Microsoft, AT&T Make Supreme Court Pitches

Microsoft  made its first ever appearance before the U.S. Supreme Court today, arguing copies of Windows shipped abroad should not be subject to U.S. infringement laws.

Despite years of litigation over matters large and small, no Microsoft case had made it to the Supreme Court before Redmond decided to appeal lower court decisions holding the software giant liable for infringing AT&T  speech recognition technology contained in Windows.

U.S. courts have already ruled Microsoft infringed on AT&T’s patent in U.S. copies of Windows and the two companies reached an undisclosed settlement. AT&T, however, insists copies of Windows shipped overseas also infringe its patent.

AT&T contends that U.S. patent law prohibits companies from shipping component parts overseas for assembly to avoid U.S. patent laws. Both a U.S. district court and the U.S. Court of Appeals for the Federal Circuit ruled in At&T’s favor.

Microsoft compiles the source code for Windows on a master disk, or “golden master,” to be shipped to foreign countries. AT&T says the disk amounts to a component part of Windows.

“Our position is that it’s not a component of the final product computers that are made abroad,” Microsoft attorney and former solicitor general Ted Olson told the justices. “What is a component is a replication, a copy of a new hard drive or a new disk that’s made a part of those computers.”

Microsoft is backed in the case by a number of technology companies and the U.S. government, which contends the appeals court ruling puts American companies at a global competitive disadvantage and attempts to extend U.S. patent law in to other countries.

U.S. software companies worry if the Supreme Court upholds the lower court decisions against Microsoft, research and development efforts will have to be shipped offshore to avoid violating U.S. patent laws.

“Now AT&T’s contrary view is that the abstract code… is the component,” Assistant Solicitor General Daryl Joseffer told the court. “The reason that can’t be is that object code in the abstract is just a series of 1’s and 0’s.”

AT&T attorney Seth Waxman said whether Microsoft sends one master disk for later copying or 100,000 copies of Windows on separate disks, the end result is infringement. He also contended the source code is an essential component of Windows that combines with the computer.

“Here what we have is the object code that is the precise commands that… interact continuously with the hard drive and with the processor in order to make physical changes on an ongoing basis,” Waxman said.

Justice David Souter pressed Waxman on his interpretation.

“The ‘continously’ does not describe the process of going from the master disk to what you claim to be the infringing computer in Europe,” Souter said.

“The master disk functions like a blueprint. The blueprint is put in some kind of machine in Europe. And by the use of the blueprint, the machine puts electrical charges on a disk or hard drive.”

Waxman said the blueprint analogy wasn’t appropriate, arguing the source code was not simply a set instructions, which wouldn’t be covered by patent law. Instead, he said, the code is “instructions about what the other things that are made should do and how they do it.”

“It’s not just how it is supplied. It’s not just how it’s combined,” Waxman said. “It’s how it interacts dynamically within the computer. And that’s why we say it’s a component.”

The court is expected to rule on the case in July.