Supreme Court Asked To Determine Extraterritorial Scope of U.S. Patent Laws

Microsoft has given the Supreme Court its third opportunity in as many years to tackle the Federal Circuit’s controversial interpretation of 35 U.S.C. 271(f). That statute allows a U.S. patentee to collect damages for foreign sales of a patented invention based on the export of one or more of its components.  The statute has been extended to the export of software code (AT&T, Eolas) as well as to the export of elements used in a patented method (Union Carbide).

In Microsoft v. AT&T, the software giant has asked the Court to answer:

  1. Whether digital software code . . . may be considered a “component[] of a patented invention” within the meaning of Section 271(f)(1); and
  2. Whether copies of such a component made in a foreign country are “supplie[d] . . . from the United States.”


Here, Microsoft’s software code was generated in the U.S. and then shipped abroad where copies were generated.  AT&T claims (and courts have thus far agreed) that sales of those foreign copies infringe the U.S. patent and create liability.  If it stands, this case could have far-reaching effects in the fields of biotechnology (DNA/cell replication) as well as foreign piracy (shipping product from the U.S. to reverse engineer and copy in a foreign country).

From a business perspective, this interpretation of the statute gives business executives another reason to send software jobs overseas.  If the component was not exported from the U.S., there will be no damages under 271(f).

Important recent 271(f) cases:

  • NTP v. Research in Motion, (271(f) “component” would rarely if ever apply to method claims).
  • AT&T v. Microsoft, 414 F.3d 1366 (Fed. Cir. 2005) (271(f) “component” applies to method claims and software being sold abroad);
  • Eolas v. Microsoft, 399 F.3d 1325 (Fed. Cir. 2005) (271(f) “component” applies to method claims and software);
  • Pellegrini v. Analog Devices, 375 F.3d 1113 (Fed. Cir. 2004) (271(f) “component” does not cover export of plans/instructions of patented item to be manufactured abroad);
  • Bayer v. Housey Pharms, 340 F.3d 1367 (Fed. Cir. 2003) (271(g) “component” does not apply to importation of ‘intangible information’).