Telecoms firm AT&T took Microsoft to court over a technology
in its Windows operating system that converts speech to digital
information. Microsoft acknowledged the violation in the US, but
the telco sought compensation for all copies of Windows sold
abroad.
Because Windows runs on the vast majority of the world's
computers, Microsoft could have been found liable for a massive
settlement, but the Supreme Court has ruled in its favour.
US patent law states that it does not apply to products made and
sold in another country. There is an exception, which is for
products whose components are supplied from the US for assembly
abroad.
"The question before us: Does Microsoft’s liability extend to
computers made in another country when loaded with Windows software
copied abroad from a master disk or electronic transmission
dispatched by Microsoft from the United States?" said Justice Ruth
Bader Ginsburg of the Supreme Court in its ruling. "Our answer is
'No'."
The court's ruling hung on a technicality of the distribution of
Microsoft's products. It sends master copies of its software abroad
to be duplicated under licence and installed on machines. The court
found that because it was not the exact software it sent abroad but
a copy of it that ended up on machines, there was no
infringement.
"The master disk or electronic transmission Microsoft sends from
the United States is never installed on any of the foreign-made
computers in question," wrote Ginsburg. "Instead, copies made
abroad are used for installation. Because Microsoft does not export
from the United States the copies actually installed, it does not
'suppl[y] . . . from the United States "components" of the relevant
computers', and therefore is not liable."
AT&T had won its case in the District Court and the Appeals
Court, but lost at the Supreme Court, with seven judges backing the
verdict and one dissenting.
