Issue 1: Is software, in the abstract, uncoupled from any tangible medium, considered a component in determining infringement under 35 U.S.C. §271(f)?

 

Answer: No.

 

Issue 2: Are copies of a software program that are made abroad from a master disk that is shipped from the United States considered a component that is supplied from the United States for the purposes of considering infringement under 35 U.S.C. §271(f)?

 

Answer: No.

 

Facts: AT&T Corp. (hereinafter AT&T) holds a patent on an apparatus for digitally encoding and compressing recorded speech. Microsoft Corp.’s (hereinafter Microsoft) Windows operating system, it is conceded, has the potential to infringe AT&T’s patent, because Windows incorporates software code that, when installed, enables a computer to process speech in the manner claimed by that patent. However, the uninstalled Windows software does not infringe AT&T’s patent. The patent is infringed only when a computer is loaded with Windows and thereby rendered capable of performing as the patented speech processor.

 

Microsoft sends to foreign manufacturers a master version of Windows, either on a disk or via encrypted electronic transmission. The manufacturer uses the master version to generate copies. Those copies, not the master sent by Microsoft, are installed on the foreign manufacturer’s computers. Once assembly is complete, the foreign-made computers are sold to users abroad. The master disk is never installed on any of the foreign-made computers in question.

 

On motion for partial summary judgment to the U.S. district court, Microsoft asserted that international distribution of Windows® for the foreign computer market is outside the scope of §271(f) because (1) software is not a “component” of a patented invention and (2) the copies of Windows replicated abroad were not “supplied” from the U.S. The district court denied Microsoft’s motion for partial summary judgment, concluding that the term “component” in §271(f) is not limited to structural or physical product elements, and further concluding that software copies made abroad from a master version sent from the U.S. are each “supplied” from the U.S. for purposes of liability under §271(f). Microsoft appealed to the United States Court of Appeals for the Federal Circuit, wherein the Federal Circuit interpreted U.S. patent statute 35 U.S.C. §271(f) as extending infringement liability to foreign computers assembled with copies of software replicated abroad from a U.S.-made master version. Microsoft appealed to the United States Supreme Court who granted certiorari.

 

Reasoning/Conclusion 1:

 

35 U.S.C. §271(f) recites:

 

(1) Whoever without authority supplies or causes to be supplied in or 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 or causes to be supplied in or 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.

 

 

Until it is expressed as a computer-readable “copy”, e.g., on a CD-ROM, Windows 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 amount to a “component” amendable to “combination.” Software, abstracted from a tangible copy is information, i.e., a detailed set of instructions, and might be compared to a blueprint or anything containing design information. A blueprint may contain precise instructions for the construction and combination of the components of the patented device, but it is not itself a combinable component of that device. Based on this reasoning, the Supreme Court considered Microsoft’s master disk a component within the scope of 35 U.S.C. §271(f), while software, in the abstract, uncoupled from any tangible medium, is not considered a component.

 

Reasoning/Conclusion 2: 35 U.S.C. §271(f) prohibits the supply of components “from the United States… in such a manner as to actively induce the combination of such components.” Under this formulation, the very components supplied from the United States, and not copies thereof, trigger §271(f) liability when combined abroad to form the patented invention at issue.

 

The copies installed on the foreign computers were not themselves supplied from the United States. The copies did not exist until they were generated by third parties outside the United States. Although copying software is easy and inexpensive, §271(f) provides no instruction to gauge when duplication is easy and cheap enough to deem a copy in fact made abroad as being supplied from the United States. §271(f) is merely concerned with whether the component that was supplied from the United States is combined abroad to form the patented invention at issue. As the master disk was not combined with the foreign computers, Microsoft is not liable under 35 U.S.C. §271(f).

 

This holding is consistent with the idea that United States law governs domestically and does not extend to foreign activities. As enunciated in Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518 at 531, “our patent system makes no claim to extraterritorial effect”; our legislation “d[oes] not, and [was] not intended to, operate beyond the limits of the Unites States, and we correspondingly reject the claims of others to such control over our markets.”

 

The full text of this opinion is available at

http://www.supremecourtus.gov/opinions/06pdf/05-1056.pdf.

 

Summary supplied by Catherine M. Voisinet and D. Richard Anderson. Edited by Leonard Svensson.