More Exceptions To Simple Rules In IP Strategy (US Supreme Court Says No To Extraterritoriality) - ('Microsoft v AT&T' (2007) US Supreme Court)

Author:Mr Duncan Bucknell
Profession:Duncan Bucknell

Take home

On 30 April 2007, the US Supreme Court handed down its long awaited decision in Microsoft v AT&T.

It's usually safe to assume that because IP rights must be granted by each country, then infringement of a particular IP Right can only occur in that country.

That's the simple rule.

The loophole is equally simple - prepare the thing in such a way as to not infringe (for example, in a kit), and then export it. This is the loophole that the US Congress tried to fix (in response to the famous Deepsouth case) when it enacted section 271(f) of the US Act (35 USC 271(f)).

So, now we have a simple rule, with an exception - if you export something that if re-combined would infringe, then you still infringe (see below for the actual words of 271(f)).

AT&T owned a patent (for digital encoding of speech) which it argued was infringed by Microsoft's Windows product. The catch was that Microsoft exported a single Master copy from the US which was not sold, but used to make copies for sale.

AT&T wanted to extend the exception to cover the alleged infringing copies sold abroad, which themselves had never been exported from the US nor even existed in the US.

The US Supreme Court said, no and left it to Congress to decide whether to change the law.

Just another example of technology getting ahead of statute drafters.

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My two most recent articles were:

In Global IP Disputes - Don't let your lawyers slavishly apply a legal 'test' - KSR v Teleflex (US Sup Crt)

Freedom to Operate put simply, with the 6T's framework


The Supreme Court's reasoning in Microsoft v AT&T:

1 - A (specific) copy of Windows and not 'Windows in the abstract' is a 'component' pursuant to 271(f). The copy which was exported was not installed on the foreign-made computers.

2 - The copies which were installed on the foreign-made computers were never themselves supplied from the USA.

3 - The presumption against extraterritoriality resolves any doubt that Microsoft's conduct falls outside 271(f). Foreign law alone and not US law governs the manufacture and sale of components of patented inventions in foreign countries.

4 - The Court's role is to interpret the statute. It is up to...

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