# Opposition Brief — Microsoft Corp. v. AT & T CORP.

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0243%3A03

## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 2007
- **Citation:** 550 U.S. 437

## Text

/ MAR 2 3 2006
No. 05-1056 OFFICE OF THE CLEP
In the

Supreme Court of the Anited States

—

MICROSOFT CORPORATION,

V.

Petitioner,

AT&T CORP.,

Respondent.

On Petition for a Writ of Certiorari to the United
States Court of Appeals for the Federal Circuit

BRIEF IN OPPOSITION

LauRA A. KASTER
AT&T Corp.

One AT&T Way
BepMINSTER, NJ 07921
(908) 532-1839

MICHAEL TRAYNOR
CooL_ey Gopwarp LLP

101 CALIFORNIA STREET, 5TH FL.
SAN Francisco, CA 94111

(415) 693-2000

Counsel for Respondent
*Counsel of Record (will be

admitted on March 27, 2006)

STEPHEN C. NeEAL*
CooL_ey Gopwarp LLP
Five PALO ALTO SQUARE
3000 Et Camino REAL
Paco ALto, CA 94306
(650) 843-5000

JONATHAN G. GRAVES
NATHAN K. CUMMINGS
CooLey Gopwarp LLP
ONE FREEDOM SQUARE
Reston Town CENTER
11951 FREEDOM Drive
Reston, VA 20190
(703) 456-8000

Becker Gallagher Legal Publishing, Inc. 800.890.5001

COUNTERSTATEMENT OF
THE QUESTIONS PRESENTED

After AT&T presented its case-in-chief to the jury,
Microsoft stipulated that AT&T’s pioneering ‘580 patent is
valid and that Microsoft infringed in the United States, in part
by supplying master copies of its U.S.-developed Windows
operating system software to domestic computer
manufacturers for assembly into the patented speech-coding
apparatus. Microsoft also stipulated that it sends identical
master copies of Windows to foreign computer manufacturers
with the intent that those manufacturers replicate the software
and assemble the identical speech-coding apparatus that
Microsoft stipulated infringes AT&T’s patent in the United
States. The district court entered judgment for AT&T based
on 35 U.S.C. § 271(a), (b), and (f) (including (f)(1) and
(f}(2)). The Federal Circuit affirmed. Although section
271(1)(2) also is a ground for the judgment, Petitioner elected
to exclude section 271(f)(2) from its questions presented. The
section 271(f)(1) questions presented are:

1. Whether software may be a “component” of a patented
invention under section 271(f)(1). See AT&T Corp. v.
Microsoft Corp., 414 F.3d 1366, 1369 (Fed. Cir. 2005) (Pet.
App. 4a).

2. Whether software replicated abroad from a master version
exported from the United States—with the intent that it be
replicated—may be deemed “supplied” from the United States
for tie purposes of section 271(f)(1). See id.

PARTIES TO THE PROCEEDINGS
AND RULE 29.6 STATEMENT

There are no parties to the proceedings other than those
listed in the caption.

Respondent AT&T Corp.’s parent company is AT&T,
Inc., which holds 100% of the stock of AT&T Corp.

TABLE OF CONTENTS
Counterstatement of the Questions Presented ......... i
Parties to the Proceedings and Rule 29.6 Statement ... ii
eT I a 5-0.0 5 60e ob wwe 6 ew Oa5 Ee iil
FR Re eres re a ern pee V
Summary of Reasons to Deny the Petition ......... I
IE EEE Shae ond 6 oO eee N eaerk kes 2

A. The Invention of the ‘580 Patent ........... 2

fs}. Microsoft’s Distribution of Infringing Software . 3
hi, PD i's 5 ow nih © 008s 0 oes 609 4
Reasons for Denying the Petition ............... 7

I. The Court Already Concluded This Term That the
Questions Presented Do Not Merit Review ...... 7

Il. There is No Inter- or Intracircuit Split on the
CO re a ener array are 8

Ill. The Federal Circuit’s Decision Was Correct ...... ‘10

iV

A. The Federal Circuit’s Decision Is in Harmony
with Long Standing Patent Jurisprudence That
Software Can Be a Component of a Patented
Invention or an Infringing Device ..........

B. The Federal Circuit Properly Read and Applied
the Statute to the Stipulated Facts ..........

1. The Federal Circuit Properly Construed
“Components” to Include Software
SI A 5.04 04s 0 06.9 Rew ckiewes

2. The Federal Circuit Properly Construed
“Supplied” to Include the Supply of Software
ES ct OR 5a oS aes bee hee ne

3. The Federal Circuit’s Decision Does Not
Expand the Extraterritorial Reach of U.S.
IAS ee Ir ae ae Ps Pe ey

4. Congress Recently Rejected Proposals to Limit
Section 271(f) as Petitioner Requests ......

IV. The Judgment Below Is Also Based on Section
271(f)(2), an Alternate Ground That Petitioner
Elected to Exclude from Its Questions Presented

a , i em Om oF we | Ow a os lO Oe Om A oe me Fe fs OS ee oe we a OS lOO lO

as. @ 28 64 2 2. 2? Be @& a C.F 2 es 2a. 6&6 &.o e's 6 tS ee ee SS

V

TABLE OF AUTHORITIES
Cases

In re Alappat,
33 F.3d 1526 (Fed. Cir. 1994) ...... 11, 12, 13, 16

AT&T Corp. v. Microsoft Corp., No. 01CV4872,
2004 WL 406640 (S.D.N.Y. Mar. 5, 2004),
aff'd, 414 F.3d 1366 (Fed. Cir.),
reh’g and reh’g en banc denied
Pe Ce chi ek eee ee eewes 8-9, 21, 22

Bayer AG v. Housey Pharmaceuticals, Inc.,
340 F.3d 1367 (Fed. Cir. 2003) ............ 9, 10

Bennett v. Spear,
i eee ree ee Pees 19

In re Bernhart,
417 F.2d 1395 (C.C.P.A. 1969) ..... 11, 12, 13, 16

Blum v. Bacon,
Se We ee CE. cw 20.0 eo 8k CK Eee 24

Burr v. Duryee,
Sy St ED 6 5s 6 bce 0.64 teen 12, 13

C.L. Maddox, Inc. v. Benham Group, Inc.,
OD Fae see Gee Rae. TOE vc cce reece euwoses 17

In re Comstock,
481 F.2d 905 (C.C.P.A. 1973) +... 2.2... 12, 13

vi

Deepsouth Packing Co. v. Laitram Corp.,
S56 U.S. SIS CITA) 2. wwe ccccs 6, 15, 20, 26, 27

Diamond v. Chakrabarty,
I a Oe a tae 15

Diamond v. Diehr,
. LB By 7), |) 11, 12, 14, 15, 16

Eolas Technologies, Inc. v. Microsoft Corp., No. 99 C 0626,
2004 WL 170334 (N.D. Ill. Jan 15, 2004) ....... 9

Eolas Technologies, Inc. v. Microsoft Corp.,
274 F. Supp. 2d 972 (N.D. Ill. 2004),
aff'd, 399 F.3d 1325 (Fed. Cir.),
reh’g and reh’g en banc denied, cert. denied,
ee a aie a's b's a6 ba v'e 9

Eolas Technologies, Inc. v. Microsoft Corp.,
399 F.3d 1325 (Fed. Cir. 2005),
reh'g and reh’g en banc denied, cert. denied,

i Cc <ecocevacsdccane passim
Haggar Co. v. Helvering,

Do ialh Wee 06 644 60 6086448 6
In re Hayes Microcomputer Products, Inc.
Patent Litigation,

i & fee Es A Ree i}

Herman & Maclean v. Huddleston,
ee eee eee 8, 22

Imagexpo, L.L.C. v. Microsoft Corp., No. O2CV751,
2003 WL 23147556 (E.D. Va. Aug. 19, 2003) .... 9

vii

Information Communications Corp. v. Unisys Corp..,
181 F.36 G29 (Sth Civ. 1999) 2... wee ee wees 17

Izumi Seimitsu Kogyo Kabushiki Kaisha v.
U.S. Phillips Corp.,

a ee i 5's < 0's tc beeen biked see 25
In re Knowlton,

bm Fie oon 2. ee 12, 13
In re Lowry,

32 F.3d 1579 (Fed. Cir. 1994) ........... 12, 16

Micro Chemical, Inc. v. Lextron Inc.,
317 F.3d 1387 (Fed. Cir. 2003) .............. 17

Microsoft Corp. v. Commissioner,
311 F.3d 1178 (9th Cir. 2002)............ 19, 26

Microsoft Corp. v. Eolas Technologies, Inc.,
Case No. 05-288 (Oct. 31, 2005) ............. 7

Miles v. Apex Marine Corp..,
GP Ss SU bo ccc cee ae cdetustetnen 13

Mills v. Rogers,
GES Dae G8 CHD 0 Oe heck cceseescvceeds 24

Netword, LLC v. Centraal Corp..,
242 F.3d 1347 (Fed. Cir. 2001) ............-. 14

Vill

NTP, Inc. v. Research In Motion, Ltd.,
261 F. Supp. 2d 423 (E.D. Va. 2002),
aff'd on different grounds,
418 F.3d 1282 (Fed. Cir. 2005),
reh’g and reh’g en banc denied, cert. denied,
rn an Seen: é os vate 4-6 bo Bees 8 Be 9

Paper Converting Machine Co. v. Magna-Graphics Corp.,
eee oe Ge as Sins kt pee enn ee 21

Pellegrini v. Analog Devices, Inc.,
375 F.3d 1113 (Fed. Cir.),

cert. denied, 543 U.S. 1003 (2004) ......... 9, 16
In re Prater,

oe gh fle ee | ere 11, 13
Response of Carolina, Inc. v. Leasco Response, Inc.,

ee ee ee es Sa as cc cw cacestae 14
Rotec Industries, Inc. v. Mitsubishi Corp.,

215 F.3d 1246 (Fed. Cir. 2000)............ 9, 10
Southwest Software, Inc. v. Harlequin Inc.,

226 F.3d 1280 (Fed. Cir. 2000)........... 12, 16
State Street Bank & Trust Co. v. Signature Financial
Group, Inc.,

149 F.3d 1368 (Fed. Cis. 1996) .............. 13
Tcherepnin v. Knight, 389 U.S. 332 (1967)... ...... 7

Union Carbide Chemicals & Plastic Technology Corp.
v. Shell Oil Co.,
434 F.3d 1357 (Fed. Cir. 2006)............ 9, 10

iX

United States v. Dubilier Condenser Corp. ,

PE 5. s:ste abe tees CAG wo heces 15
Waymark Corp. v. Porta Systems Corp..,

245 F.3d 1364 (Fed. Cir. 2001).............. 21
Williams v. Taylor,

SED 5 06k 05 4 5k X08 Be 6
Yee v. Escondido,

EP SO EEEEED ce nacidedevcevasuvner.e 24
Constitutional Provision
FR Gf & t) Bape yi ere Te ee 26
Statutes
Ge ED ic eketeeeeucs eueente 19
SD oD odkadnd ds bbe ede hheee ene 4
SP EE Se S6 Cee Cosa beh adacoeweex 4
Pe cto babes bowls Pek e wen “passim
f+ tS. A rrenenrn ae passim
35 U.S.C. § 271(f(2) ...... eee teens passim

I NE ke ee as 10

Rules

eg 0 ee rw re ye ay 24
EE We sin cekis Habe eeeeeeeens ©) 23
Other Authorities

American Bar Association Section of Intellectual Property
Law, A Section White Paper: Agenda for 21st Century Patent
Reform

ey SED ine dk Wwe ood Ke 20, 22, 26

American Heritage Dictionary 302
CEE "sas kb vce eeaeienesaks 14,17

American Jobs Creation Act of 2004,
Pub. L. No. 108-357, 118 Stat. 1418 (2004) .. 19, 26

Manual of Patent Examining Procedure
PR 64-405 OEE 50 b cE ewe Rees 12, 14

Microsoft Computer Dictionary (Sth ed. 2002) ... 14, 16

Patent Law Amendments Act of 1984, H.R. 6286,
130 Cong. Rec. 28069 (Oct. 1, 1984) ..... 7, 15, 26

Patent Quality and Improvement: Hearing Before the

Subcomm. on Courts, the Internet and Intellectual Property of

the H. Comm. on the Judiciary, |
CEE cdg win e-o es bees dale tse 22

xl

Patent Reform Act of 2005, H.R. 2795,
rer errr Ts oe 22

S. Rep. No. 98-663 (1984) ..... ere L Lo 15, 18, 26

Staff of H. Comm. on the Judiciary, 109th Cong.,
Patent Act of 2005 § 10 (Comm. Print 2005) ..... 22

BRIEF IN OPPOSITION

+

SUMMARY OF REASONS TO DENY THE PETITION

The Court recently denied Microsoft's certiorari petition
in a case presenting the identical issue of liability for patent
infringement under 35 U.S.C. § 271(f) based on conduct in
the U.S. In this case, Microsoft stipulated that it infringed
AT&T’s valid patent in the U.S. based on Microsoft’s supply
of software to domestic computer manufacturers for
replication and loading into infringing devices. Microsoft's
liability under section 271(f)(1) is based on identical conduct:
Microsoft’s supply of the same software to foreign computer
manufacturers with the intent that it be replicated and loaded
into the same devices that Microsoft admits infringe when
assermbled in the United States. Developments since the
denial of certiorari in the Eolas case make Microsoft's
Petition in this case even weaker because recent legislative
activity suggests Congress has ratified the result in both cases
by rejecting the attempts of Microsoft and others to amend the
statute. Microsoft’s Petition should also be denied because
there is no conflict among the Circuits or within the decisions
of the Federal Circuit. Furthermore, the Federal Circuit
reached the correct result. The court’s construction does not
expand the extraterritorial reach of U.S. patent laws, but
instead appropriately focuses on the activities of Microsoft as
a domestic supplier. Finally, the judgment below rests on an
alternative ground that Petitioner elected to exclude from its
questions presented. The Court should therefore deny
Microsoft's Petition because the case does not qualify for or
otherwise merit review in this Court.

2

.

STATEMENT OF THE CASE
A. The Invention of the ‘580 Patent.

In 1981, Bishnu Atal and Joel Remde, two scientists at
Bell Telephone Laboratories, invented a pioneering advance
in digital speech compression, which is disclosed and claimed
in U.S. Patent Re 32,580. Their breakthrough greatly
enhanced the sound quality of synthesized speech while
maintaining high data compression. Ct. App. JA 711.

From the outset, the implementation of the invention has
required a machine, such as a computer programmed by
software, to perform the patented speech coding and decoding
operations. Ct. App. JA 493-94. Dr. Atal included as
appendices to the ‘580 patent excerpts of the implementing
software program he wrote. ‘580 patent appendices A-D (Ct.
App. JA 104-108). The patent expressly teaches the use of
this software to carry out the speech-coding operations
essential to the invention. See ‘580 patent col.5, In.68-col.6,
In.9; col.8, 11.37-40 (Ct. App. JA 102-103).

Although at the time of the invention it could be
implemented only by using very large supercomputers,
dramatic improvements in microprocessors in the 1990s
enabled widespread implementation of the invention via
software running on personal computers and microprocessor
chips. During that period, the invention was adopted by
international telecommunications organizations for important
industry standards, and was widely licensed by AT&T to
numerous third parties and used in numerous products. Ct.
App. JA 708, 1033-43. The ‘580 patent is recognized as a

seminal technology cmployed today in mobile telephones,

3

personal computers, videoconferencing services and products
that operate over the Internet, all using software programs to
achieve significant compression and high-quality reproduction
of speech. It is not merely “one of the thousands of
unexploited patents comprising the modern ‘patent thicket’”
as Petitioner contends. Pet. at 20. To the contrary, the ‘580
patent is a technological breakthrough that has been widely
praised; Dr. Atal has received numerous prestigious awards
attributed to the invention. Ct. App. JA 509-10.

fs. Microsoft’s Distribution of Infringing Software.

I: is undisputed that Microsoft conceives of, writes,
compiles, tests, debugs, and creates a master version of its
flagship Windows operating system software in Redmond,
Washington. Pet. App. 45a. The Windows software is
asseinbled and becomes operational in its final form in the
United States. Microsoft supplies the Windows software to
foreign and domestic computer manufacturers on so-called
“golden master” disks or via electronic transmissions. The
computer manufacturers then use these master versions to
install the Windows software into the computer products that
they manufacture. Pet. App. 45a-46a. As a result, the same
software code—the same “zeros and ones” created in the U.S.
by Microsoft programmers—is assembled on _ foreign
computers in the very same manner as it is on domestic
computers.

Although others in the industry licensed AT&T’s patented
technology on reasonable and non-discriminatory terms,
Microsoft refused to obtain a license. Ct. App. JA 1044-
1052. Without authorization, Microsoft incorporated into
Windows certain speech-coding software (known as “codecs” )
that use the invention of the ‘580 patent. After licensing

4

discussions broke down, AT&T filed suit against Microsoft
for infringing the ‘580 patent. See id.

C. Proceedings Below.

At trial, after AT&T presented its case-in-chief to the
jury, Microsoft stipulated to infringement under 35 U.S.C.
§ 271(a) (direct infringement within the United States) and
271(b) (active inducement of infringement), and to the validity
and enforceability of the ‘580 patent. Pet. App. 42a.
Microsoft’s stipulated infringement and inducement in the
U.S. was based in part on its supply of Windows software
(including the infringing codecs) on golden master disks and
via electronic transmissions to U.S. computer manufacturers,
who then installed the same Windows software onto
computers to create fully assembled, infringing systems.

AT&T also claimed that Microsoft infringed under section
271(f), which includes both (f)(1) and (f)(2). See Pet. App.
24a, 25a-27a. Microsoft’s liability under those sections was
premised on the same conduct Microsoft admitted infringed
under sections 271(a) and (b). Microsoft supplies its
Windows’ software products to foreign computer
manufacturers on golden master disks and through electronic
transmissions, with the intent that those manufacturers install
the Windows software onto computers to create fully
assembled systems. Microsoft moved for partial summary
judgment of non-infringement under section 271(f).

The district court denied Microsoft’s motion. Relying on
established patent jurisprudence and the text and legislative
history of section 271(f), the court rejected Microsoft’s
argument that its software is intangible and therefore cannot
be a “component” under section 271(f). Pet. App. 29a-35a.
The district court also rejected Microsoft’s contention that a

5

foreign-replicated copy of the infringing software does not
constitute a component supplied from the United States, based
on Microsoft’s stipulation that it supplies the software with the
intent that an exact copy of the U.S.-manufactured software
be incorporated into foreign-assembled computers. Pet. App.
3S5a-37a. Microsoft’s counsel also admitted to the district
court that sending a separate Windows CD abroad for every
computer to be assembled would infringe under section
271(f). Pet. App. 36a n.7. Accordingly, the district court
held, based on the stipulated facts, that Microsoft infringed
the ‘580 patent under section 271(f), including both (f)(1) and
(f)(2). Pet. App. 20a-38a, 42a-43a.

The United States Court of Appeals for the Federal Circuit
affirmed the district court’s judgment under section 271(f).
Relying on Eolas Technologies, Inc. v. Microsoft Corp. , 399
F.3d 1325 (Fed. Cir. 2005), reh’g and reh’g en banc denied,
cert. denied, 126 S. Ct. 568 (2005), the panel unanimously
agreed that software may be a “component” of a patented
invention under section 271(f). Pet. App. 4a & lla. It also
ruled, by a 2-1 majority, that software replicated abroad from
a master version of the software developed in and exported
from the United States—with the intent that the software be
replicated—may be deemed “supplied” from the United States
for the purposes of section 271(f).'

' Although the opinion states that the “supplied from the United
States” issue was one of first impression, it had been previously
‘briefed and argued to the Federal Circuit in Eolas and, based on
facts identical to those here (supply of Windows software to foreign
computer manufacturers for assembly abroad), the court affirmed
the judgment under section 271(f). Eolas, 399 F.3d at 1339
(“Exact duplicates of the software code on the golden master disk
are incorporated as an operating element of the ultimate device.”);
see also id. at 1340-41; Microsoft Eolas Appeal Br. at 28, 62-63;

6

Because Congress did not define the word “supplied” in
section 271(f), the court looked to the ordinary, contemporary
and common meaning of the term. Pet. App. 6a (quoting
Williams v. Taylor, 529 U.S. 420, 431 (2000)). Given the
nature of the technology, the court concluded that copying is
part and parcel of software distribution. It emphasized that
Microsoft has taken advantage of the replicable nature of
software to distribute its software efficiently. Rather than
supply a separate disk for each copy of the software
supplied—thus incurring extra material, shipping and storage
costs—Microsoft supplies a single master disk that is intended _
to be replicated easily. In light of the undisputed and
Stipulated facts and the admissions of Microsoft’s counsel, the
court reasoned that Microsoft’s competing interpretation is
incorrect because it would permit liability only when the party
acts in an unrealistic manner (namely, supplying the software

in a more expensive, labor intensive way). Pet. App. 7a
(citing Haggar Co. v. Helvering, 308 U.S. 389, 394 (1940)).

The court also examined the legislative history and
concluded that its interpretation comports with Congress’s
purpose in enacting section 271(f). Pet. App. 8a. Congress
enacted section 271(f) in response to Deepsouth Packing Co.
v. Laitram Corp., 406 U.S. 518 (1972), which exposed a
loophole in section 271 that allowed potential infringers to
avoid liability by manufacturing the components of patented
products in the United States and then shipping them abroad
for assembl Congress concluded that, without this
“housekeeping-oriented” measure, “the patent system would

Eolas Opp. Appeal Br. at 12, 58, 60-61. Microsoft previously
admitted to this Court that the decision in Eolas necessarily decided
this issue. Microsoft Eolas Cert. Pet. at 8-9 n.2 (Case No. 05-
288).

7

not be responsive to the challenges of a changing world and
the public would not benefit from the release of creative
genius.” Pet. App. 9a (quoting Patent Law Amendments Act
of 1984, H.R. 6286, 130 Cong. Rec. 28069 (Oct. 1, 1984)).
The court concluded that section 271(f) is a remedial measure
that should be construed broadly to effectuate its purposes.
Id. (citing Tcherepnin v. Knight, 389 U.S. 332, 336 (1967)).

The court also reasoned that Microsoft’s interpretation
would subvert the remedial purpose of the statute by allowing
advances in technology to be used to maintain a loophole that
the statute was intended to close. Pet. App. 9a-10a. The
court concluded that sending a single copy of a software
component abroad with the intent that it be replicated creates
liability under section 271(f) for those copies. The panel
thereafter denied without comment Microsoft’s petition for
rehearing, and the full court denied without comment
Microsoft’s petition for rehearing en banc. Pet. App. 39a-
40a.

¢

REASONS FOR DENYING THE PETITION

I. The Court Already Concluded This Term That the
Questions Presented Do Not Merit Review.

The Court recently denied a certiorari petition in which
Microsoft presented the identical issue it raises here.
Microsoft Corp. v. Eolas Techns., Inc., Case No. 05-288
(Oct. 31, 2005). In its petition in Eolas, Microsoft stated that
“AT&T v. Microsoft involves the identical issue presented
here. ... In both [Eolas] and AT&T, the Federal Circuit
determined that a foreign-made and sold computer that has
been programmed with the Windows software code includes

8

a ‘component’ that was ‘supplied’ from the United States and
‘combined’ with other components to produce the final
product within the meaning of § 271(f).” Microsoft Eolas
Cert. Pet. at 8-9 n.2; see also id. at i (question presented).
Because the operative facts and legal conclusions relating to
section 271(f) are identical in both decisions, this case
presents no better a vehicle for review than did Eolas.’
Indeed, given Congress’s recent refusal to limit section 271(f)
as Microsoft urges (see infra p. 21), the justifications for
granting Microsoft’s present Petition are even weaker now
than when Microsoft presented them in Eolas. See Herman
& MacLean v. Huddleston, 459 U.S. 375, 385-86 (1983)
(decision by Congress to leave a provision intact suggests that
it has ratified the interpretation). The Court’s recent decision
in Eolas not to review this issue was correct.

II. There is No Inter- or Intracircuit Split on the
Questions Presented.

The questions presented are purely issues of patent law.
Petitioner does not and cannot allege any intercircuit conflicts,
because the Federal Circuit has exclusive jurisdiction over the
interpretation and application of the patent laws. Moreover,
there was never any intercourt conflict about these questions;
every court that has considered the issues has reached the
same conclusion that the Federal Circuit reached here and in
Eolas. See AT&T Corp. v. Microsoft Corp., No. 01CV4872,

* Microsoft’s attempts to distinguish its petition in Eolas are
unavailing. Pet. at 29-30. Microsoft does not explain why the
Federal Circuit’s remand for further proceedings on issues of
anticipation, inequitable conduct and prior art defenses rendered
Eolas ill-suited to address the scope of infringement and damages
under section 271(f). /d. at 29. In fact, Microsoft argued to the
contrary in Eolas. Microsoft Eolas Cert. Reply Br. at 2-3.

9

2004 WL 406640 (S.D.N.Y. Mar. 5, 2004), aff'd, 414 F.3d
1366 (Fed. Cir.), reh'g and reh’g en banc denied (Fed. Cir.
2005); Eolas Techs. Inc. v. Microsoft Corp. , 274 F. Supp. 2d
972 (N.D. Ill. 2004), aff'd, 399 F.3d 1325 (Fed. Cir.), reh’g
and reh'g en banc denied, cert. denied, 126 S. Ct. 568
(2005); Eolas Techs. Inc. v. Microsoft Corp., No. 99 C 0626,
2004 WL 170334 (N.D. Ill. Jan 15, 2004); Imagexpo, L.L.C.
v. Microsoft Corp., No. 02CV751, 2003 WL 23147556 (E.D.
Va. Aug. 19, 2003); NTP, Inc. v. Research In Motion, Litd..,
261 F. Supp. 2d 423, 431 (E.D. Va. 2002), aff'd on different
grounds, 418 F.3d 1282 (Fed. Cir. 2005), reh'g and reh’g en
banc denied, cert. denied, 126 S. Ct. 1174 (2006). The
courts have been clear, consistent, and predictable in their
application of section 271(f) to software, and there is no need
for the Court to exercise its discretionary jurisdiction.

Nor can certiorari be justified on the basis that the
decisions below conflict with prior Federal Circuit precedent,
because no such conflict exists. Petitioner's effort to
manufacture such a conflict rests primarily on Pellegrini v.
Analog Devices, Inc., 375 F.3d 1113 (Fed. Cir.), cert.
denied, 543 U.S. 1003 (2004). Microsoft raised this
argument below, and both the Eolas and AT&T panels
correctly distinguished Pellegrini. Pet. App. 7a-8a; Eolas,
399 F.3d at 1340-41. The nature of the shipping
“instructions” (to people) at issue in Pellegrini is
fundamentally different from software instructions (for
computers) that cause the computers to act as special purpose
and infringing machines. See Pellegrini, 375 F.3d at 1118
(holding that instructions to people and corporate oversight
are not “components” under section 271(f)).

Petitioner's citations to Bayer, Rotec and the dissent in
Unicn Carbide (Pet. at 11, 15, 17 & 19 n.3) also fail to
identify any conflicts among Federal Circuit decisions. In

10

Bayer AG v. Housey Pharmacewticals, Inc., 340 F.3d 1367,
1368-69 (Fed. Cir. 2003), the court held that importing
information about the properties of a substance does not
infringe section 271(g). Nevertheless, information about a
substance’s properties is fundamentally different from the
computer software at issue here and in Eolas the causes
computers to function in a specific manner. In Rotec
Industries, Inc. v. Mitsubishi Corp. , 215 F.3d 1246, 1257-58
(Fed. Cir. 2000), the patentee admitted that none of the
construction equipment components were manufactured in the
United States, and the court rejected patentee’s argument that
an “offer to supply” foreign components infringes under
section 271(f). Here, by contrast, it is undisputed that
Microsoft wrote, compiled, tested, debugged, and created the
Windows software in, and exported that software from, the
United States. Finally, in Union Carbide Chemicals & Plastic
Technology Corp. v. Shell Oil Co., 434 F.3d 1357, 1358
(Fed. Cir. 2006), the court denied a petition to rehear en banc
whether section 271(f) applies to process inventions.
Petitioner’s attempt to depict Judge Lourie’s dissent as
rethinking the opinion he authored below (Pet. at 11, 15) is
misleading. Judge Lourie explicitly noted that the inventions
in Eolas and AT&T were apparatus inventions, whereas the
inventions in Union Carbide were methods and processes.
434 F.3d at 1358. Microsoft has simply failed to show the
decision below to be in conflict with any other cases applying
or interpreting the patent statute.

Ill. The Federal Circuit’s Decision Was Correct.
This Court should deny Microsoft's Petition because the

Federal Circuit correctly applied section 271(f) and binding
patent-law precedent to the facts of this case.

1]

A. The Federal Circuit’s Decision Is in Harmony with
Long Standing Patent Jurisprudence That Software
Can Be a Component of a Patented Invention or an
Infringing Device.

Microsoft's Petition is devoid of citations to any judicial
authority holding that software is intangible and cannot be a
component of a patented invention. In fact, Microsoft’s
position conflicts with thirty years of patent jurisprudence,
business practices in the software industry, and Microsoft's
own patent portfolio. In contrast, the Federal Circuit's
decisions here and in Eolas are entirely consistent with
precedent, Patent Office procedures and policy, and industry
practices.

Long standing patent jurisprudence holds that software
may be a component of a patented invention. This Court held
in Diamond v. Diehr, 450 U.S. 175, 187 (1981), that a patent
claim may be drawn to statutory subject matter even if it uses
a computer program. See also In re Alappat, 33 F.3d 1526,
1545 (Fed. Cir. 1994) (holding that “a computer operating
pursuant to software may represent patentable subject
matter”). In fact, a general-purpose computer is nothing
more than a “storeroom of parts and/or electrical
components” until the computer is programmed; but once the
software is introduced, the “commoditized” parts become a
spec'al-purpose computer that may be patented. /n re Prater,
415 F.2d 1393, 1403 n.29 (C.C.P.A. 1969). When such a
machine is programmed, it is physically different from the
machine without the program; if the software programs the
machine in a new and nonobvious way, then the programmed
machine is patentable. /n re Bernhart, 417 F.2d 1395, 1500
(C.C.P.A. 1969); see also In re Hayes Microcomputer
Proas., Inc. Patent Litig., 982 F.2d 1527 (Fed. Cir. 1992)
(affirming judgment of infringement by devices programmed

12

to practice the invention). Software may also be the structure
corresponding to means-plus-function limitations in a patent
claim. See In re Knowlton, 481 F.2d 1357, 1368 (C.C.P.A.
1973); In re Comstock, 481 F.2d 905, 908-09 (C.C.P.A.
1973).

The procedures of the Patent Office are in complete
accord with this case law. The Manual of Patent Examining
Procedure (MPEP) notes that computer programs are often
recited as part of a patent claim. If the computer program
being claimed is part of an otherwise patentable machine, the
claim is patentable. MPEP § 2106 at 2100-13 (8th ed. 2003).

Several of the cases cited above explicitly rejected the
notion that software is intangible and unpatentable. See, e.g.,
In re Alappat, 33 F.3d at 1545 (rejecting the contention that
software running on a computer transforms the computer
from a machine into a mathematical algorithm) (citing Diehr,
450 U.S. at 187); In re Lowry, 32 F.3d.1579, 1583 (Fed. Cir.
1994) (rejecting the contention that software data structures
are intangible information, and instead holding they are “the
essence of electronic structure”); /n re Bernhart, 417 F.2d
1395 (reversing a rejection of apparatus claims based, in part,
on the rationale that a computer is structurally the same with
or without its software). See also Southwest Software, Inc. v.
Harlequin Inc. , 226 F.3d 1280, 1283, 1288 (Fed. Cir. 2000)
(noting that the software accused of infringing under section
271(f) was a “device”).

This Court long ago recognized that, under patent law, a
machine is “a concrete thing, consisting of parts, or of certain
devices and combination of devices.” Burr v. Duryee, 68
U.S. 531, 570 (1863). The Court stressed that a particular
machine is defined by its mode of operation, or “that peculiar
combination of devices which distinguish it from other

13

machines.” /d. The cases cited above demonstrate that
computer software may be a device—indeed, perhaps the only
device—that distinguishes a patented invention from a
general-purpose computer. See, e.g., In re Alappat, 33 F.3d
at 1545; In re Bernhart, 417 F.2d at 1399 (stating that the
claims recite, and can be infringed only by, a computer
programmed to carry out the recited routine), /n re Knowlton,
481 F.2d at 1368; In re Comstock, 481 F.2d at 908-09; In re
Prater, 415 F.2d at 1403 n.29; see also State Street Bank &
Trust Co. v. Signature Fin. Group, Inc. , 149 F.3d 1368, 1375
(Fed Cir. 1998). It logically follows that the distinguishing
device—the software—must be a component of that patented
invention. See Burr, 68 U.S. at 570.

B. The Federal Circuit Properly Read and Applied the
Statute to the Stipulated Facts.

1. The Federal Circuit Properly Construed
“Components” to Include Software
Components.

a. The Federal Circuit’s decisions in Eolas and AT&T
properly construe section 271(f). As shown above, the courts
consistently held that software programs can be a component
of patented inventions long before Congress enacted section
271(f). As a matter of law, Congress is presumed to have
known of this judicial authority when it included the language
“component of a patented invention” in section 271(f). See
Miles v. Apex Marine Corp., 498 U.S. 19, 32 (1990) (“We
assume that Congress is aware of existing law when it passes
legisiation.”). In light of this authority, it would have been
strange if software were not covered by section 271(f).

Moreover, because Congress did not specifically define
the word “component,” the Federal Circuit appropriately

14

gave the term its ordinary, contemporary and common
meaning. Diehr, 450 U.S. at 182. Nothing in the ordinary
meaning of “component” limits the term to exclude software.
See, e.g., American Heritage Dictionary 302 (2d coll. ed.
1991) (defining “component” as “part of a mechanical or
electrical complex”); Microsoft Computer Dictionary 116 (Sth
ed. 2002) (defining “component” as a “discrete part of a
larger system or structure” and an “individual modular
software routine that has been compiled and dynamically
linked, and is ready to use with other components or
programs”). And with respect to software in particular, it is
ordinary usage of the courts, the Patent Office and the
industry to refer to software as a “component” of a computer
system. See, e.g., Netword, LLC v. Centraal Corp., 242
F.3d 1347, 1351 (Fed. Cir. 2001) (patent claim describes
“computers” and their “software components”); Response of
Carolina, Inc. v. Leasco Response, Inc., 537 F.2d 1307,
1326 (Sth Cir. 1976) (“The final component of the computer
system is the application software.”); MPEP § 2106.01 at
2100-24 (discussing elements “at least partially comprised of
a computer software component”); id. § 2106.02 at 2100-25
(discussing “systems which include a computer as well as
other hardware and/or software components”).

Ironically, even Microsoft’s directions for using the
golden master disks refer to software as “components” to be
installed during computer assembly. Ct. App. JA 1677,
1681, 1712. Indeed, Petitioner itself has obtained numerous
patents that include software as a “component” of the
invention. See, e.g., U.S. Patent No. 6,738,773 col.5 11.43-
47 (filed May 1, 2000) (Ct. App. JA 1838); U.S. Patent No.
6,727,917 col.3 Il.7-14 (filed May 4, 2000) (Ct. App. JA
1851); U.S. Patent No. 6,725,262 col.5 11.23-28 (filed Apr.
27, 2000) (Ct. App. JA 1863).

15

This Court has “more than once cautioned that courts
should not read into the patent laws limitations and conditions
which the legislature has not expressed.” Diehr, 450 U.S. at
182 (quoting Diamond v. Chakrabarty, 447 U.S. 303, 308
(1980) and United States v. Dubilier Condenser Corp. , 289
U.S. 178, 199 (1933)). There is simply nothing in the
language of section 271(f) that can support excluding software
from the definition of “component.” In fact, there is nothing
in the statute that suggests Congress intended to exclude any
type of component whatsoever. To the contrary, subsection
(f)(2) explicitly states that “any” component is covered by the
statute. The use of the comprehensive term “any” reflects
Congress’s intent not to place any restrictions on the types of
components subject to the statute. See Chakrabarty, 447 U.S.
at 308 (“In choosing such expansive terms as ‘manufacture’
and ‘composition of matter,’ modified by the comprehensive
‘any.’ Congress plainly contemplated that the patent laws
would be given wide scope.”).

Nor is there anything in the legislative history suggesting
that software—or any other part of a special purpose
machine—would be excluded from the definition of
“component” or from the purview of the statute. To the
contrary, the legislative history demonstrates Congress’s
intent to protect all patent owners by completely closing the
“loophole” in section 271 recognized by Deepsouth. S. Rep.
No. 98-663, at 2-3 (1984); 130 Cong. Rec. H28,069 (daily
ed. Oct. 1, 1984). Congress emphasized that section 271(f)
was needed to make the patent system “responsive to the
challenges of a changing world.” 130 Cong. Rec. H28,069.

b. Petitioner argues otherwise by mistakenly treating
software as nothing more than “intangible information” or
“design information.” Pet. at 13-22. This is not a novel
argument; it is one the courts have repeatedly rejected. See,

16

e.g., Southwest Software, 226 F.3d at 1283, 1288; In re
Alappat, 33 F.3d at 1545 (citing Diehr, 450 U.S. at 187); In
re Lowry, 32 F.3d at 1583; In re Bernhart, 417 F.2d 1395.
Moreover, the software’ industry—including
Microsoft—clearly understands that software is not
“information.” Information is “[t}he meaning of data as it is
intended to be interpreted by people. Data consists of facts,
which become information when they are seen in context and
convey meaning to people. Computers process data without
any understanding of what the data represents.” Microsoft
Computer Dictionary 271. Software, on the other hand, is
“computer programs; instructions that make hardware work.”
Id. at 489 (emphasis added).

By contrast, instructions to people about how to
manufacture a product (Pet. at 17-18, citing Pellegrini); the
design information about a car (Pet. at 15); a mask for
fabricating semiconductor circuits (Pet. at 21); and a tire’s
tread design (id.) are very different. The appropriate limiting
principle in the statute is that the “component” is part “of
[the] patented invention” being assembled. Petitioner’s
“examples” are not functional parts incorporated in devices
being manufactured and are, therefore, irrelevant.

Petitioner's argument also cannot be reconciled with its
admission to the district court that Microsoft would be liable
under section 271(f) if it exported a separate disk containing
the Windows software for each computer to be assembled
overseas, rather than supplying a limited number of golden
master versions. Pet. App. 36a n.7. Through that admission,
Microsoft necessarily acknowledged both that software can be
a component of a patented invention supplied from the United
States under section 271(f), and that software is still a
component when it is transferred from a disk to a computer
hard drive to assemble the special purpose machine.

17

2. The Federal Circuit Properly Construed
“Supplied” to Include the Supply of Software
Abroad.

a. The Federal Circuit also properly construed the term
“supplied” consistent with its ordinary, contemporary and
common meaning. The ordinary meaning of “supply” is
“[{t}o make available for use; provide;” “[t}o furnish or equip
with.” American Heritage Dictionary 1222 (2d coll. ed.
1991). When it comes to the ordinary meaning of
“supplying” software, this includes providing or furnishing
the software for installation on a computer. See, e.g., Micro
Chem. Inc. v. Lextron Inc. , 317 F.3d 1387, 1389 (Fed. Cir.
2003) (stating that defendant “supplics ... software” as part of
computerized medical record systems); /nfo. Comm. Corp. v.
Unisys Corp., 181 F.3d 629, 631 (Sth Cir. 1999) (explaining
that as joint-creators of public-safety computer systems,
plaintiff “created and supplied the software applications,”
while defendant supplied the computer hardware); C.L.
Maddox, Inc. v. Benham Group, Inc. , 88 F.3d 592, 597 (8th
Cir. 1996) (referring to an undependable computer system
that had numerous deficiencies in the software “supplied by”
a defendant). Even Petitioner's own patents use “supply”
with-this same meaning. U.S. Patent No. 5,548,759 col.3
11.31-41 (filed Jan. 11, 1996) (explaining that a manufacturer
“supplies software” on a disk for installing the application
program on the computer); U.S. Patent No. 6,000,832 col.14
11.45.49 (filed Sep. 24, 1997) (claiming as part of a method
claim the step of “supplying” software code to the customer).

Although the replication of the accused Windows software
occurs Overseas, the courts have correctly recognized that the
software is nevertheless supplied from the United States. The
Windows software was designed, written, debugged, tested
and manufactured entirely within the United States.

18

Microsoft stipulated that it exports those software components
from the United States to foreign computer manufacturers
with the intent that the manufacturers install an exact copy of
the software onto foreign-assembled computers. Pet. App.
45a-45b. The very same zeros and ones cieated in the U.S.
by Microsoft programmers are installed on the foreign
computers. It is these zeros and ones that cause the foreign-
assembled machines to practice AT&T’s patented speech
compression technology, just as with computers assembled in
the U.S. In other words, the software that makes the
computers “new and useful” was created domestically; it was
not of foreign origin.’ This is exactly the type of domestic
activity Congress intended to cover when it enacted section
271(f).

b. Petitioner’s reading of “supplied” would write the
clause “in a manner that would infringe the patent if such
combination occurred within the United States” out of the
statute. That clause implements Congress’s intent to treat the
exportation of components the same as domestic “making”
and “selling” of infringing devices. See, e.g., S. Rep. No.
98-663, at 3 (1984) (“The bill simply amends the patent law
so that when components are supplied for assembly abroad to
circumvent a patent, the situation will be treated the same as
when the invention is ‘made’ or ‘sold’ in the United States.”)
(emphasis added). Microsoft stipulated that it infringed the
‘580 patent in the United States, in part by supplying golden

* Judge Rader dissented below from the majority’s construction of
“supplied.” In his view, copying is separate from supplying. But
his dissent cannot be reconciled with the opinion he authored in
Eolas, where the panel unanimously affirmed a judgment under
section 271(f) on stipulated facts identical to those here (exporting
golden masters of Windows software with the intent that it be
replicated abroad).

19

masters to domestic computer manufacturers with the intent
that they use the disks to assemble infringing computers. See,
e.g., Ct. App. JA 1671-72. But Petitioner argues that the
very same assembly by foreign computer manufacturers
should not be covered by section 271(f). In both instances
Microsoft’s conduct and intent are the same; the only
difference is the location of the assembly. Petitioner is
therefore asking this Court to treat golden masters sent to
foreizn OEMs differently from domestic golden masters, even
though Microsoft intended that all golden masters be used to
assermble AT&T’s patented speech processor. Such a reading
of the statute would violate the “cardinal principle of statutory
construction” that each word should be given meaning.
Bennett v. Spear, 520 U.S. 154, 173 (1997).

c. Microsoft’s arguments about the meaning of
“components” and “supplied” are undermined by its own
prior successful arguments in at least two other contexts.
First, in Microsoft Corp. v. Commissioner, 311 F.3d 1178
(9th Cir. 2002), Microsoft argued that it was entitled to tax
deductions under 26 U.S.C. § 927(a)(2)(B) for all foreign
sales of software replicated abroad from Microsoft’s golden
masters, claiming that such copies were “export property”
under the statute. The Ninth Circuit, while recognizing that
purely “intangible intellectual property” was not “export
property,” agreed with Microsoft that all copies created from
the software embodied on the exported golden master were
export property, thereby allowing Microsoft over $31 million
in deductions for 1990 and 1991. /d. at 1182, 1185, 1189.
Second, in the American Jobs Creation Act of 2004, Pub. L.
No. 108-357, 118 Stat. 1418 (2004), software is classified as
a manufactured good. The bill was originally intended to
protect more traditional manufacturing companies, but as a
result of Microsoft’s lobbying efforts, the definition of
manufactured goods was expanded to include computer

20

software. A.B.A. Sec. Intellectual Property L., A Section
White Paper: Agenda for 21st Century Patent Reform 52-55
(Sept. 16, 2005) (explaining the ABA Intellectual Property
Law Section’s opposition to the proposed repeal or
amendment of section 271(f)) (hereinafter “ABA White
Paper”). If computer software is deemed a manufactured
good and export property and afforded the protections of a
manufactured good and export property in other areas of the
law, then it should not be considered an intangible item
manufactured abroad for purposes of the patent law. See id.
Such an interpretation would subvert the protections of U.S.
patents.

The Federal Circuit’s construction of section 271(f) is in
complete harmony with long standing patent case law and the
language and intent of Congress in enacting the statute.
Microsoft’s strained interpretations of “component” and
“supplied,” on the other hand, would create special treatment
for software—another Deepsouth “loophole”—that would
discriminate against owners of software-related inventions.
Certiorari cannot be justified on this basis.

3. The Federal Circuit’s Decision Does Not
Expand the Extraterritorial Reach of U.S.
Patent Laws.

Microsoft erroneously contends that the Federal Circuit’s
decision expands the extraterritorial reach of U.S. patent laws
and subjects foreign manufacturers to the requirements of
U.S. law. See Pet. at 22-29. To the contrary, the Federal
Circuit appropriately focused on Microsoft's activities in the
United States. The court affirmed the judgment of
infringement under section 271(f) based on Microsoft's supply
from the United States of the accused software, and
Microsoft's intent that it be copied and combined with

21

computer hardware abroad. See Pet. App. 6a (“sending a
single copy abroad with the intent that it be replicated invokes
§ 271(f) liability for those foreign-made copies”); see also
Eolas, 399 F.3d at 1339. This is consistent with the statutory
language (“Whoever without authority supplies or causes to
be supplied in or from the United States . . . in such a manner
as to actively induce the combination”) and prior precedent.
See, e.g., 35 U.S.C. § 271(f(1); Waymark Corp. v. Porta
Sys. Corp., 245 F.3d 1364, 1367-68 (Fed. Cir. 2001) (actual
assembly of the infringing product is irrelevant to
section 271(f) infringement; statute requires only intent by the
supp!ier that the exported component(s) be combined) (Rader,
J.). The statute was specifically intended to reach the
activities of domestic suppliers, and it was properly applied
below.

Petitioner’s extraterritoriality argument is a red-herring.
Years before the Federal Circuit decided Eolas or AT&T, the
court defined the limits of section 271(f) in order to avoid
“the appearance of ‘giving extraterritorial effect to United
States patent protection.’” Waymark, 245 F.3d at 1368
(quoting Paper Converting Mach. Co. v. Magna-Graphics
Corp., 745 F.2d 11, 17 (Fed. Cir. 1984)). Relying on the
language and legislative history of the statute, the Waymark
court held that liability does not require proof of an actual
combination of the components abroad, but only a showing
that the infringer shipped them from the United States with
the intent that they be combined. /d. Thus, section 271(f)
liability is not “predicated [on] acts wholly done in a foreign
country” or on “efforts to practice a patent invention outside
the territorial jurisdiction of the United States” (Pet. at 14),
but on the domestic actor exporting the components abroad.
See id. In both Eolas and this case, that domestic actor was
Microsoft. It was Microsoft—not the foreign computer
manufacturers—that wrote, compiled, tested, debugged, and

22

created the infringing software, and exported that software
with the intent that it be installed on computers abroad in a
manner that Microsoft admits infringes when done in the
United States. The Federal Circuit appropriately applied the
statute to those activities.

4. Congress Recently Rejected Proposals to Limit
Section 271(f) as Petitioner Requests.

Recent legislative activity also suggests that the Federal
Circuit properly construed and captured Congress’s intent in
section 271(f). Leading up to the introduction of the Patent
Reform Act of 2005, H.R. 2795, 109th Cong. (2005),
Congress considered proposals either to repeal section 271(f)
or to amend it to limit its application only to “tangible”
components that are “physically” combined with other
“tangible” components. See Staff of H. Comm. on the
Judiciary, 109th Cong., Patent Act of 2005 § 10 (Comm.
Print 2005); Patent Quality and Improvement: Hearing Before
the Subcomm. on Courts, the Internet and Intellectual
Property of the H. Comm. on the Judiciary, 109th Cong. 23
(2005) (prepared statement of Richard J. Lutton, Jr., on
behalf of the Business Software Alliance in support of
repealing section 271(f)); see also id. at 143-44; ABA White
Paper at 52-55. In considering those proposals, the lower
courts’ decisions in AT&T and Eolas were explicitly
discussed. See, e.g., Patent Quality and Improvement
Hearing at 14, 23; ABA White Paper at 53. The proposals to
repeal or limit section 271(f) were nevertheless rejected. See
H.R. 2795. Congress’s decision to leave the provision intact
suggests that Congress has ratified the Federal Circuit’s
interpretation. See Herman, 459 U.S. at 385-86.

The Federal Circuit correctly construed section 271(f)
consistent with its plain meaning, the legislative history and

23

binding patent-law precedent. The exercise of the Court’s
discretionary jurisdiction is accordingly unnecessary.

IV. The Judgment Below Is Also Based on Section
271(f)(2), an Alternate Ground That Petitioner
Elected to Exclude from Its Questions Presented.

The judgment below was also based on section 271(f)(2),
which Microsoft has not asked this Court to review.
Microsoft’s Petition should therefore also be denied because
Microsoft presents an incomplete case for review. See Sup.
Ct. R. 15.2 (requiring Respondent to raise objections to the
questions presented).

AT&T alleged that Microsoft infringed under section
271(), i.e., including both (f)(1) and (f)(2). See Pet. App.
24a, 2S5a-27a.* The district court entered judgment against

* Tithe 35 U.S.C. § 271(f) provides in its entirety:
§ 271. Infringement of patent.

(1) Whoever without authority supplies or causes to be
supplied in or from the United States all or a substantial
portion of the components of a patented invention, where
such components are uncombined in whole or in part, in
such manner as to actively induce the combination of such
components outside of the United States in a manner that
would infringe the patent if such combination occurred
within the United States, shall be liable as an infringer.

(*) Whoever without authority supplies or causes to be
supplied in or from the United States any component of a
patented invention that is especially made or especially
adapted for use in the invention and not a staple article or
commodity of commerce suitable for substantial

24

Microsoft, and the Federal Circuit affirmed the judgment,
again under both 271(f){1) and (f)(2). See Pet. App. Sa, 11a,
26a-27a, 38a, 42-43a, & 45a-47a. But in its Petition to this
Court, Microsoft has presented questions only under section
271(f)(1), and has cited only section 271(f)(1) as the statutory
provision involved. Supreme Court Rule 14.1(a) requires the
petition to contain the “questions presented for review,” in
order to provide the respondent with sufficient notice and to
assist the Court in “selecting the cases in which certiorari will
be granted.” Yee v. Escondido, 503 U.S. 519, 535-36
(1992). Although Microsoft included both (f)(1) and (f)(2) as
part of the question presented and statutory provision involved
in its petition in Eolas, Microsoft elected here to exclude
(f)(2). Because Petitioner presents only questions under
section 271(f)(1), and does not seek review of section
271(f)(2), section 271(f)(2) is an alternative ground for
upholding the judgment below. See, e.g., Mills v. Rogers,
457 U.S. 291, 305 (1982) (“review of one basis for a decision
supported by another basis not subject to examination would
represent ‘an expression of abstract opinion’”); see also Blum
v. Bacon, 457 U.S. 132, 137 n.5 (1982).

Nor can Petitioner claim that a question under section
271(f)(2) is “subsidiary” to and “fairly included” within its
questions presented under section 271(f)(1). See Sup. Ct. R.
14.1(a). It only cites (f)(2) twice, once as a “see also”
supporting cite (Pet. at 15) and once as providing a
confirming use of the term “component” (Pet. at 17). In

noninfringing use, where such component is uncombined in
whole or in part, knowing that such component is so made
or adapted and intending that such component will be
combined outside of the United States in a manner that
would infringe the patent if such combination occurred
within the United States, shall be liable as an infringer.

25

addition, although sections (f)(1) and (f)(2) both contain the
term “component” and the clause “supplies or causes to be
supplied,” the two sections otherwise have materially
different texts, and differ in their operation and effect. For
example, section (f)(1) is directed to active inducement not
implicated in section (f)(2); similarly, the components in (f)(2)
are limited to those that are “especially made or especially
adapted for use in the invention and not a staple article or
comraodity of commerce,” a restriction not found in (f)(1).
Because no 271(f)(2) issue is set out or fairly included in the
Petition, there is a “heavy presumption against” the Court’s
consideration of any issue under that section. See /zumi
Seimitsu Kogyo Kabushiki Kaisha v. U.S. Phillips Corp. , 510
U.S. 27, 32 (1993). By denying certiorari, the Court will
avoic the dilemma of deciding whether to follow the
presumption and thereby hear only a partial case, or to
override the presumption and thus reach out to hear questions
that have not been presented.

V. Petitioner Misstates the Impact of the Decision Below.

Microsoft tries to paint a doomsday picture for American
software companies if the lower courts’ interpretation of
section 271(f) stands. Petitioner claims that section 271(f)
will expose them to “crippling” liability and destroy their
“right” to “compete with an American patent holder in
foreign markets.” Pet. at 11. Microsoft alleges that as a
resul: these companies will move their research and
development facilities outside of the United States. Pet. at 11-
12. This is nothing more than alarmism posing as advocacy.
The only way section 271(f) has any impact whatsoever on a
defendam in the U.S. software industry—or any other
industry for that matter—is if that defendant has
misappropriated another’s patented technology. Stripped of
its rhetoric, the premise of Petitioner’s policy argument is

26

therefore that American software companies can compete
abroad only if they are permitted to expropriate and export
another’s patented innovations. This attitude not only is self-
defeating, it is wrong. Congress’s Constitutional authority is
to protect the rights of U.S. inventors, not U.S. infringers.
See U.S. Const. art. 1, § 8.

Petitioner’s repeated invocation of the “right of American
companies to compete with an American patent holder in
foreign markets” also rings hollow. See, e.g., Pet. at 1]
(quoting Deepsouth, 406 U.S. at 531). There can be no
question that, in closing the “loophole” recognized by
Deepsouth, Congress explicitly concluded that the right to
compete with an American patent holder in foreign markets
does not include the right to export components of the patent
holder’s invention for assembly abroad. 130 Cong. Rec.
H28,069; S. Rep. No. 98-663, at 2-3. Furthermore,
Petitioner's warnings about software manufacturing fleeing
overseas are overblown. Pet. at 12. It is clear from the
Microsoft v. Commissioner case and the American Jobs
Creation Act of 2004 that Microsoft receives significant
financial benefits for keeping its manufacturing in the United
States. 311 F.3d at 1182; ABA White Paper at 55.

The range of inventions containing software or operating
under software control is astounding: automobiles,
telephones, televisions, refrigerators, washers, digital
watches, and even new “smart goods” such as light switches,
electrical outlets and shower faucets now rely on software for
some portion of their operation. The variety of new
computer-related products available to consumers is also
impressive, including cell phones, handheld computers, digital
video recorders, digital cameras and camcorders, vehicle
navigation, and so forth. It is irrational to contend that
Congress would have designed section 271(f) to exclude such

27

technology from the scope of the statute. To the contrary, the
statute and legislative history make clear that Congress
intended to reverse Deepsouth for all inventors, both as a
matter of basic fairness and to stimulate all areas of the
economy. Petitioner’s strained interpretation of section 271(f)
would undermine and harm American businesses, and should
be rejected.

+

CONCLUSION

For the foregoing reasons, the Petition for writ of
certiorari should be denied.

LAURA A. KASTER
AT&T Corp.

One AT&T Way
Bedminster, NJ 07921
(908) 532-1839

MICHAEL TRAYNOR
COOLEY GODWARD LLP
101 California Street

5" Floor

San Francisco, CA 94111
(415) 693-2000

28

Respectfully submitted,

STEPHEN C. NEAL*
COOLEY GODWARD LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306
(650) 843-5000

JONATHAN G. GRAVES
NATHAN K. CUMMINGS
COOLEY GODWARD LLP
One Freedom Square
Reston Town Center
11951 Freedom Drive
Reston, YA 20190
(703) 456-8000

Counsel for Respondent

March 23, 2006

* Counsel of Record (Will be
admitted on March 27, 2006)

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0243%3A03. Public record. Not legal advice.