Microsoft v. AT&T: Unlicensed Export of Patented Software

With Microsoft’s reply brief filed late last week, briefing is likely over in the battle over interpretation of 35 USC 271(f). Oral arguments will be held this Wednesday (February 21, 2007). The case boils down the following statement:

Whether, by exporting the golden masters containing machine-readable object code from which foreign replicated copies were made in foreign countries, installed overseas in foreign-made computers, and sold to foreign end users, Microsoft “supplie[d] . . . from the United States” the “components of a patented invention” in a manner that induced “the combination of such components outside of the United States.”

What is the component? Why Microsoft believes it should win on either theory of component:

  1. If the component is the golden master itself, then it cannot be infringing because the golden master itself was not combined in an infringing manner as required by the statute.
  2. If the component is the object code . . .  well, object code cannot be a component because it is “an idea.”

As Hal Wegner recently noted in his widely-read newsletter, ”It’s Hardball!“ At oral arguments, two former Solicitors General will face-off Theodore Olson for Microsoft and Seth Waxman for AT&T.  [Updated] Anything involving patent law at the Department of Justice goes through Daryl Joseffer and his boss Thomas Hungar. Joseffer will be given time at the arguments.

Note:

  • Microsoft presumptively argues that these two suggestions for the ‘component’ are mutually exclusive. The do not, however, explain why both the golden master and the object code could be simultaneous components.
  • I agree with Microsoft that AT&T’s Moby Dick analogy doesn’t sit well. . .
  • All the briefs are available here.

13 thoughts on “Microsoft v. AT&T: Unlicensed Export of Patented Software

  1. Scary indeed…

    SCOTUS judges trying to decide on something they obviously don’t have a clue about…

    Well, that’s what this country has turned into…

    “The fate of all mankind I see is in the hands of fools “(King Crimson)

  2. Here’s my question: Why didn’t AT&T sue for a “reasonable royalty” to the “golden master” which was made in the U.S. (the “Golden Master” by itself presumably worth billions)?

  3. last page:

    MR. OLSON: The making of the master disk if actually used in a computer with a microphone and a speaker, and that’s the liability that existed in the stipulation under 271(a). Making copies is liability domestically under 271(b). If it’s going to be liable for foreign made replications, then it must be under 271(f). The language of the statute, we submit is clear. Physical things must be components under 271(f) because they must be supplied from somewhere. Ideas have no physical from. They’re in the air. The words used, “supplied from” tells us that it must be a physical thing combined with. Ideas don’t combine with physical things to make a patented invention. Physical things do. Thank you, Your Honor.

    JUSTICE STEVENS: Thank you, Mr. Olson. The case is submitted.

    [Whereupon, at 11:15 a.m., the case in the above-entitled matter was submitted.]

  4. Waxman’s rebuff:

    Look at it from the perspective — maybe this helps. Let’s look at the question from the perspective of Microsoft, the OEM, and the user overseas. Object code is the end of Microsoft’s manufacturing process. That is what they make. They don’t make hard drives, they don’t make disks, they don’t make computers. They fully finish their product, the Windows operating code, and then send it overseas. The OEM is -

    JUSTICE SCALIA: That, that code is not patentable, you’ve said.

    MR. WAXMAN: The code is not patentable.

  5. the dance around the elephant by the blind men continues:

    JUSTICE BREYER: How would you, how would you — go back for a second, please, because, if you’re finished with that, because I don’t see how to decide for you without at the same time permitting a person to walk over to the Patent Office, to read that application and the description, which after all at least can be a very highly detailed set of instructions of how to make a machine, getting on the phone, explaining that just like the blueprint which it is just like to somebody in Europe. They then make it. And that on your reading would violate the statute. It can’t be right that that would and you don’t even think it would.

    MR. WAXMAN: I don’t because -

    JUSTICE SOUTER: And so what’s the difference between that and this case for you?

    MR. WAXMAN: Justice Breyer, there is a long, long spectrum with respect to software that goes, goes from high level system architecture to all the way down through component architecture, pseudo code, source code, which is, which is a description that humans understand, and the actual machine language …

  6. 5th page 27:

    JUSTICE STEVENS: Your time is up, but I want to ask you one yes or no question. In your view is software patentable?

    MR. JOSEFFER: Standing alone in and of itself, no.

    JUSTICE STEVENS: Thank you.

    Mr. Waxman. ORAL ARGUMENT OF SETH P. WAXMAN [begins here] …

  7. 4th installment: tech savvy Justices (pg 24):

    JUSTICE ALITO: If these — if these computers are built abroad and are sold with Windows installed, the component is the electrons on the hard drive? Is that what, that’s your position?
    MR. JOSEFFER: It’s the physical embodiment of the software which in some instances is manifested by — by those electrons. Now AT&T’s contrary view is that the abstract code in the abstract is the component. The reason that can’t be is that object code in the abstract is just a series of 1′s and 0′s. In theory I could memorize in my head or write down on a piece of paper. But that’s not going to combine with other, with other parts to make a patented invention.

  8. 3rd installment of juicy exchanges (pg 22):

    JUSTICE BREYER: I take it that we are operating under the assumption that software is patentable? We have never held that in this Court, have we?
    MR. JOSEFFER: No, but as I was saying before -
    JUSTICE BREYER: So what should we do here? Should, if we are writing this, since it’s never been held that it’s patentable in this Court -
    MR. JOSEFFER: I think if -
    JUSTICE BREYER: If I were writing something, should I say on the assumption that it’s patentable? Since the issue isn’t raised?
    MR. JOSEFFER: No. I think, I think the reason that’s not relevant here is that the patented invention in this case is not software. It’s computer that has software loaded into it. And the components of a patented invention do not themselves have to be patented.

  9. Microsoft’s skillful reply should be appended to future editions of Arthur Schopenhauer’s essay “The Art of Controversy.”

    “A brilliant move is the retorsio argumenti, or turning of the tables, by which your opponent’s argument is turned against himself. He declares, for instance, ‘So-and-so is a child, you must make allowance for him.’ You retort, ‘Just because he is a child, I must correct him; otherwise he will persist in his bad habits.’”
    -Strategem XXVI (read “object code” for “child”).

    “Should your opponent be in the right, but, luckily for your contention, choose a faulty proof, you can easily manage to refute it, and then claim that you have thus refuted his whole position.”
    -Strategem XXXVII.

  10. If one is to “buy into” the argument that binary code existant on a “golden master” is not a “component”, then pray tell why the supply from the US of individual CDs/DVDs containing the binary code for each computer manufactured overseas would be problematic.

    Somewhat related, what about supply from the US of a “plug mold” for a component of a machine?

  11. What about the SFLC’s amicus brief ? Where Eben Moglen (sp) argued for no software patents? Surely this will weigh in on the justice’s decision? I hope so.

    - rmcall

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