To: Professor Risch
From: Alvin C. Hathaway Jr.
Facts
AT&T Corp. held a reissue patent (32,580) on a speech coder-decoder, or codec. A codec is a computer program that converts a spoken message into a compact code and then can decode the compact code back into a signal that sounds like the original spoken message. Microsoft makes a limited number of "golden master" disks in the United States containing the machine-readable object code for its Windows operating system software. Some golden master disks are shipped overseas to original equipment manufacturers, which use the disks to install foreign-replicated copies of the Windows operating system software onto foreign-assembled computers. These golden master disks contain the source code of AT&T Corp’s speech coder-decoder patent.
Procedural History
AT&T brought a patent infringement lawsuit against Microsoft in district court alleging that Microsoft's Windows XP and Vista operating system products included speech codec that infringed its patent. Judge William H. Pauley III first ruled that merely informational communications that a patentee makes to industry members and third parties regarding a patented product and required licensing are not sufficient to provide an alleged infringer actual notice of infringement under 35 U.S.C. § 287(a) and granted partial summary judgment in Microsoft's favor, limiting damages to infringement accruing after AT&T's formal letter alleging patent infringement. 290 F. Supp. 2d 409 (S.D.N.Y. 2003).
The district court then granted partial summary judgment in AT&T's favor, holding that if Microsoft was unaware of the speech codec patent when the alleged infringement took place, it could not assert the defense of equitable estoppel against the infringement claim. 70 USPQ2d 1141 (S.D.N.Y. 2004).
Microsoft moved for partial summary judgment, based off of 35 U.S.C. § 271(f), to exclude sales of goods incorporating foreign-replicated copies of its infringing Windows software from any damages award.
AT&T appealed the district court ruling. The Federal Circuit affirmed the district court's ruling, concluding that such activity did constitute "supply" of a patented component under Section 271(f). AT&T Corp. v. Microsoft Corp., 414 F.3d 1366 (Fed. Cir. 2005). AT&T appealed to the U.S. Supreme Court. In October 2006, the Supreme Court granted review
Understanding 271(f)
35 U.S.C. § 271(f), statutory provision states:
(1) Whoever without authority supplies ... from the United States all or a substantial portion of the components of a patented invention, where such components are uncombined in whole or in part, in such manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.
(2) Whoever without authority supplies ... from the United States any component of a patented invention that is especially made or especially adapted for use in the invention and not a staple article or commodity of commerce suitable for substantial noninfringing use, where such component is uncombined in whole or in part, knowing that such component is so made or adapted and intending that such component will be combined outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.
Section 271(f) was enacted by the legislature in response to the Supreme Court's ruling in Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518, 173 USPQ 769 (1972), which held that manufacturing components of a patented invention in the United States, but assembling them into the patented invention abroad, was not "making" and therefore did not constitute infringement under 35 U.S.C. § 271(a).
Section 271(f), purpose was to prevent infringers from avoiding infringement liability by manufacturing or supplying a component of a patented invention from the United States and shipping it aboard to be combined into an end product overseas. However, components supplied from foreign countries and incorporated into foreign-assembled products do not fall under the aegis of the provision.
Issue
(1) Whether digital software code–an intangible sequence of “1’s†and “0’sâ€â€“may be considered a “component[] of a patented invention†within the meaning of Section 271(f)(1); and, if so,
(2) Whether copies of such a “component†made in a foreign country are “supplied . . . from the United States.â€
Microsoft Argument
Microsoft wants to avoid infringing the AT&T Corp. U.S. patent for its activity abroad and Microsoft gives two separate reasons why its activity of exporting software do not fall within under 271(f).
(I) First Microsoft claims that software code is an “intangible†string of information not a “component†as required by the statute.
(II) Next Microsoft claims that because copies of the code were used to create the infringing software/hardware combination, no “physical particle†that Microsoft shipped overseas actually became part of the finished product. So Microsoft is basically claiming that nothing in the infringing combination was actually supplied from the U.S. as required by the statute.
Holding
The court held that a master software disk that is exported and then used to install software at the point of assembly is not a component within the meaning of the law. Because Microsoft does not export from the United States the copies of Windows installed on the foreign-made computers in question, Microsoft does not "supply ... from the United States" "components" of those computers, and therefore is not liable under §271(f) as currently written.
Understanding the Holding
This basically supports the general principle that U.S. law stops at U.S. borders. The ruling effectively prevents holders of U.S. software patents from enforcing those patents in other countries unless they hold a valid patent there. Because Microsoft develops much of its software in the U.S., and ships the code around the world, this holding is basically a license for Microsoft to continue its practice of shipping source code without the treat of infringing others patents. This is a huge breakthrough for all software creation companies that are based in the U.S. and ship products worldwide.
Dicta
1. “Abstract software code is an idea without physical embodiment . . . and as such, it does not match the categorization ‘components’ amenable to ‘combination’. Windows abstracted from a tangible copy no doubt is information – a detailed set of instructions – and thus might be compared to a blueprint (or anything else containing design information). A blueprint may contain precise instructions for the construction and combination of the components of a patented device, but it is not itself a combinable component.â€
“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. (An analogy: The notes of Beethoven’s Ninth Symphony.) One can alternatively envision a tangible ‘copy’ of software, the instructions encoded on a medium such as a CD-ROM. (Sheet music for Beethoven’s Ninth.)â€
The decision helps to add clarity to our patent system by defining what will constitute a component in the software industry. The decision also draws lines for our transnational patent system shall work. The decision supports the theory that U.S. courts, like other countries courts, can respect the patent laws of other countries, helping promote cooperation among patent systems worldwide.
In this section of the Microsoft v. AT&T case the court draws the distinction at the point when the instructions are detached from any medium versus when the instructions are encoded onto a medium. This could be potentially hazardous for the court because this dicta has a limited current view of the stages of software development. There could potentially be in the future a merge between both of these stages of software design. Instructional code could be written so that it compiles itself without the need of a separate program to compile the software. In my opinion the court took a risk by clearly distinguishing the stages of software development by whether it can be put on a CD and understood by a computer. As we all know, the software and computer industry as developed faster than any industry we have seen before. There are an unimaginable ways in which software could be developed and installed in the future. And because of this specific conclusion, it could bring about new questions in the future that will require additional understanding.
2. “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 uncombinable. 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’.â€
This quote from the Microsoft v. AT&T court lets us know that software remains patentable. It make clear by using examples that any code that must be reinterpreted to become functional is not patentable. Because of this definition source code can likely be considered not patentable.
Affects on prior 271(f) cases decisions
Eolas Technologies Inc. v. Microsoft Corp., 399 F.3d 1325, 73 USPQ2d 1782 (Fed. Cir. 2005), held that Microsoft's exporting of master disks containing infringing code constituted the supply of a "component" under Section 271(f). Eolas held that software qualifies as subject matter eligible for patenting and that Section 271(f) is not limited to patented "machines" or "physical structures."
Basically, there are two points that come out of Eolas:
(I) First, there is no "physicality" requirement for a component of a patented invention to fall within the statute.
(II) Second, the shipped component itself does not have to be part of the infringing use, but a foreign produced copy of the shipped component can create infringement liability when the copy is to be used in an infringing manner.
This recent Microsoft v. AT&T Supreme Court case pretty much overrules the second point that was decided in Eolas. Eolas is no longer good law as it relates to extraterritorial patent infringement. The Microsoft v. AT&T decision basically looks as the current form of the potentially infringing material, contrary to Eolas which said that if the potentially infringing material can be used in an infringing way then there was infringement. The first point made by the Eolas court still stands as good law. The Microsoft v. AT&T court confirmed that there is no physicality requirement for a component of a patented item. The Microsoft v. AT&T Supreme Court expands upon this non-physicality requirement by distinguishing between software that is ready to be installed on a computer machine versus source code that must be complied before it can used by a computer hardware.
From: Alvin C. Hathaway Jr.
Facts
AT&T Corp. held a reissue patent (32,580) on a speech coder-decoder, or codec. A codec is a computer program that converts a spoken message into a compact code and then can decode the compact code back into a signal that sounds like the original spoken message. Microsoft makes a limited number of "golden master" disks in the United States containing the machine-readable object code for its Windows operating system software. Some golden master disks are shipped overseas to original equipment manufacturers, which use the disks to install foreign-replicated copies of the Windows operating system software onto foreign-assembled computers. These golden master disks contain the source code of AT&T Corp’s speech coder-decoder patent.
Procedural History
AT&T brought a patent infringement lawsuit against Microsoft in district court alleging that Microsoft's Windows XP and Vista operating system products included speech codec that infringed its patent. Judge William H. Pauley III first ruled that merely informational communications that a patentee makes to industry members and third parties regarding a patented product and required licensing are not sufficient to provide an alleged infringer actual notice of infringement under 35 U.S.C. § 287(a) and granted partial summary judgment in Microsoft's favor, limiting damages to infringement accruing after AT&T's formal letter alleging patent infringement. 290 F. Supp. 2d 409 (S.D.N.Y. 2003).
The district court then granted partial summary judgment in AT&T's favor, holding that if Microsoft was unaware of the speech codec patent when the alleged infringement took place, it could not assert the defense of equitable estoppel against the infringement claim. 70 USPQ2d 1141 (S.D.N.Y. 2004).
Microsoft moved for partial summary judgment, based off of 35 U.S.C. § 271(f), to exclude sales of goods incorporating foreign-replicated copies of its infringing Windows software from any damages award.
AT&T appealed the district court ruling. The Federal Circuit affirmed the district court's ruling, concluding that such activity did constitute "supply" of a patented component under Section 271(f). AT&T Corp. v. Microsoft Corp., 414 F.3d 1366 (Fed. Cir. 2005). AT&T appealed to the U.S. Supreme Court. In October 2006, the Supreme Court granted review
Understanding 271(f)
35 U.S.C. § 271(f), statutory provision states:
(1) Whoever without authority supplies ... from the United States all or a substantial portion of the components of a patented invention, where such components are uncombined in whole or in part, in such manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.
(2) Whoever without authority supplies ... from the United States any component of a patented invention that is especially made or especially adapted for use in the invention and not a staple article or commodity of commerce suitable for substantial noninfringing use, where such component is uncombined in whole or in part, knowing that such component is so made or adapted and intending that such component will be combined outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.
Section 271(f) was enacted by the legislature in response to the Supreme Court's ruling in Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518, 173 USPQ 769 (1972), which held that manufacturing components of a patented invention in the United States, but assembling them into the patented invention abroad, was not "making" and therefore did not constitute infringement under 35 U.S.C. § 271(a).
Section 271(f), purpose was to prevent infringers from avoiding infringement liability by manufacturing or supplying a component of a patented invention from the United States and shipping it aboard to be combined into an end product overseas. However, components supplied from foreign countries and incorporated into foreign-assembled products do not fall under the aegis of the provision.
Issue
(1) Whether digital software code–an intangible sequence of “1’s†and “0’sâ€â€“may be considered a “component[] of a patented invention†within the meaning of Section 271(f)(1); and, if so,
(2) Whether copies of such a “component†made in a foreign country are “supplied . . . from the United States.â€
Microsoft Argument
Microsoft wants to avoid infringing the AT&T Corp. U.S. patent for its activity abroad and Microsoft gives two separate reasons why its activity of exporting software do not fall within under 271(f).
(I) First Microsoft claims that software code is an “intangible†string of information not a “component†as required by the statute.
(II) Next Microsoft claims that because copies of the code were used to create the infringing software/hardware combination, no “physical particle†that Microsoft shipped overseas actually became part of the finished product. So Microsoft is basically claiming that nothing in the infringing combination was actually supplied from the U.S. as required by the statute.
Holding
The court held that a master software disk that is exported and then used to install software at the point of assembly is not a component within the meaning of the law. Because Microsoft does not export from the United States the copies of Windows installed on the foreign-made computers in question, Microsoft does not "supply ... from the United States" "components" of those computers, and therefore is not liable under §271(f) as currently written.
Understanding the Holding
This basically supports the general principle that U.S. law stops at U.S. borders. The ruling effectively prevents holders of U.S. software patents from enforcing those patents in other countries unless they hold a valid patent there. Because Microsoft develops much of its software in the U.S., and ships the code around the world, this holding is basically a license for Microsoft to continue its practice of shipping source code without the treat of infringing others patents. This is a huge breakthrough for all software creation companies that are based in the U.S. and ship products worldwide.
Dicta
1. “Abstract software code is an idea without physical embodiment . . . and as such, it does not match the categorization ‘components’ amenable to ‘combination’. Windows abstracted from a tangible copy no doubt is information – a detailed set of instructions – and thus might be compared to a blueprint (or anything else containing design information). A blueprint may contain precise instructions for the construction and combination of the components of a patented device, but it is not itself a combinable component.â€
“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. (An analogy: The notes of Beethoven’s Ninth Symphony.) One can alternatively envision a tangible ‘copy’ of software, the instructions encoded on a medium such as a CD-ROM. (Sheet music for Beethoven’s Ninth.)â€
The decision helps to add clarity to our patent system by defining what will constitute a component in the software industry. The decision also draws lines for our transnational patent system shall work. The decision supports the theory that U.S. courts, like other countries courts, can respect the patent laws of other countries, helping promote cooperation among patent systems worldwide.
In this section of the Microsoft v. AT&T case the court draws the distinction at the point when the instructions are detached from any medium versus when the instructions are encoded onto a medium. This could be potentially hazardous for the court because this dicta has a limited current view of the stages of software development. There could potentially be in the future a merge between both of these stages of software design. Instructional code could be written so that it compiles itself without the need of a separate program to compile the software. In my opinion the court took a risk by clearly distinguishing the stages of software development by whether it can be put on a CD and understood by a computer. As we all know, the software and computer industry as developed faster than any industry we have seen before. There are an unimaginable ways in which software could be developed and installed in the future. And because of this specific conclusion, it could bring about new questions in the future that will require additional understanding.
2. “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 uncombinable. 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’.â€
This quote from the Microsoft v. AT&T court lets us know that software remains patentable. It make clear by using examples that any code that must be reinterpreted to become functional is not patentable. Because of this definition source code can likely be considered not patentable.
Affects on prior 271(f) cases decisions
Eolas Technologies Inc. v. Microsoft Corp., 399 F.3d 1325, 73 USPQ2d 1782 (Fed. Cir. 2005), held that Microsoft's exporting of master disks containing infringing code constituted the supply of a "component" under Section 271(f). Eolas held that software qualifies as subject matter eligible for patenting and that Section 271(f) is not limited to patented "machines" or "physical structures."
Basically, there are two points that come out of Eolas:
(I) First, there is no "physicality" requirement for a component of a patented invention to fall within the statute.
(II) Second, the shipped component itself does not have to be part of the infringing use, but a foreign produced copy of the shipped component can create infringement liability when the copy is to be used in an infringing manner.
This recent Microsoft v. AT&T Supreme Court case pretty much overrules the second point that was decided in Eolas. Eolas is no longer good law as it relates to extraterritorial patent infringement. The Microsoft v. AT&T decision basically looks as the current form of the potentially infringing material, contrary to Eolas which said that if the potentially infringing material can be used in an infringing way then there was infringement. The first point made by the Eolas court still stands as good law. The Microsoft v. AT&T court confirmed that there is no physicality requirement for a component of a patented item. The Microsoft v. AT&T Supreme Court expands upon this non-physicality requirement by distinguishing between software that is ready to be installed on a computer machine versus source code that must be complied before it can used by a computer hardware.