The Supreme Court will hear the case between AT&T and Microsoft concerning section 271(f) of the Patent Act.

CNET does an excellent job of summarizing the issues Excerpts:.

The U.S. Supreme Court has agreed to wade into a patent case involving Microsoft and AT&T. The outcome could alter the scope of damages that software companies must hand over for infringing activity occurring abroad...

The questions the court has been asked to tackle are: Does software object code count as one of those components? And if so, can a U.S. company be considered a supplier of that component to thousands of computers, if it provides only one master disk to a foreign manufacturer, which then replicates it?

Andy Culbert, a Microsoft associate general counsel, applauded the high court's acceptance of the appeal. The earlier appeal ruling caused concern because it "imposes liability on any company that does research and development in the U.S., but doesn't impose the same liability on companies that have their R&D based overseas," Culbert said in a statement. "This creates a disincentive for companies to base their R&D operations in the US and potential new liabilities for making, using and selling products overseas..."

Microsoft's position has garnered some support from the U.S. Department of Justice's Office of Solicitor General, which had strongly urged the Supreme Court to take up the issue. Government lawyers wrote in a supporting brief that the appeals court's ruling "improperly extends US patent law to foreign markets and puts US software companies at a competitive disadvantage vis-a-vis their foreign competitors in foreign markets... That disadvantage will harm the software sector of the American economy and could ultimately compel some software companies to relocate their research and development operations abroad..."

posted by Noel Le @ 2:27 PM | International, Patents

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