4. Reasoning of the court (Microsoft VS AT&T)

4. Reasoning of the court:
The court’s opinion in detail becomes even more explicit:

“This case poses two questions: First: when, or in what form, does software qualify as a ‘component’ under [Section] 271(f)? Second: were ‘components’ of the foreign-made computers involved in this case ‘supplied’ by Microsoft from the United States?”

“Software, the ‘set of instructions, known as code, that directs a computer to perform specified functions or operations...can be conceptualized in at least two ways. One can speak of software in the abstract: the instructions themselves detached from any medium (such as source code, which has no power in actual software). One can alternatively envision a tangible ‘copy’ of software, the instructions encoded on a medium such as a CD-ROM. Until it is expressed as a computer-readable copy, e.g. on a CD-ROM, Windows software - indeed any software detached from an activating medium - remains un-combinable. It cannot be inserted into a CD-ROM drive or downloaded from the Internet; it cannot be installed or executed on a computer. Abstract software code is an idea without physical embodiment, and as such, it does not match §271(f)’s categorization: ‘components’ amenable to ‘combination’.”

http://www.betanews.com/article/Microsoft-Wins-in-Supreme-Court-ATT-Ruling-Overturned/1177944397

The Chief Justice took no part in the consideration or decision of this case.
The Court had no trouble finding that a physical piece of software (such as a disk) can be a component of a patented invention, but reached a different result as to software in the abstract. The Court compared software in the abstract to a blueprint or a tool. Blueprints and tools can be used to manufacture a component but does not make the blueprints and tools themselves components. Similarly, software in the abstract can be used to create a disk containing the software, but the software in the abstract is not a component. Only a physical embodiment of software qualifies as a component.

The Court further held that Microsoft did not supply a component of the invention from the United States, because the exported physical software, the master disk, was not directly used in the invention – a computer running Windows. Instead, the recipients of the disk made copies, and used only the copies in the computer. The plain meaning of 35 U.S.C. § 271(f), according to the Court, only applied to the inclusion in the computer of components supplied from the United States. The statute could not be read to cover the inclusion of copies of components, when the copies were not themselves supplied from the United States.

A concurring opinion by three justices would have added another ground. The concurring opinion observed that the disks used to further copy the software onto the computer hard drives were then removed and thus did not become a physical part of the completed computer. Since the disks were not physically present in the final apparatus, the concurring justices felt those disks could not be a component of the apparatus. The other justices in the majority, however, did not reach that issue.

http://www.wolfgreenfield.com/newsstand/client-alerts-122