Tech Shout!

The Supreme Court is all set to hear from attorneys from Microsoft and AT&T, as a part of the lung-running patent dispute between the two companies.

The case is Microsoft Corp. v. AT&T Corp., 05-1056. Attorneys will make their oral arguments on Wednesday over whether Microsoft can be held responsible for infringing an AT&T patent overseas. Usually, patents are valid only within a country’s borders.

American telecommunications company AT&T Inc. holds a patent on technology that converts speech into computer code, so the speech can be transmitted electronically. It accused Microsoft Corp. of breaching the patent by including similar abiities in its Windows software. Microsoft agreed it violated the patent domestically but refuses that it is accountable for infringement when the software is shipped overseas.

The case centers on a provision in patent law that restricts companies from shipping parts of a patented invention overseas for assembly. The basic idea and intention behind the provision, when it became law in 1984, was to prevent companies from evading patents by sending parts offshore to assemble them in a way that would infringe the patent in the United States.

AT&T alleges that Microsoft is liable under that provision for violating its patent when it ships its Windows software abroad to foreign computer manufacturers for copying and installation on computers.

However, Microsoft retorts back by arguing in court filings that it only sends a “master version” of the software abroad, either on optical disk or by electronic transfer, and it is the foreign manufacturer that is responsible for copying the software and placing it on computers. AT&T should pursue those companies for patent infringement under their countries’ laws, Microsoft says.

On the other hand, AT&T dismisses the distinction that Microsoft draws between the master version of the software and the copies made in foreign countries. The company argued in court filings that Microsoft supplied the software code “to foreign computer manufacturers, with the intent that those companies would pay Microsoft a royalty each time they combined that code with other components to form devices that would infringe AT&T’s patent if made or used in the United States.”

AT&T and Microsoft reached a partial settlement on the patent-infringement case in 2004, but the agreement left open the question of whether overseas computers should be included.

While the rest of the software sector is often on the opposite side of industry-ruling Microsoft in legal cases, this one is different, experts said.

Technology companies including Yahoo Inc., Intel Corp. and Amazon.com Inc. have joined Microsoft in asking the Supreme Court to overturn the decision by the U.S. Court of Appeals for the Federal Circuit.

Solicitor General Paul Clement till a great extent sided Microsoft in his brief that had urged justices to take the case.

The section of patent law in question “generally prevents companies from manufacturing the components of a patented invention in the United States for assembly overseas,” said Clement, the government’s top Supreme Court lawyer. “But the statute permits the manufacture and assembly of identical components overseas — conduct that is properly the domain of other nations’ patent laws.”

A lower court specializing in patent cases has sided with AT&T in the dispute. Oral arguments on Microsoft’s Supreme Court appeal begin today, and a ruling is expected by July.