Microsoft Corp. v. AT&T Corp. - 550 U.S. 437, 127 S. Ct. 1746 (2007)

Rule:

It is the general rule under United States patent law that no infringement occurs when a patented product is made and sold in another country. There is an exception. 35 U.S.C.S. § 271(f) provides that infringement does occur when one supplies from the United States, for combination abroad, a patented invention's components.

Facts:

AT&T Corporation held a patent on a computer used to digitally encode and compress recorded speech. Microsoft Corporation’s Windows operating system has the potential to infringe the patent because Windows incorporated software that, when installed, would enable a computer to process speech in the manner claimed by the patent. Microsoft sent master versions of Windows, the master disks were copied, and the copies were installed in computers which were sold in the foreign countries. AT&T Corporation contended that such conduct constituted infringement by supplying components of its invention from the U.S. for combination abroad. In its answer, Microsoft alleged that unincorporated software, because it was intangible information, cannot be typed a “component” of an invention under Section 271(f) of the Patent Act. Microsoft further argued that the foreign-generated copies of Windows actually installed abroad were not “supplied from the United States.” The District Court held Microsoft liable under the Act, and the Federal Circuit affirmed. Microsoft challenged the decision.

Issue:

Under the circumstances, could Microsoft be held liable for patent infringement under Section 271(f) of the Patent Act?

Answer:

No.

Conclusion:

The U.S. Supreme Court held that, although it was conceded that Microsoft’s software enabled a computer to process speech in the manner claimed by the patent, Microsoft did not infringe the patent based on supplying the master disks for copying and installing in computers abroad. According to the Court, the master disk was never installed on any foreign-made computers and, instead, the copies made abroad were used for installation. Further, Microsoft’s software did not qualify as a component until it was expressed as a computer-readable copy, i.e., when the foreign-made copies were generated, and the fact that this copying step was simple and inexpensive did not extend liability for infringement under § 271(f).