patent.

KSR won its case in Federal District Court in Detroit, but that decision was rejected by the United States Court of Appeals for the Federal Circuit in 2005.

The Supreme Court's Monday verdict reversed the appeals court decision and the case was sent back to the Detroit District Court, in a move which could have far-reaching implications for the granting of patents in the United States.

Writing on behalf of his peers, Justice Anthony Kennedy reportedly observed that:

"Granting patent protection to advances that would occur in the ordinary course without real innovation retards progress and may ... deprive prior inventions of their value."

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