Microsoft wins patent battle with AT&T

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WASHINGTON (Reuters) -- The U.S. Supreme Court overturned Monday a ruling that Microsoft Corp. should be held liable for patent infringement on copies of the Windows operating system sold overseas. By a 7-1 vote, the justices rejected arguments by AT&T Inc. that Microsoft software code that infringes on its patents could be deemed a "component" of a computer, making overseas sales of the Windows operating system an infringement under U.S. patent law.

The case revolved around the interpretation of a section of the Patent Act which involves the export of components of patented inventions from the U.S. Under section 271 (f) of this act, a person that supplies a component of a patented invention overseas is liable for infringement.

Microsoft had argued that the software was not technically supplied from the United States because overseas manufacturers of its computers made copies of the software from a master disk and installed those copies into the operating system.

Microsoft said it could not be considered a supplier since the copies, not the original software, were in the computers built abroad.

AT&T argued that Microsoft's logic was a way to circumvent patent law and infringe upon the company's patent. The company had previously succeeded convincing the trial courts and the federal circuit that software was an important component of its speech decoding technology because the invention would not work without it.

Source: CNN.com