7. Dissent

7. Dissent
The case was decided with a 7 to 1 majority in favor of Microsoft. The judge that dissented was Justice Stevens.Here is what he had to say:

I disagree with the Court's suggestion that because
software is analogous to an abstract set of instructions, it
cannot be regarded as a "component" within the meaning
of §271(f).Whether attached or de-
tached from any medium, software plainly satisfies the
dictionary definition of that word.'Component' is commonly defined as `a
constituent part,' `element,' or `ingredient'. And unlike a
blueprint that merely instructs a user how to do something, software actually causes infringing conduct to occur.

A master disk is the functional equivalent of a warehouse of components ... that Microsoft fully expects to be incorporated into foreign-manufactured computers.

http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=US&vol=000&invol=05-1056

http://www.pdfdownload.org/pdf2html/pdf2html.php?url=http%3A%2F%2Fwww.supremecourtus.gov%2Fopinions%2F06pdf%2F05-1056.pdf&images=yes

6. Your own argument. (Microsoft VS AT&T)

6. My Argument
Microsoft won this case based on the theory that their master disc they sent out overseas was not directly used in the products AT&T produced. They argued that copies were made from the master disc, and because Microsoft didn't produce these copies themselves, they are not at fault because it was the companies overseas distibuting copies of Microsoft's software.

I believe that Microsoft won in a clever loophole, but I must say that is was directly Microsoft's fault because it was the intention that brought this case at hand. Microsoft sent out the master disc knowing that there would be copies made, so there should be some blame on Microsoft's end. I do however think that it was fair that Microsoft won the case based on the fact that they themselves did not distibute the copies, only the abstract.

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

3. Decision of the court (Microsoft VS AT&T)

Decision of the court:
In a 7-1 decision, the Supreme Court held that Section 271(f) of the Patent Act does not extend to cover foreign duplication of software.
There is no such thing as a world-wide patent. Rather, patent law is territorial. A US patent covers infringing acts that occur in the US but generally disregards extraterritorial activity. The lone statutory exception is Section 271(f) of the Patent Act, which calls for infringement liability for the unauthorized supply of "components" of a patented invention for "combination" abroad.

AT&T is the assignee of a patent covering a computer for encoding and compressing recorded speech. In the United States, a computer with Microsoft Windows installed infringes this patent. The question in this case, is whether the foreign installed software can be considered a "component" supplied from the United States under 271(f).

The question before us: Does Microsoft's liability extend to computers made in another country when loaded with Windows software copied abroad from a master disk or electronic transmission dispatched by Microsoft from the United States? Our answer is "No."

AT&T’s argument boiled down to the notion that patented software could essentially be decomposed by a supplier (Microsoft) and recomposed by a foreign manufacturer abroad (for instance, Acer). In such a situation, AT&T argued, Microsoft would be liable for the infringement. Microsoft argued that in exporting an installation disc to foreign manufacturers, it was shipping an "abstract" form of the software, not the patented mechanism itself.

Although Microsoft had obtained a license to AT&T’s speech software and was using it in Windows XP and Vista, AT&T claimed that license did not extend to Microsoft the right to export Windows – and thus export the software with it – to other manufacturers who would then install the software on their own computers, and then sell those computers and pocket the proceeds.

“Abstract software code is an idea without physical embodiment,” reads the syllabus of this morning’s historic decision in AT&T v. Microsoft from the US Supreme Court, “and as such, it does not match [the] categorization “components” amenable to “combination.”

So because it is an abstract form of software, that is being distributed to OEM's, who then recomposes the software and ships it abroad, Microsoft has no control over how the OEM's distribute the software, making Microsoft not liable for AT&T's patent.

http://www.patentlyo.com/patent/2007/05/microsoft_v_att_1.html

http://keznews.com/2778_Microsoft_Wins_in_Supreme_Court__AT_T_Ruling_Overturned

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

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

Microsoft VS. AT&T

1. This case concerns the applicability of §271(f) to computer software first sent from the United States to a foreign manufacturer on a master disk, or by electronic transmission, then copied by the foreign recipient for installation on computers made and sold abroad. AT&T holds a patent on a computer used to digitally encode and compress recorded speech. Microsoft’s Windows operating system has the potential to infringe that patent because Windows incorporates software code that, when installed, enables a computer to process speech in the manner claimed by the patent. Microsoft sells Windows to foreign manufacturers who install the software onto the computers they sell. Microsoft sends each manufacturer a master version of Windows, either on a disk or via encrypted electronic transmission, which the manufacturer uses to generate copies. Those copies, not the master version sent by Microsoft, are installed on the foreign manufacturer’s computers. The foreign-made computers are then sold to users abroad.

AT&T holds a patent on a computer used to digitally encode and compress recorded speech. Microsoft’s Windows operating system has the potential to infringe that patent because Windows incorporates software code that, when installed, enables a computer to process speech in the manner claimed by the patent. Microsoft sells Windows to foreign manufacturers who install the software onto the computers they sell. Microsoft sends each manufacturer a master version of Windows, either on a disk or via encrypted electronic transmission, which the manufacturer uses to generate copies. Those copies, not the master version sent by Microsoft, are installed on the foreign manufacturer’s computers. The foreign-made computers are then sold to users abroad. AT&T filed an infringement suit charging Microsoft with liability for the foreign installations of Windows.

http://www.supremecourtus.gov/opinions/06pdf/05-1056.pdf

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