2. Issue of the case (Microsoft VS. AT&T)

2. Issue of the case
At issue is whether Microsoft can be held liable for violating an AT&T patent on technology that condenses speech into computer code, similar to that found on Microsoft's Windows program. Microsoft admitted it infringed the AT&T patent on computers sold domestically but contends that it is not liable for its programs installed by computer manufacturers overseas. In 1984, Congress amended the patent law to forbid companies from shipping components of patented inventions overseas and having the parts assembled elsewhere in an attempt to skirt patent laws. So in this case, justices are looking at whether digital software code can be considered a "component" of a patented invention and if so, whether it was "supplied" from the United States.

Seth P. Waxman, AT&T's lawyer and a former Clinton administration solicitor general, told justices they should uphold two lower courts' rulings in the company's favor. Waxman said there is no dispute that Microsoft sends Windows code from the United States, via the "golden disk" or electronic transmission, to be installed in foreign computers.

"Those facts resolve this case," Waxman said. "Microsoft has 'supplied' a 'component' that when 'combined with hardware' enables the practice of AT&T's invention."

But Microsoft's lawyer, former Bush administration solicitor general Theodore B. Olson, countered that the code is copied outside the United States and installed on computers overseas. Thus, U.S. patent laws don't apply, he said.

"Those are computers that are sold abroad," Olson told the court. The components the law refers to, he said, were all manufactured overseas.

http://www.washingtonpost.com/wp-dyn/content/article/2007/02/21/AR2007022100087.html

http://www.washingtonpost.com/wp-dyn/content/article/2007/02/21/AR2007022100087_2.html

The U.S. Court of Appeals for the Federal Circuit, in July 2005, ruled against Microsoft, saying that software copies made from a master version sent from the U.S. are not shielded from patent law, which prohibits circumvention of infringement through the exporting of products.
Microsoft argued that it had sent one master copy of Windows overseas on a so-called golden disk to be copied onto PCs sold outside the U.S. Microsoft shouldn't be liable for patent infringement for the hundreds of thousands of copies of Windows made from that master disk, its lawyers argued.
Microsoft, which agreed to an undisclosed settlement with AT&T in March 2004, also argued that software object code isn't a component of a patented invention. The agreement allowed the software vendor to appeal the case.
http://www.infoworld.com/d/security-central/supreme-court-review-att-vs-microsoft-patent-case-61