In a 7-1 decision, the Supreme Court held the Patent Act does not extend to foreign duplication of software in Microsoft Corp. v. ATT Corp., decided April 30, 2007. Itââ?¬â?¢s no secret that there is no such thing as a world-wide U.S. patent. The U.S. patent laws only cover infringing acts that occur, or will occur, in the United States. Infringing acts include the unauthorized “make, use or sell” of the patented invention, either in the United States or imports into the United States. But what about components of a patented invention, made in the United States, for combination abroad? The Patent Act covers that scenario under 35 U.S.C. Ã?§271(f)(1), making such actions an infringement, even when the combined product is not sold in the United States. This extended reach of the Patent Act was created to close a loophole that existed from a 1972 Supreme Court case. But in the Microsoft Corp. v. ATT Corp. decision, the Supreme Court has made clear that such “components” must be in tangible form and ready to be combined. If they are neither of those things, it will not make for liability under section 271(f)(1). The key issue in the case was whether a “master disc” (or encrypted electronic transmitted version) of Windows shipped abroad could be considered a “component” for purposes of infringement liability under 35 U.S.C. 271(f) if the master disc was only used to make copies of software for later installation on computers abroad. There was agreement among the parties that Microsoftââ?¬â?¢s Windows has the potential to infringe ATTââ?¬â?¢s patent regarding digitally encoded and compressed recorded speech. The master disc was never installed on any foreign-made computers in question. Instead, it was copied by the foreign manufacturers, then installed on the computers, which are then sold to users abroad. The Supreme Court decided that a master disc was not a component and made certain compelling statements regarding the scope of Federal Jurisdiction for acts occurring abroad. This decision substantially limited infringement liability for companies who create code in the United States and then export it to foreign countries. Recognizing that Congress was trying to close a loophole, the Supreme Court acknowledged Congress’ efforts to expand the scope of infringement liability by enacting section 271(f). Nevertheless, the Court held that the expansion was not so broad as to cover software in the abstract. Rather, the Court focused on the simple, yet important, distinction between having the code embodied in a tangible medium for specific use versus the mere concept of code in the abstract. Specifically, the Supreme Court held that section 271(f) applies only to “components” that could be “combined” to form the invention. On the other hand, software without a physical embodiment and that is not a computer-readable copy is not combinable with other things and does not constitute a “component” under Ã?§271(f). The Court stated “the very components supplied from the United States, and not copies thereof, trigger Ã?§271(f) liability when combined abroad to form the patented invention at issue.” Interestingly, the Court acknowledged a potential “loophole” identified by ATT. Namely, ATT argued that the foreign laws were not as protective of patent laws and that companies could escape liability by engaging in the act of merely exporting a single copy of software. In the end, the Court stated that foreign law, not United States’ law, governs the acts related to components of inventions made, used, or sold in foreign countries, and that ATTââ?¬â?¢s remedy lies in obtaining and enforcing foreign patents. The Court expressly found that Federal Jurisdiction over patent matters should be construed narrowly so as not to impede on the sovereignty of foreign regulation. This decision is important for any software company exporting its software to foreign countries, as well as any company exporting components or instructions which may be used abroad for an allegedly infringing activity.

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