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April 30, 2007

Supreme Court favors Microsoft in foreign patent fight with AT&T

Posted by David Hunter at 9:35 PM ET.

More tech companies than just Microsoft are breathing a sigh of relief after Microsoft’s last ditch appeal to the US Supreme Court prevailed and limited liability for infringement of a domestic software patent abroad. IDG News Service’s Jeremy Kirk explains:

The U.S. Supreme Court ruled on Monday that Microsoft is not liable for using patented AT&T technology in copies of Windows running on computers outside the United States.

The 7-to-1 ruling relieves the software giant from paying what could have been enormous damages and changes how the software industry looks at patent rights.

Microsoft has previously admitted to violating an AT&T patent for converting speech to computer code, which it incorporated into tens of millions of copies of its Windows OS. It settled with AT&T in the United States, but disputed that Windows software running on machines located overseas were covered by the patent.

In delivering the court’s opinion, Justice Ruth Bader Ginsburg wrote that the “master disk” or “electronic transmission” Microsoft gives to foreign manufacturers does not violate the patent on its own since that specific copy is not used on foreign-made computers.

The Supreme Court was the last stop for Microsoft, which had lost a previous court battle. In July 2005, the U.S. Court of Appeals for the Federal Circuit upheld a lower-court ruling that Microsoft was liable to pay fines for foreign sales of patent-infringing software even if it was originally created in the United States.

But Microsoft had gained broad support in its defense efforts, including the Bush administration and tech giants, Intel, and Yahoo, and industry groups such as the Business Software Alliance and the American Intellectual Property Law Association.

Frankly, this seems like putting a Band-Aid on patent laws that are clearly inadequate for modern software (and other) technology, but that’s an all too common story.

Update 5/1: As for what it means to Microsoft:

Brad Smith tells the Wall Street Journal’s Jess Bravin today (click here) that the ruling will lop off about 60% of its exposure in the 45 patent cases pending against it today.

Filed under AT&T, Amazon, Coopetition, Hardware, Intel, Microsoft, Patent Lawsuits, Patents, Yahoo

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