The US Supreme Court has overturned a lower court's ruling that held Microsoft liable for patent infringement on copies of its software that were sold outside of the US.
The court ruled in a patent dispute between the software giant and telecommunications provider AT&T over a audio compression technology that is bundled with the Windows operating system.
Patent law states that overseas sales are subject to US patents when the infringement concerns a US supplied component. A Chinese automobile for instance could be subject if to US patents on brake pads if it uses pads that are supplied and manufactured by a US parts manufacturer.
Lower courts had deemed that the audio codec technology fell under Microsoft's rules, but the Supreme Court reversed their decisions, claiming that it "improperly extends United States patent law to foreign markets". Extending the ruling would put US software companies at a competitive disadvantage.
The decision hinged on the definition of a component. Microsoft supplies computer makers with a gold disk from which they create installation disks. The vendor argued that the gold disk can't be considered a component because users can't use it to install the software.
AT&T countered however that turning the gold disk into a readable and installable software CD is so easy that it too qualifies as a component.
The 8-judge panel voted 7-1 in favour of Microsoft.
Microsoft scores patent victory
By Tom Sanders on May 1, 2007 4:12PM