Anticipate This!™ | Patent and Trademark Law Blog

Microsoft Corp. v. AT&T Corp.

Posted in Opinion Commentary by Jake Ward on May 1, 2007

Title 35 U.S.C. § 271(f)(1) does not govern the manufacture and sale of components of U.S. patented inventions in foreign countries.

(Supreme Court 2007, 05-1056)

Title 35 U.S.C. § 271(f)(1) provides that it is an act of direct patent infringement to “suppl[y]. . . from the United States . . . components of a patented invention . . . in such manner as to actively induce the combination of such components outside of the United States.”

In this case, AT&T Corp. alleged that when Microsoft Corporation’s Windows software was installed on a personal computer outside tbe U.S., the programmed computer infringed AT&T’s patent for a “Digital Speech Coder” system.  AT&T sought damages not only for each Windows-based computer made or sold in the United States, but also, under Section 271(f)(1), for each computer made and sold abroad.  Extending Section 271(f)—and consequently, the extraterritorial application of U.S. patent law—the Federal Circuit held that Microsoft infringed under Section 271(f)(1) when it exported master versions of its Windows software code to foreign computer manufacturers, who then copied the software code and installed the duplicate versions on foreign-manufactured computers that were sold only to foreign consumers.  The Supreme Court reversed.

In reversing the holding of the CAFC, the Supreme Court stated: 

Because Microsoft does not export from the United States the copies of Windows installed on the foreign-made computers in question, Microsoft does not “suppl[y] . . . from the United States” “components” of those computers, and therefore is not liable under §271(f)as currently written. . . .

Foreign conduct is generally the domain of foreign law, and in the patent area, that law may embody different policy judgments about the relative rights of inventors, competitors, and the public. Applied here, the presumption tugs strongly against construing §271(f) to encompass as a “component” not only a physical copy of software, but also software’s intangible code, and to render “supplie[d] . . . from the United States” not only exported copies of software, but also duplicates made abroad.  Foreign law alone, not United States law, currently governs the manufacture and sale of components of patented inventions in foreign countries.  If AT&T desires to prevent copying abroad, its remedy lies in obtaining and enforcing foreign patents. . . .

REVERSED.

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