Joint Appendix — Microsoft Corp. v. AT & T CORP.

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No. 05-1056

IN THE

Supreme Court of the United States

MICROSOFT CORPORATION,

Petitioner,

AT&T Corp.,

Respondent.

On Writ Of Certiorari

To The United States Court Of Appeals

For The Federal Circuit

BRIEF FOR PETITIONER

T. ANDREW CULBERI THEODORE B. OLSON

MICROSOFT CORPORATION Counsel of Record

One Microsoft Way MIGUEL A. ESTRADA

Redmond, WA 98052 MARK A. PERRY

(425) 706-6921 MATrIHEW D. McGILI

' AMIR C. TAYRANI

DALe M. HEts1 GIBSON, DUNN & CRUICHER LLP

WoobDcocKk WASHBURN LLP ‘

‘ 1050 C cut Avenue, N.W.

2929 Arch Street 0 Connecticut Avenue

Philadelphia, PA 19104 peony, apy D.C. 20036

(215) 564-8939 (202) 955-8500

Counsel for Petitioner

QUESTIONS PRESENTED

Title 35 U.S.C. § 271(f) provides that it is an act of pat-

ent infringement to “suppl[y] ... from the United States” a

“component of a patented invention” in a manner that in-

duces the combination of that component with other compo-

nents outside of the United States. The questions presented

are:

1. Whether copies of a “component” made in a foreign

country are “supplie[d] . . . from the United States”; and

Il. Whether a “binary sequence of numbers that lacks

physical existence” may be considered a “component of a

patented invention” within the meaning of Section 271(f).

PARTIES TO THE PROCEEDING

AND RULE 29.6 STATEMENT

The caption contains the names of all the parties to the

proceeding below.

The corporate disclosure statement included in the peti-

tion for a writ of certiorari remains accurate.

TABLE OF CONTENTS

Page

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ee alisihcinisninicticniciiinlaesiiitiotatasibianieieen idancinisuiaisoacaanissnaein l

STATUTORY PROVISION INVOLVED ...........0...00.00:000 l

TT ceiesisccidaniinititeptitianptinicnintinneveninnnsaiishinniabionipainies 2

og TE 7

ITT kncteiciseeiinstidaneitinaeienbucsvniaiusiansenssieiianiotanuienenbeshiteiantenns 11

I. FOREIGN-MADE Coplres OF THE OBJEC:

CODE FOR THE WINDOWS OPERATING

SYSTEM WERE NOT “SupPLik[D]” Ey

MICROSOFT “FROM THE UNITED STATES” ............. 13

A. The Plain Language Of Section 271(f)

Does Not Encompass Foreign-Made

AU cinsesscsdindbnlidiacnstanniniddeapsonsuenvinubionniiaceine 14

B. Traditional Principles Of Statutory

Construction Prohibit The Extension Of

Section 271(f) To Foreign-Made Copies......... 26

I]. WHAT Microsoft DID SupPLY FROM THE

UNITED STATES WERE NOT COMPONENTS OF

A PATENTED INVENTION COMBINED ABROAD........ 33

A. Under The Parties’ Stipuiation, The

Physical Media At Issue In This Case

Are Not “Components” Of A Patented

ici ccslendanticiescennicsvansntastamninntesiatieniascsen 34

B. A “Binary Sequence Of Numbers That

Lacks Physical Existence” Cannot Be A

“Component Of A Patented Invention”

SRE OID 7 GOD tecitescetcccaccsdenctesscnianiciensese 37

TT siscccsiitininiceaibieriaiiictaipiieeibaatiibiuitalateliiipdanaitiigtiinlel 45

TABLE OF AUTHORITIES

Page(s)

CASES

Aro Mfg. Co. v. Convertible Top Replacement

ne er ee IIE ascsectcisthieradaiendtedpesestnsninrdenipiliseiia 12

Asgrow Seed Co. v. Winterboer,

LE REESE RE ees ke an 14

Bayer AG v. Housey Pharms., Inc.,

FO Bee CIF Gs Ge. BO ecciscstinncssnnseserncssicinsveners 43

Brown v. Duchesne,

6O U.S. (19 How.) 183 (1857)..........c..cscssccssseees 10, 29, 31

Chicago & S. Air Lines, Inc. v. Waterman S.S.

Rasen RIES oe eT 30

Deepsouth Packing Co. v. Laitram Corp.,

EE ey PN TP vicichtictnsensettnhiiciens 7, 13, 14, 29, 39, 42

District of Columbia v. Universal Computer

Assocs., Inc., 465 F.2d 615 (D.C. Cir. 1972)... 22

Dowagiac Mfg. Co. v. Minn. Moline Plow Co.,

I hi lcdeiialdenlacenebeenhdesiil 10, 31

E.W. Bliss Co. v. United States,

Re ET i5

EEOC vy. Arabian Am. Oil Co.,

I csi cccindicstssh dialoncteciaseneieeiisnmeiobensicapaieliil 30

Eolas Technologies Inc. v. Microsoft Corp..,

399 F.3d 1325 (Fed. Cir.), cert. denied,

Ee | EE ey

F. Hoffman-La Roche Ltd. v. Empagran S.A.,

Isis eicoesctatnnisnintetnineiahbananonace dopniestith 31, 33

Fantasy Sports Props., Inc. v. Sportsline.com,

Inc., 287 F.3d 1108 (Fed. Cir. 2002)................:csscceseeees 20

Gates Rubber Co. v. Bando Chem. Indus..,

PW Ble ee CGA, Pe a ieicstrtescctoninstensctcshicteneesasnabdsaian 21

Goldstein v. California, 412 U.S. 546 (1973)... cece 4}

In re Alappat, 33 F.3d 1526 (Fed. Cir. 1994)

EE OT ILM NID os NE DY Choy Hed 38

Lexmark Int'l, Inc. v. Static Control

Components, Inc.,

Sg ef rr Be 26

Metro-Goldwyn- Mayer Studios Inc. v. Grokster

CE Fe, Pe ee intidinvsiitiintslettnstntiipeiieicsanas 17

Optical Disc Corp. v. Del Mar Avionics,

Fe Oe Ce Rs a, Be iatinininsasdedisthtineanibecanne 25

Parker v. Flook, 437 U.S. 584 (1978)...........cccccccecceceeees 10,29

Pellegrini v. Analog Devices, Inc.,

375 F.3d 1113 (Fed. Cir.), cert. denied,

PD Os. Se GE heenscnicncstitcsmntaniteigumaniinl 11, 16, 39, 42

Rodriguez v. Compass Shipping Co.,

AS FA I iscictenhornrisncteiinianisaitanlesstuniainmbaguans 17

Sony Corp. of Am. v. Universal City Studios,

TE Sas EF GOD scsasivtsicachindabtantinembastaaia 15, 43

Stenograph L.L.C. v. Bossard Associates, Inc.,

DOS Fr. CO FD wseskecinesictntinsiadiniisescaiantaaghl 4

Symbol Techs., Inc. v. Opticon, Inc.,

SOS Fe ESE GGG. CO, TDG DP iccccesseccinticcsnninteiicnsiiininapens 4]

United States v. Ron Pair Enters., Inc.,

RP CE. Bie EE hnvicciccdiipiscttisscciunjunstabiasiaimstiiiemiaainia’ 26

United States v. Williams, 504 U.S. 36 (1992)... 12

Waymark Corp. v. Porta Sys. Corp.,

BES FSB CSGS OE. Ct. DOG) oa ccccccevesccceccesesinsesssvencnesss 32

White-Smith Music Publ’g Co. v. Apollo Co.,

iain cnenricenctibinisensicbinnnevverecameneentnnant 22

WMS Gaming Inc. v. Int'l Game Tech.,

EE IE, UIs cccsscoensscensecesenssessenensesses 23

STATUTES

ke cea ningsetinasonccntsenneniesednutd 20

ne sereraernecnteiontil 19

ESTES EO eee 19

IEE ere 42

ERE l

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ESTERS ce 4

EE a TEED 31

SEE 3]

Ee 4

as cl ctseisenineneensncini 43

SEE ee 8, 32, 35, 42

ic cesindieeansennnciin 8, 35, 43

is senaabcnsnononeneit 43

Patent Law Amendments Act of 1984,

PU. ©. PEO, SEGEZ, SS Beet, SIGS...........cccrercrcsceseesssenss. 14

LEGISLATIVE HISTORY

130 Cong. Rec. H10,525 (Oct. 1, 1984)... 14, 36

130 Cong. Rec. H12,231 (Oct. 11, L984). 27, 36

S. Rep. No. 663, 98th Cong., 2d Sess. (1984)... \4

Patent Reform Act of 2006, S. 3818,

arate eciea cneneanennenanebesanvinnion 29

Vil

OTHER AUTHORITIES

DONALD S. CHISUM,

CBRN GES FATIINTG GID cncenccecncccscncccessecsecesesesccccceess 4)

Dale Fisk, Programming with Punched Cards,

at http://www.columbia.edu/acis/history/fisk.pdf

SETI ecsuiaceeniceseslcuihelindniahdaiuaabaieihblashncioenhiiphadaiedtandia Mica altel 22

MICROSOFT COMPUTER DICTIONARY (Sth ed. 2002)............ 20

RANDOM HOUSE UNABRIDGED DICTIONARY

ON Aa 14, 20, 35, 42

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UNITED STATES PATENT & TRADEMARK OFFICE,

MANUAL OF PATENT EXAMINATION

PROCEDURE (rev. 8th ed. 2006) ..............................eceeee. 2!

RON WHITE, HOW COMPUTERS WORK

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BRIEF FOR PETITIONER

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. la-19a) is

reported at 414 F.3d 1366. The opinion of the district court

(Pet. App. 20a-38a) is not officially reported but can be ac-

cessed at 2004 WL 406640.

JURISDICTION

The judgment of the court of appeals was entered on

July 13, 2005. A timely petition for rehearing was denied on

October 20, 2005. Pet. App. 39a. On January 12, 2006, Jus-

tice Stevens extended the time within which to file a petition

for a writ of certiorari to and including February 17, 2006.

No. 05A606. The petition for a writ of certiorari was filed on

that date and was granted on October 27, 2006. This Court

has jurisdiction under 28 U.S.C. § 1254(1).

STATUTORY PROVISION INVOLVED

Title 35 U.S.C. § 271(f provides:

§ 271. Infringement of patent

* * *

(f)(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 com-

ponents 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.

(2) 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 noninfring-

ing 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.

* * *

STATEMENT

On summary judgment, the district court held that Mi-

crosoft infringed AT&T’s patent under Section 271(f) of the

Patent Act—which prohibits “suppl[ying] ... from the

United States” a “component of a patented invention”—

based on the use of U.S.-supplied master versions of the ob-

ject code for the Windows operating system by foreign

manufacturers, who copied the master versions and, in turn,

installed the foreign-made copies on foreign-made computers

that were sold to foreign end-users. In a 2-1 decision, the

Federal Circuit affirmed.

1. AT&T holds United States Reissue Patent 32,580

(“the °580 patent”) entitled “Digital Speech Coder.” Pet.

App. 44a. AT&T’s invention “relates to speech processing

and more particularly to digital speech coding arrangements.”

"580 patent, col. 1:9-10 (Supp. J.A. 8). Speech coding is the

process of compressing a digital speech signal in order to fa-

cilitate its electronic transmission and storage. The invention

disclosed by the "S80 patent aims to “provide improved

speech coding of high quality at lower bit rates” than prede-

cessor speech coding technology. /d. at col. 1:58-60 (Supp.

J.A. 8). The °580 patent claims certain improved methods of

speech coding and certain speech processor circuits capable

of carrying out the improved speech coding methods. See id.

at cols. 17-24 (Supp. J.A. 16-19).

Of particular relevance here is claim 40 of the "580 pat-

ent, which recites an “[a]pparatus for producing a speech

message comprising” various means for implementing the

speech coding methods claimed elsewhere in the patent.

"580 patent, col. 23:24-25 (Supp. J.A. 19) (italics omitted).

A preferred embodiment of the inventive device is a general

purpose computer programmed to act as the claimed speech

processor. Indeed, the inventor appended to the °580 patent

the source code for certain computer programs (written in

FORTRAN programming language) that he used to instruct a

Bell Labs supercomputer to test the improved speech coding

methods. /d. apps. A-D (Supp. J.A. 12-15). The *580 patent

thus teaches one skilled in the art to program a general pur-

pose computer to function as the patented speech coding de-

vice. This invention—claimed more than a quarter-century

ago—is today widely used in mobile phones and personal

computers to achieve high-quality reproduction of digitally

recorded speech.

Several computer programs created and licensed by Mi-

crosoft, most notably its flagship Windows operating system

program, include one or more “speech codecs”: computer

programs that, when installed, make a general purpose com-

puter “capable of coding--converting a speech signal into a

more compact code—and decoding—converting the more

compact code back into a signal that sounds like the original

speech signal.” Am. Compl. 4 14 (J.A. 15); see also Pet.

App. 3a.

The operative complaint alleges that “products that have

incorporated and/or supported” Microsoft's speech codecs—

including all computers in the United States running the

Windows operating system. —infringe the °580 patent’s appa-

ratus claims because they are capable of recording, storing,

and playing back speech in a manner substantially similar to

that described in the *580 patent. Am. Compl. 4 44 (J.A. 20).

AT&T alleged that Microsoft induced those acts of infringe-

ment by licensing copies of the object code for the Windows

operating system, which when installed on a compatible

computer system is capable of performing the function of the

patented invention. Microsoft eventually stipulated that, by

licensing copies of the Windows object code to manufactur-

ers of computers that are ultimately sold in the United States,

it induced infringement of the °580 patent. See Pet. App.

42a: see also 35 U.S.C. § 271(b).!

AT&T also alleged that Microsoft had infringed the ap-

paratus claims of the patent under Section 271(f) by export-

ing a “component”—the “Windows software containing the

allegedly infringing codecs”—that was combined overseas to

produce an apparatus that, had it been produced in the United

States, would infringe. Pet. App. 24a.

Microsoft transmits master versions of the Windows op-

erating system program to foreign computer manufacturers

either on “golden master disks” or in encrypted electronic

transmissions. Pet. App. 45a-46a 4 5, 7. The parties have

stipulated that neither the electronically transmitted master

version nor the golden master “disk itself is [Jever installed

on a computer that is then sold.” Jd. at 45a 4 5. Each foreign

manufacturer instead uses the master version to produce, in

the foreign country, duplicate copies of the Windows object

code. Id. at 45a-46a 4 5-7. It is these copies, and only these

copies, that are installed on foreign-manufactured computers.

Id. at 46a 9.2

On summary judgment, AT&T asserted that the golden

master disks and encrypted electronic transmissions contain-

ing Windows object code constitute “components” of

| Microsoft also installed the Windows object code on Microsoft-

owned computers during the software development process, and conse-

quently stipulated to direct infringement under Section 271(a).

2 In fact, the “installation” process itself involves an act of duplication.

See Stenograph L.L.C. v. Bossard Assocs., Inc., \44 F 3d 96, 100 (D.C.

Cir. 1998) (“installation of software onto a computer results in “copy-

ing’”). The object code is read from the golden master disk and physi-

cally scrivened onto the foreign computer's hard drive. See RON WHITE,

How COMPUTERS WORK 144-45, 172-73 (8th ed. 2006).

AT&T’s patented Digital Speech Coder apparatus and that

the foreign-produced copies of the object code installed on

the foreign-manufactured computers are “supplie[d]” by Mi-

crosoft “from the United States.” Pet. App. 46a 4 10. Micro-

soft argued conversely that the foreign replicators—not Mi-

crosoft— provided the versions of Windows actually installed

on the foreign-made computers, and that what Microsoft did

supply—master versions of the machine-readable object

code-—were not “components” of AT&T’s patented inven-

tion within the meaning of Section 271(f). Jbid.

2. The district court denied Microsoft’s motion for par-

tial summary judgment. Pet. App. 22a. The court held that

the Windows object code sent by golden master disks and

encrypted electronic transmissions to foreign manufacturers

was a “component” of AT&T's Digital Speech Coder device.

Jd. at 31a. The court further held that Microsoft had “sup-

plie[d] ... from the United States” each of the tens of mil-

lions of foreign-made copies of the Windows object code be-

cause “replication of the object code abroad” is different in

kind from the “manufactur[e] ... of it ... abroad.” /d. at

35a.

3. A divided panel of the Federal Circuit affirmed. Pet.

App. Ila.

a. In determining whether the computer programs em-

bodied in the golden master disks and encrypted electronic

transmissions were “components” of AT&T’s patented in-

vention, the panel majority relied on Eolas Technologies Inc.

v. Microsoft Corp., 399 F.3d 1325, 1339 (Fed. Cir.), cert.

denied, 126 S. Ct. 568 (2005), which was decided while the

appeal in this case was pending. Folas held that “computer

readable program code” is a “component” within the mean-

ing of Section 271(f) because that code is “the key part” of a

patented computer invention that “drives the functional nu-

cleus of the finished computer product.” /bid. (internal quo-

tation marks omitted). The pancl in this case adopted the Eo-

las court’s conclusion without expanding upon its analysis.

Pet. App. 4a.

The panel majority further concluded that Microsoft was

liable under Section 271(f) for each foreign copy of the

computer-readable Windows object code produced using the

golden master disks and electronic transmissions shipped

from the United States. Pet. App. 7a. The cuurt held that

each of these foreign-made copies had “essentially been sup-

plied from the United States” because “{c]opying . . . is part

and parcel of software distribution,” and therefore, “for soft-

ware ‘components,’ the act of copying is subsumed in the act

of ‘supplying.’” /d. at 6a, 7a (emphasis added); see also id.

at 7a (“It is inherent in the nature of software that [it] . . . may

be replicated”). In reaching this conclusion, the court can-

didly acknowledged that it was interpreting Section 271(f) to

account for “the realities of software distribut‘on” and to en-

sure that the statute “remain{s] effective” in a rapidly chang-

ing world. /d. at 7a, 10a. A conclusion that foreign-made

copies were not supplied from the United States, the panel

majority asserted, would “permit[{] a technical avoidance of

the statute by ignoring the advances in a field of technology

. that developed after the enactment of § 271(f)” and

“would emasculate § 271(f) for software inventions.” /d. at

6a n.2, 10a. The panel majority accorded no significance to

the ready availability of foreign patents to protect AT&T

from acts of foreign infringement, finding it more appropriate

to “construe our statutes irrespective of the existence or non-

existence of foreign patents.” /d. at 6a n.2.

b. Judge Rader dissented. Although he agreed that Fo-

las was controlling as to the issue of whether the object code

for the Windows operating system could be a “component of

a patented invention,” Judge Rader disagreed with the major-

ity’s conclusion that the foreign-manufactured copies of the

Windows object code had been “supplie[d] ... from the

United States.” Pet. App. Ila.

Jadge Rader rejected the panel majority’s contention that

the “act of copying is subsumed in the act of ‘supplying,””

Pet. App. 6a, finding such reasoning to be contrary to the

“ordinary meaning of ‘supplies.’” /d. at 12a. The necessary

consequence of the panel majority’s holding, Judge Rader

recognized, was to “provide[] extraterritorial expansion to

U.S. law by punishing under U.S. law ‘copying’ that occurs

abroad.” Jbid. The majority opinion was flawed, Judge

Rader continued, because it “holds Microsoft liable for the

activities of foreign manufacturers making copies of the pat-

ented component abroad” in the absence of a clear indication

of Congress’s intention to do so. /d. at l6a-17a. Judge

Rader concluded that--rather than seeking to give extraterri-

torial effect to U.S. patent law-—the proper course of action

for AT&T would have been to “protect its foreign markets

from foreign competitors by obtaining and enforcing foreign

patents.” /d. at 18a-19a (emphases added).

SUMMARY OF ARGUMENT

In holding Microsoft liable for infringing AT&T’s patent

under 35 U.S.C. § 271(f), the Federal Circuit committed two

significant errors. First, it incorrectly concluded that copies

of the object code for the Windows operating system made in

a foreign country are nonetheless “supplie[d] ... from the

United States”; and second, it incorrectly concluded that

what Microsoft did supply from the United States—golden

master disks and encrypted transmissions containing the

Windows object code—could be considered “components” of

AT&T’s patented invention under Section 271(f).

l. In Deepsouth Packing Co. v. Laitram Corp., 406 U.S.

518 (1972), this Court held that it was not an act of infringe-

ment to make the components of a patented invention in the

United States and ship them abroad for final assembly. Con-

gress responded to Deepsouth by enacting Section 271(f),

which makes it an act of infringement to “suppl[y] .. . from

the United States” the components of a patented invention in

a manner that induces the overseas combination of “such

components.” The “components” allegedly combined over-

seas in this case—the copies of Windows object code in-

stalled on and executed by foreign-built computers—were

made in a foreign country; they were not supplied from the

United States.

A. “Supply” means to “furnish or provide.” The only

things Microsoft furnishes from the United States are the

golden master disks and encrypted transmissions containing

master versions of the Windows object code. But those mas-

ters are never installed on a computer that is sold; rather, only

the foreign-made copies of Windows are installed on foreign-

built computers.

1. The Federal Circuit held that Microsoft had “sup-

plie[d]” the “foreign-made copies” from the United States,

reasoning that “for software ‘components,’ the act of copying

is subsumed in the act of ‘supplying.’” Pet. App. 6a. This is

plainly wrong. “Supply” of “components” constitutes an act

of infringement only when it induces the combination of

“such components,” i.e., the same components “supplied,” to

form a patented invention. 35 U.S.C. § 271(f)(1); see also id.

§ 271(f)(2). Section 271(f) does not prohibit inducing the

combination of copies of the components supplied from the

United States.

Judge Rader, dissenting below, recognized that “[t|he act

of supplying is separate and distinct from copying, reproduc-

ing, or manufacturing.” The majority, however, was of the

view that copying is “part and parcel of software distribu-

tion.” It is, but copying is also inherent in distributing any

other product, including the shrimp deveining machines at

issue in Deepsouth. If a manufacturer exported a prototype

shrimp deveining machine from which copies of the parts

were made and assembled overseas, there would be no in-

fringement under Section 271(f). And AT&T has conceded

that “there is no indication that Congress meant to treat soft-

”

ware ... any differently from any other components of pat-

ented inventions” for purposes of Section 271(f).

2. To win this case, AT&T must show that Section

271(f) requires treating software components differently from

all other components. This it cannot do.

a. Software may refer to a computer program embodied

in a computer-readable medium or to a computer program in

the abstract. A computer program consists of the instructions

that, when installed on a compatible computer, direct the

computer to perform specified functions. These instructions

are written in the binary language of computers, which can

be transliterated as “1’s” and “0’s.” Each digit instructs the

computer to either open or close a switch. When a particular

sequence of commands (a computer program) is installed on

a computer-readable medium, such as a disk, the computer

may execute the program to perform the desired function. A

computer program is not functional unless it is embodied in a

computer-readable medium.

b. AT&T stipulated that only copies of the Windows

program are installed on the foreign-built computers at issue.

But it claims that these copies were “supplie[d] . . . from the

United States” because they contain the “very same zeros and

ones created in the U.S. by Microsoft programmers.” That

position contravenes AT&T’s own theory of liability, which

seeks to hold Microsoft liable for each and every foreign-

made computer running a foreign-made copy of Windows.

Moreover, when a computer program is copied, a new se-

quence of digital information ts physically scrivened onto the

recipient hard drive or other medium. The content-—-the ob-

ject code—may be identical to the master version, but it is

not the same sequence any more than a machine part turned

on a duplicating lathe is the same as the identical template

from which it was produced.

B. Extending Section 271(f) to foreign-made copies of

software components would transgress at least two principles

of statutory construction.

1. In responding to Deepsouth, Congress sought to pro-

hibit the domestic manufacture of component parts for as-

sembly overseas. Because the copies at issue in this case

were not manufactured in the United States, imposing in-

fringement liability would frustrate rather than further the

congressional objective in enacting Section 271(f). The Fed-

eral Circuit majority sought to justify its departure from the

statutory text by pointing to “advances in a field of technol-

ogy ... that developed after the enactment” of the statute;

but this Court has repeatedly emphasized that the Patent Act

must be construed as enacted, leaving it to Congress to re-

spond to changing circumstances. F.g., Parker v. Flook, 437

U.S. 584 (1978); Brown v. Duchesne, 60 U.S. (19 How.) 183

(1857).

2. The presumption against extraterritoriality removes

any possible doubt about the application of Section 271(f) to

foreign-produced copies. The Court has repeatedly held that

the Patent Act does not reach overseas conduct. F.g., Dowa-

giac Mfg. Co. v. Minn. Moline Plow Co., 235 U.S. 641

(1915). The Federal Circuit, however, impermissibly gave

Section 271(f) extraterritorial effect by imposing infringe-

ment liability on conduct (the making of copies) that occurs

entirely on foreign soil.

II. The parties stipulated below that the “components”

in issue were the golden master disks and the encrypted

transmissions containing master versions of the Windows

object code. In this Court, AT&T contends that the relevant

“component” is a “binary sequence of numbers that lacks

physical existence.” Neither articulation amounts to a “com-

ponent” under the statute.

A. The golden master disks and encrypted transmissions

are not components because they are never “combined” with

other components to practice the claimed invention. The par-

ties stipulated that the master versions of the code conveyed

by these media are never installed on a computer that is sold.

B. Although computer programs recorded on machine-

readable media may be statutory components, the abstract

instructions comprising such programs—a “binary sequence

of numbers that lacks physical existence,” in AT&T’s formu-

lation—cannot be a component of a patented invention

within the meaning of Section 271(f).

1. Uncoupled from any computer-readable medium, the

abstract sequence is nothing other than design information.

When read and executed by a computer (from a computer-

readable medium) the sequence can direct that computer to

alter its circuitry to perform certain specialized functions, but

standing alone, the sequence of numbers is nothing other than

abstract instructions. Section 271(f) “refers to the physical

supply of components, not simply to the supply of instruc-

tions.” Pellegrini v. Analog Devices, Inc., 375 F.3d 1113,

1118 (Fed. Cir. 2004).

2. AT&T’s theory that an abstract sequence can be a

component cannot be reconciled with the statutory text,

which requires that a component be capable of being “com-

bined” with other components. Abstract information, float-

ing in the ether, cannot be combined with anything. Nor can

abstract information be exported or “supplied.” Abstract in-

formation does not travel. Before information can move

from one physical location to another, it must first be reduced

to some physical medium, whether a sound wave, electro-

magnetic impulse, or a piece of paper.

ARGUMENT

Section 271(f) makes it an act of patent infringement to

“suppl[y] ... from the United States” a “component” of a

patented invention with the intent that the component thus

supplied be “combin{ed]” with other components overseas in

a manner that would infringe had the combination occurred

in the United States. Analysis of claims under Section 271(f)

thus requires both identifying the relevant components of the

patented invention and determining whether the accused in-

fringer supplied those components from the United States.3

The parties stipulated that Microsoft supplies from the

United States “a limited number of ‘golden master’ disks . . .

on which the machine-readable object code for the Windows

operating system software is stored.” Pet. App. 45a 4 4.

“Microsoft also supplies its Windows operating system ob-

ject code from the United States ... by sending to [foreign

manufacturers] a single encrypted transmission of the object

code.” /d. at 46a 47. The parties further stipulated “that,

other than the ‘golden master disks’ and the encrypted trans-

missions of Windows object code, Microsoft does not supply

any ‘component’ from the United States for assembly

abroad.” /d. at 47a 4 10.

The parties also stipulated that the master versions of the

Windews object code embodied in the golden master disks

and encrypted electronic transmissions are “never installed

on a computer that is then sold.” Pet. App. 45a 45. Rather,

the foreign manufacturers use the master versions to “make

3 AT&T never clarified whether it was proceeding under Section

271(f(1), Section 271(f)(2), or both, and the courts below held generi-

cally that Microsoft was lable under “Section 271(f).” See, e.g., Pet.

App. lla (“[T]he judgment of the district court holding Microsoft liable

under § 271(f) is affirmed”). Microsoft could possibly be liable only un-

der Section 271(f)(1) because Windows is not “especially made or espe-

cially adapted for use in [AT&T's patented] invention,” as 35 U.S.C.

§ 271(f)(2) requires. See Aro Mfg. Co. v. Convertible Top Replacement

Co., 377 U.S. 476, 488 n.7 (1964). In any event, the result would be the

same under either provision because both include the same operative lan-

guage- “component” and “supplie[d! . . . from the United States,” and

“[i}Jn granting certioran, [this Court] necessarily considered and rejected”

AT&T's belated invocation of Section 271(f(2) “as a basis for denying

review.” United States v. Williams, 504 U.S. 36, 40 (1992).

... copies of the object code” and “install those copies onto

computer hardware.” /d. at 46a 4j 9.

These stipulated facts, and the plain language of Section

271(f), establish that Microsoft has committed no act of in-

fringement under that statute. The foreign-produced copies

of the object code for the Windows operating system were

not “supplie{d] . . . from the United States”-—they were made

overseas. And what Microsoft did supply-—golden master

disks and electronic transmissions conveying master versions

of the Windows object code—are not “components” because

the physical media were not, and the abstract information

they conveyed could not be, “combined” overseas to practice

the claimed invention.

Il. FOREIGN-MAbDE Copies Or THE OBJECT CODE

FOR THE WINDOWS OPERATING SYSTEM WERE

NoT “Suppuie[D]” By MICROSOFT “FROM THE

UNITED STATES”

In Deepsouth Packing Co. v. Laitram Corp., 406 U.S.

518 (1972), this Court held that a company was not liable for

patent infringement under 35 U.S.C. § 271(a}—which pro-

hibits “mak[ing] . . . al] patented invention, within the United

States,” without authorization-—where it manufactured all the

component parts of a patented shrimp deveining machine in

the United States and shipped those parts for final assembly

abroad. 406 U.S. at 524. Because the final assembly oc-

curred in a foreign country, the Court concluded that the de-

fendant did not “make” the patented machine within the

United States and therefore did not intringe the patent. /d. at

527. The Court emphasized the territorially limited nature of

the U.S. patent laws, explaining that Section 271(a) “makes it

clear that it is not an infringement to make or use a patented

product outside of the United States.” /hbid. Recognizing

that its decision might be viewed as opening a loophole in the

patent laws, the Deepsouth Court invited Congress to provide

a “clear ... indication of intent to extend the patent privi-

lege” to the export of components of a patented invention for

assembly abroad. /d. at 532.

Congress responded to Deepsouth by enacting Sec-

tion 271(f) as part of the Patent Law Amendments Act of

1984, Pub. L. No. 98-622, § 10!, 98 Stat. 3383, 3383. See

130 Cong. Rec. H10,525 (Oct. 1, 1984) (“This proposal re-

sponds to the United States Supreme Court decision in

{[Deepsouth], concerning the need for a legislative solution to

close a loophole in patent law”); S. Rep. No. 663, 98th

Cong., 2d Sess. 2-3 (1984) (explaining that the “provision is

a response to the Supreme Court’s 1972 Deepsouth deci-

sion’).

In order to prevent Deepsouth-like schemes from cir-

cumventing infringement liability, Section 271(f) makes it an

act of infringement to “suppl[y] ... from the United States”

the “components of a patented invention” in a manner that

induces the combination of “such components” abroad. As

Congress’s use of “such components” attests, liability at-

taches only where the defendant induces the overseas combi-

nation of the same components that it shipped from the

United States. The copies of computer-readable object code

for the Windows operating system that are installed on the

foreign-assembled computers are made by foreign manufac-

turers, in forcign countries, and thus were not “supplie[d] . . .

from the United States” within the meaning of Section

271(f).

A. The Plain Language Of Section 271(f) Does

Not Encompass Foreign-Made Copies

As AT&T agrees (Second Supp. Cert. Br. 3), the ordi-

nary meaning of the verb “supply” is “to furnish or provide.”

RANDOM HOUSF UNABRIDGED DICTIONARY 1912 (2d ed.

1993); see also Asgrow Seed Co. v. Winterboer, 513 U.S.

179, 187 (1995) (where Congress uses an undefined term,

courts should afford the term its ordinary meaning). As this

Court has explained in a different context, “to furnish means

to supply.” E.W. Bliss Co. v. United States, 248 U.S. 37, 45

(1918). Thus, Microsoft cannot be held liable under Section

271(f) unless it induces foreign manufacturers to combine the

same components that it furnishes from the United States to

practice the patented invention. But the only things Micro-

soft furnishes from the United States are master versions of

the object code for the Windows operating system (via

golden master disk or encrypted transmission); and it is un-

disputed that those master versions are never installed on a

computer that is then sold. Pet. App. 45a 45, 46a 4 7.

Rather, foreign manufacturers use the master versions to pro-

duce copies of the object code that they then install on com-

puter hardware and sell as part of completed computer sys-

tems to overseas end-users. /d. at 45a 4 5, 46a 97. These

foreign-made copies were not furnished by Microsoft from

the United States.

Just as supplying a product that can be used to produce

copies is not the same thing as supplying the copies them-

selves, see Sony Corp. of Am. v. Universal City Studios, Inc.,

464 U.S. 417, 436 (1984), supplying a master template or

prototype from which copies can be produced is not the same

thing as actually supplying those copies. The fact that, today,

computer programs can be duplicated with relative ease does

not mean that, by encoding a computer program on a golden

master disk and shipping that master version to foreign

manufacturers who produce duplicate copies of the object

code, Microsoft has done anything more than “supplly] . . .

from the United States” the single master version of the ob-

ject code—a master that “is never installed on a computer

that 1s then sold.” Pet. App. 45a 45. The copies of the ob-

ject code that are installed on computers built overseas are

themselves made overseas—they are not supplied from the

United States. To be sure, those copies convey the same set

of instructions as the master version; but they are different

from the master, just as a machine part turned on a

duplicating lathe is identical to but different from the

template. See, eg., Shopsmith Lathe Duplicator, ar

http://www.shopsmith.com/ownersite/catalog/latheduplicator

-htm (last visited Dec. 4, 2006).

1. Judge Rader, in his dissent below, correctly under-

stood that a copy made overseas is not supplied from the

United States. As he explained, “(t]he ordinary meaning of

‘supplies[]’ ... does not include ‘copying,’ ‘replicating,’ or

‘reproducing’—in effect ‘manufacturing.”” Pet. App. 12a.

Rather, “(t]he act of supplying is separate and distinct from

copying, reproducing, or manufacturing.” /bid. “As a matter

of logic,” he continued, “one cannot supply one hundred

components of a patented invention without first making one

hundred copies of the component, regardless of whether the

components supplied are physical parts or intangible soft-

ware.” /d. at 13a. But foreign “manufacturers do not install

the actual component ‘supplied’ from the U.S. (the master

disc). Instead, they install a copy made [overseas]. Thus, .. .

liability cannot attach under § 271(f) because the components

actually assembled into the infringing products were never

literally ‘shipped from the United States.” Jd. at 15a-16a

(quoting Pellegrini v. Analog Devices, Inc., 375 F.3d 1113,

1117 (Fed. Cir.), cert. denied, 543 U.S. 1003 (2004)).

The Federal Circuit majority recognized—as it had to—

that Microsoft does not actually “suppl[y] ... from the

United States” the foreign-produced copies of Windows ob-

ject code. Instead, the court of appeals majority was of the

view that “such resulting copies have essentially been sup-

plied from the United States.” Pet. App. 7a (emphasis

added). The Federal Circuit’s use of the modifier “essen-

tially” is an acknowledgment that Microsoft does not actually

supply the copies from the United States. See also id. at 4a

(“software replicated abroad from a master version exported

from the United States ... may be deemed ‘supplied’ from

the United States”) (emphasis added). But Congress used no

such modifiers; the statute as enacted applies only to the act

of actually supplying a component from the United States.

See Rodriguez v. Compass Shipping Co., 451 U.S. 596, 617

(1981) (“As with other problems of interpreting the intent of

Congress in fashioning various details of [a] legislative com-

promise, the wisest course is to adhere closely to what Con-

gress has written”). And the court of appeals’ efforts to jus-

tify its departure from the plain language of the statute are

sorely lacking.

The Federal Circuit first asserted that “the ‘supplying’ of

software commonly involves generating a copy” and that

“({clopying ...is part and parcel of software distribution.”

Pet. App. 6a. Of course, software producers and content pro-

viders go to great lengths to prevent unauthorized duplication

of their products. Cf Metro-Goldwyn-Mayer Studios Inc. v.

Grokster, Ltd., 545 U.S. 913 (2005). And although author-

ized-copying is inherent in the distribution of software, any

business that derives profit from the sale of multiple identical

products is dependent on the “copying” of the products’

components. The pharmaceutical industry, for example, is

based on the mass production of identical copies of com-

pounds, many of them patented. Indeed, the manufacturer in

Deepsouth was engaged in supplying copies of the compo-

nents for shrimp deveining machines. The key question un-

der Section 271(f) cannot be whether a copy is involved in

the alleged infringement; in the case of volume sellers, the

allegedly infringing product almost always will include cop-

ied components. Rather, the question must be where the

copying takes place. If the accused infringer copies a com-

ponent in the United States and exports those copies for in-

clusion into foreign products, then liability may attach; but if

the accused infringer sends abroad a master version of the

component that itself is never combined into a patented in-

vention but-ipstead is copied, then there is no liability under

Section 271(f).

The court of appeals also opined that “[i}t is inherent in

the nature of software that one can supply only a single disk

that may be replicated—saving material, shipping, and stor-

age costs-—instead of supplying a separate disk for each copy

of the software to be sold abroad.” Pet. App. 7a. But it is

equally inherent in the nature of shrimp deveining machines

that a domestic company can save “material, shipping, and

storage costs” by sending a master version of the machine's

components abroad for foreign replication. Conversely, a

domestic company that, like the accused infringer in Deep-

south, chooses to make multiple copies of components in the

United States and then export them will incur the costs of so

doing. As Judge Rader recognized, “[t]he only true differ-

ence between making and supplying software components

and physical components is that copies of software compo-

nents are easier to make and transport”; but this “is not the

proper basis for making distinctions under § 271(f).” /d. at

14a. Incurring costs such as those for materials, shipping,

and storage is inherent in the act of “supply.” The Federal

Circuit’s acknowledgment that Microsoft saves such costs by

sending only a master version abroad for replication compels

the conclusion that there has been no “supply.”

It is both incorrect and insufficient to say, as the Federal

Circuit did, that “for software ‘components,’ the act of copy-

ing is subsumed in the act of ‘supplying,’ such that sending a

single copy abroad with the intent that it be replicated in-

vokes § 271(f) liability for those foreign-made copies.” Pet.

App. 6a. That ipse dixit simply assumes the answer to the

first question presented and reads out of the statute the lan-

guage providing that liability for “suppl{ying]” the compo-

nents of a patented invention “from the United States” can

attach only where “such components”-—that is, the same

components that are “supplie[d] ... from the United

States”—-are combined or intended to be combined overseas.

The Federal Circuit’s flawed reasoning also impermissibly

treats software products differently from all other products

that might be subject to Section 271(f).4

A simple example illustrates the absurdity of the Federal

Circuit’s approach. Suppose that a domestic manufacturer

sends a single shrimp deveining machine to its counterpart in

a foreign city. The foreign manufacturer then disassembles

the machine, creates a series of dies or molds, and copies

each of the components of the machine. The foreign manu-

facturer then assembles 100 machines entirely from the

foreign-made copies, and sells them to foreign buyers.

Would the domestic manufacturer have “supplie[¢! . . . from

the United States” the components of 100 shrimp deveining

machines? Of course not. Similarly, suppose that the do-

mestic manufacturer ships abroad the dies and molds, from

which the foreign manufacturer makes copies of all the parts.

The domestic manufacturer would not have “supplie{d] . . .

from the United States” each machine assembled from those

foreign-made parts. Finally, suppose that the domestic

manufacturer, rather than sending the actual machine, sends

the blueprints or design specifications for each of the parts to

his foreign counterpart. If the foreign manufacturer uses the

plans to make copies of all the parts, then assembles and sells

machines abroad, the domestic manufacturer certainly has

not “supplie[d]... from the United States” those foreign-

assembled machines.

4 The copyright laws demonstrate that the Federal Circuit was wrong

to conclude that the supply of an original subsumes all subsequently

made copies. Creators of computer programs have a number of exclusive

rights, including the right to prevent copying. 17 U.S.C. § 103. The

clusive rights, including by granting the owner of a copy of a computer

program the express authority to make additional copies in the installation

process or as backups. /d. § 117(a). If copying were truly a legally ir-

relevant activity subsumed in the act of supplying, these statutory excep-

tions to copyright holders’ exclusive rights would be unnecessary.

AT&T has conceded that “there is absolutely no indica-

tion that Congress meant to treat software . . . any differently

from any other components of patented inventions” for pur-

poses of Section 271(f). Second Supp. Cert. Br. 4; cf TRIPS

Agreement pt. II, § 5 (1994) (requiring signatories to “accord

the same treatment to all forms of invention”). If foreign-

made copies of the components of a shrimp deveining ma-

chine would not lead to infringement liability because the

copies are not supplied from the United States, as they obvi-

ously would not, then neither can a foreign-made copy of the

object code for the Windows operating system serve as the

predicate for a Section 271(f) violation. The Federal Cir-

cuit’s contrary conclusion, if sustained, would subject soft-

ware producers to a different, and far more unfavorable, re-

gime than applies to every other domestic business. Thus,

while AT&T criticizes Microsoft (and the United States) for

supposedly advocating a “software exception” to Section

271(f) (Second Supp. Cert. Br. 4), it is AT&T’s position that

would put software engineers on unequal footing.

2. To win this case, AT&T must show that Section

271(f) as enacted by Congress requires treating software dif-

ferently from the components of a shrimp deveining ma-

chine, such that foreign-made copies of the former can some-

how trigger liability while foreign-made copies of the latter

obviously cannot. This AT&T cannot do.

a. “Software” is a term frequently used but imperfectly

understood. It is common ground that software includes

“(t]he programs used to direct the operation of a computer.”

RANDOM HOUSE UNABRIDGED DICTIONARY 1814; see also

MICROSOFT COMPUTER DICTIONARY 489 (Sth ed. 2002) (de-

fining “software” as a “[c]omputer program[]; instructions

that make hardware work”). A computer program is a “set of

statements or instructions to be used directly or indirectly in a

computer in order to bring about a certain result.” 17 U.S.C.

§ 101; see also, e.g., Fantasy Sports Props., Inc. v. Sports-

line.com, Inc., 287 F.3d 1108, 1118 (Fed. Cir. 2002) (a com-

puter program is “a set of instructions, known as code, that

directs a computer to perform specified functions or opera-

tions”); UNITED STATES PATENT & TRADEMARK OFFICE,

MANUAL OF PATENT EXAMINATION PROCEDURE

§ 2106.01(1)(a) (rev. 8th ed. 2006) (“a computer program is

merely a set of instructions capable of being executed by a

computer’).

The-ultimate goal of a computer program is to instruct

the computer to perform a desired function. The program-

mers of the earliest computers had to physically rewire the

machine to perform each new function.» Today’s computer

programs instruct the computer to rewire itself. Such pro-

grams are originally written as “source code”—human-

readable commands to the computer—in a programming lan-

guage such as BASIC, FORTRAN, or C++. See Gates Rub-

ber Co. v. Bando Chem. Indus., Ltd., 9 F.3d 823, 835 (10th

Cir. 1993); see also ’580 patent, apps. A-D (Supp. J.A; 12-

15) (FORTRAN source code for computer program that

causes a computer to perform speech coding functions). To

make the instructions executable by a computer, source code

is run through a “compiler” that translates the human-

readable source code into computer-readable “object code,”

which is expressed in the digital binary language that can be

transliterated as “1’s” and “O’s.” Each digit represents an

instruction to the computer’s processor to open or close one

of its millions of switches. The object code is thus a set of

instructions for aligning a computer’s circuits in a particular

manner to achieve a particular functionality.

Antique player pianos employ technology comparable to

rudimentary software technology. A music roll for a player

piano has 88 columns—one for each of the 88 keys on a pi-

—— —~

5 To program ENIAC—a 30-ton computer built for the U.S. Army in

1943—technicians had to manually wire a series of switches in a precise

arrangement. It took two days to set up a program ENIAC could execute

in approximately two seconds. WHITE, supra, at 6.

ano. A perforation in a particular column causes the player

piano to depress the corresponding key and strike the corre-

sponding strings. See generally White-Smith Music Pudl’g

Co. v. Apollo Co., 209 U.S. 1, 9-10 (1908) (copyright case

describing the mechanics of a player piano). The player pi-

ano roll is software for player piano hardware; it is a set of

instru >tions, readable and executable by the hardware, to per-

form a certain function—the physical production of a piece

of music. Technicians transcribed musical compositions into

the machine-readable piano roll format—i.e., wrote the soft-

ware—either by reading sheet music and manually punching

holes into a master template, or playing the composition on a

piano modified with a device that produced a perforated ma-

trix from which a master template could be made. Jd. at 10-

11 (“persons skilled in the art can take such pieces of sheet

music in staff notation, and by means of the proper instru-

ments make drawings indicating the perforations, which are

afterwards outlined and cut upon the rolls in such wise as to

reproduce, with the aid of the other mechanism, the music

which is recorded in the copyrighted sheets”’).

Analytically similar punch-card technology also played

an important role in the history of computing. At its core, a

computer is simply a conglomeration of on/off switches. See

RON WHITE, HOW COMPUTERS WoRK 53 (8th ed. 2006)

(“The easiest way to visualize how computers work is to

think of them as enormous collections of switches”). The

once-ubiquitous 80-column cards pioneered by IBM con-

tained series of “punches” that, read by a computer in se-

quence, instructed the computer’s processor either to keep its

switches in their existing state (no punch) or to change state

(punch). See Dale Fisk, Programming with Punched Cards 1

(2005), at http://www.columbia.edu/acis/history/fisk.pdf.

“(T]he punch cards [we]re fed into the computer, the infor-

mation contained thereon [wals recorded in the inner opera-

tions of the machine; at the completion of the process the

computer [wa]s programmed.” District of Columbia v. Uni-

versal Computer Assocs., Inc., 465 F.2d 615, 617 (D.C. Cir.

1972).

Although the technology has advanced, the methodology

fundamentally remains the same. Rather than holes in punch

cards, CDs and DVDs store the commands to open or close a

computer’s internal switches in the form of a series of pits

(indentations) and lands (the areas between the pits); hard

drives store those commands by aligning pairs of bands of

magnetically charged particles in either the same or opposite

polarity. WHITE, supra, at 144-45. Each pit and land on a

CD-ROM, and each pair of magnetically charged bands on a

hard drive, represents a bit—in the binary digital language of

computers, a “1” or a “O”. Different patterns of bits corre-

spond to different -ommands to the machine. The instruc-

tions embodied in the pits and lands of a CD-ROM or the

magnetically charged particles on a hard disk platter (soft-

ware) control the operations of the computer (hardware) by

directing switches to open or close. It is the “opening and

closing of the interconnected switches” that “creates electri-

cal paths . . . that cause (the computer] to perform the desired

function.” WMS Gaming Inc. v. Int'l Game Tech., 184 F.3d

1339, 1348 n.3 (Fed. Cir. 1999). Today’s personal com-

puters possess microprocessors—-less than a square centime-

ter in size—that contain more than 150 million switches and

can perform up to two billion operations per second.

b. The stipulation that AT&T signed in this case clearly

states that foreign manufacturers “make . . . copies of the ob-

ject code for the Windows operating system (created from

the golden master disks and/or electronically transmitted

software code)” and “install those copies. onto computer

hardware.” Pet. App. 46a {| 9 (emphases added). AT&T has

argued that the copies of Windows at issue in this case, while

concededly made in a foreign country, are “nevertheless sup-

plied from the United States” because “[t]he very same zeros

and ones created in the U.S. by Microsoft programmers are

_ installed on the foreign computers.” Br. in Opp. to Pet. for

Cert. 17-18. That formulation misstates the issue in this case.

AT&T’s position-that the copies are the “very same” as

the master contravenes AT&T’s Own theory of liability.

AT&T disregards the fact that it is attempting to hold Micro-

soft liable for each device that practices its patented inven-

tion—i.e., for each foreign-made computer on which a

foreign-made copy of Windows has been installed. Because

AT&T is seeking to premise Section 271(f) liability on each

of those physical embodiments of the code, AT&T is wrong

_ to assert that the “issue is not whether Microsoft supplied

each of the individual physical containers in which that code

is stored.” Second Supp. Cert. Br. 4 (emphasis omitted).

That is precisely the issue in this case. If it were not, Micro-

soft would be liable, at most, for a single act of infringement

for each master version shipped overseas, rather than being

confronted with the prospect of staggering liability for each

of the tens of millions of foreign-produced copies.

Moreover, AT&T’s contention that the copies contain

the “very same” 1’s and 0’s as the master contradicts the

laws of physics. Neither the golden master disks nor the en-

crypted transmissions contain any |’s and 0’s at all. Rather,

they contain pits and lands (on the disk) or electromagnetic

impulses (in the transmission) describing a binary sequence

that can be transliterated as 1’s and 0’s. When the sequence

is copied, a new sequence of binary instructions is physically

scrivened into the recipient storage medium. The object code

is virtually identical to that found on the master version; but

it is not the “very same” as the master. The golden master

disks and electronic transmissions are analogous to the “glass

master” disks commonly used in the replication of CDs and

DVDs. In the process of glass mastering, the manufacturer

creates a template that is the physical inverse of the CD or

DVD; where the original CD has pits, the glass master has

lands. The glass master disk is then used to stamp out physi-

cal inversions of itself, which is to say, copies of the original.

See Optical Disc Corp. v. Del Mar Avionics, 208 F.3d 1324,

1325-26 (Fed. Cir. 2000). While they are identical, they are

not the “very same.” That foreign manufacturers copy the

object code digitally rather than mechanically (as it would

have been if Microsoft shipped glass master disks rather than

golden master disks) is irrelevant.

Indeed, when object code is copied from a CD-ROM and

installed on a foreign computer’s hard drive, the resulting

copy is not the “same” as the master at all; it is physically

different and obviously so. On a CD-ROM, the computer

program instructions are encoded in the form of pits and

lands; on the surface of a hard disk platter in a hard drive, the

instructions are embodied in the form of pairs of bands of

iron particles that are aligned in the same (for 0’s) or oppo-

site (for 1°s) polarity. See WHITE, supra, at 144-45, 172-73.

The flaws in AT&T’s analysis are evident when one

considers the identical question in the context of yesterday’s

technology. Suppose Microsoft compiled the object code for

Windows and stored it, not on CDs or other modern media,

but on 80-column IBM punch cards. The resultant deck of

object cards could be run through a computer (equipped with

a suitable card reader) to, inter alia, practice AT&T’s

claimed invention. If Microsoft shipped the object deck to a

foreign manufacturer, who in turn made 100 copies of the

object deck and bundled those copies with 100 foreign-made

computers for sale to 100 foreign end-users, would Microsoft

have committed 100 acts of infringement under Section

271(f)? The answer is clearly no, because the copies were

not supplied from the United States; and the same answer

holds if the object code is transmitted via golden master disk

or electronic transmission.

Indeed, it would be possible (although far from practical)

to write out the object code for Windows longhand, as a lit-

eral series of 1’s and 0’s. Suppose Microsoft were to do so,

and then ship the stack of paper to a foreign manufacturer,

who in turn enters each digit manually into a computer that

produces disks containing machine-readable copies of the

code. Under AT&T’s theory, because each disk contains the

“very same |s and Os” as the original manuscript, the domes-

tic author has “supplied” each copy from the United States.

But neither law nor logic will support such a conclusion.

And if the theory does not hold for the manuscript original, it

equally cannot hold for the originals transmitted via golden

master disk or electronic transmission.®

“[W]here, as here, the statute’s language is plain, the

sole function of the courts is to enforce it according to its

terms.” United States v. Ron Pair Enters., Inc., 489 U.S.

235, 241 (1989) (internal quotation marks omitted). The lan-

guage of Section 271(f) is very clear: It imposes infringe-

ment liability only on those who “supply or cause to be sup-

plied in or from the United States” the component of a pat-

ented invention. Microsoft has supplied no such component:

The copies of Windows at issue were made in foreign coun-

tries, not supplied from the United States. Enforcing the

statute according to its terms requires reversal of the decision

below.

B. Traditional Principles Of Statutory

Construction Prohibit The Extension Of

Section 271(f) To Foreign-Made Copies

1. The expansive reading of Section 271(f) urged by

AT&T and accepted by the Federal Circuit majority turns a

blind eye to the objectives that Congress sought to accom-

plish when enacting that provision, and would (if accepted)

6 Of course, the manuscript and the punch cards in these examples—

like any other recordation of the Windows object code, including the

golden master disks—-would be protected by the copyright laws. See,

e.g., Lexmark Int'l, Inc. v. Static Control Components, Inc., 387 F.3d

522, 533 (6th Cir. 2004). The legality of extraterritorial copying under

those laws is not at issue in this case.

constitute a judicial arrogation of authority properly reserved

to Congress.

In order to close the patent-law “loophole” identified by

the Court in Deepsouth, Section 271(f) imposes a narrow

limitation on the right of American companies to compete

overseas with U.S. patent holders by supplying components

from the United States. Under Section 271(f), “a product’s

patent cannot be avoided through the manufacture of compo-

nent parts within the United States for assembly outside the

United States.” 130 Cong. Rec. H12,231 (Oct. 11, 1984)

(statement of Rep. Kastenmeier) (emphasis added). Because

the foreign-duplicated copies of Windows object code are not

“manufacture[d] ... within the United States,” they do not

fall within the ambit of Section 271(f).

Section 271(f) was not designed to prohibit a U.S. com-

pany from exporting a single master version of a component

of a patented invention even if a foreign manufacturer made

copies of that component for final assembly outside of the

United States. Congress did not intend, for example, to pro-

hibit the defendant in Deepsouth from supplying templates or

prototypes that would allow the duplication of component

parts of a shrimp deveining machine in foreign countries. If

it had intended to reach such conduct, Congress could have

added language to Section 271(f) declaring it an act of in-

fringement to “make a component of a patented invention

outside of the United States,” or to “suppl[y] from the United

States” the design specifications required to make the copies

overseas. In combination with the enacted text of Section

271(f), such language would have facilitated the imposition

of liability whenever an unauthorized component of a pat-

ented invention—manufactured overseas or in the United

States—could be traced back to a U.S. company. The ab-

sence of such language is fatal to AT&T’s case.

In holding that Section 271(f) applies to foreign-

manufactured copies of object code, the Federal Circuit ac-

knowledged that it was seeking to account for “advances in a

field of technology . . . that developed after the enactment of

§ 271(f).” Pet. App. 10a (emphasis added); see also ibid.

(“Section 271(f), if it is to remain effective, must therefore be

interpreted in a manner that is appropriate to the nature of the

technology at issue”). The Federal Circuit attempted to jus-

tify its rewriting of the statute by speculating that “[t]o decide

otherwise would emasculate § 271(f) for software inven-

tions.” Jd. at 6a n.2. But Congress is well aware that copies

as well as originals may be supplied and that the copying of

various products other than software—including pharmaceu-

ticals—can be accomplished with relative ease. Congress

has expressly specified where it intends a statute to reach the

supply of such copies. See, e.g., 35 U.S.C. § 12 (“The Direc-

tor may supply copies of specifications and drawings of pat-

ents and published applications for patents in printed or elec-

tronic form to public libraries in the United States which

shall maintain such copies for the use of the public”). In Sec-

tion 271(f), however, Congress made no mention of copies;

rather, it prohibited the supply of “components” where “such

components”—-that is, the originals—may be combined over-

seas.

Moreover, the Federal Circuit is wrong to suggest that

the adoption of Microsoft’s arguments would exempt all

software inventions from the scope of Section 271(f). U.S.

companies distribute software to foreign markets in a number

of different ways, many of which could implicate Section

271(f). For example, while Section 271(f) does noi reach

foreign-produced copies of object code duplicated from a

U.S.-designed original, it would likely apply to a U.S. com-

pany that exported domestically produced software-encoded

disks Or microchips intending that foreign manufacturers or

users incorporate those same disks or microchips into a com-

puter system. Under such a distribution model, the software

company might have induced the overseas combination of a

component it “supplie{d] ... from the United States.” The

Federal Circuit’s concerns about the “emasculat[ion]” of Sec-

tion 271(f) are therefore decidedly ill-founded.

When the Federal Circuit took it upon itself to ensure

that Section 271(f) “remain{s] effective,” Pet. App. 10a, it

arrogated to itself a legislative role that properly rests with

Congress. Indeed, this Court has expressly rejected judicial

efforts to rewrite the text of existing patent laws to cover

technologies not expressly regulated by Congress. “It is our

duty to construe the patent statutes as they now read, in light

of our prior precedents, and we must proceed cautiously

when we are asked to extend patent rights into areas wholly

unforeseen by Congress.” Parker v. Flook, 437 U.S. 584,

' 596 (1978) (emphasis added); see also id. at 595 (“Difficult

questions of policy concerning the kinds of programs that

may be appropriate for patent protection and the form and

duration of such protection can be answered by Congress on

the basis of current empirical data not equally available to

this tribunal’) (footnote omitted); Brown v. Duchesne, 60

U.S. (19 How.) 183, 197 (1857) (patent laws “should not be

strained by technical constructions to reach cases which

Congress evidently could not have contemplated”).

This case provides the ideal vehicle to remind the Fed-

eral Circuit that it is not the Judiciary but Congress that is the

appropriate branch of the federal government to decide

whether existing laws should be modified to take account of

technological changes. See Deepsouth, 406 U.S. at 530.’

Unless and until Congress amends the existing patent laws,

courts must treat software products like any other products of

manufacture. If copies are made in and exported from the

United States, they may be subject to Section 271(f); if they

are made overseas, they are not. That simple principle,

7 In this regard, it is telling that Congress is currently considering a bill

to repeal—not expand-—-Section 271(f). See Patent Reform Act of 2006,

S. 3818, 109th Cong. § 5(f) (2006).

which follows from the plain language of the statute, is all

that is necessary to decide this case.

2. Any conceivable doubt about whether Section 271(f)

reaches foreign-manufactured components is completely dis-

pelled by the presumption against the extraterritorial applica-

tion of U.S. law.

It is a “longstanding principle of American law that leg-

islation of Congress, unless a contrary intent appears, is

meant to apply only within the territorial jurisdiction of the

United States.” EEOC v. Arabian Am. Oil Co., 499 U.S.

244, 248 (1991) (internal quotation marks omitted). This

presumption against extraterritoriality is grounded in comity

considerations and “serves to protect against unintended

clashes between our laws and those of other nations which

could result in international discord.” /bid. The presumption

also reflects the fact that the legislative and executive

branches are far better equipped than the judiciary to evaluate

the complex foreign policy considerations raised by the ex-

traterritorial application of U.S. law. Indeed, decisions af-

fecting international relations are “of a kind for which the

Judiciary has neither aptitude, facilities nor responsibility.”

Chicago & S. Air Lines, Inc. v. Waterman S.S. Corp., 333

U.S. 103, 111 (1948).

Because of these comity considerations and separation-

of-powers concerns, courts will not construe a U.S. law as

encompassing foreign conduct “unless ... the affirmative

intention of the Congress” to apply a law extraterritorially is

“clearly expressed” in the statutory language. Arabian Am.

Oil Co., 499 U.S. at 248 (internal quotation marks omitted).

Indeed, even if the more natural reading of the statute en-

compasses foreign activity, as long as “the statute’s language

reasonably permits an interpretation consistent with” the

general presumption that Congress seeks to avoid interfer-

ence with other nations’ sovereignty, a court “should adopt

it.” F. Hoffman-La Roche Ltd. v. Empagran S.A., 542 U.S.

155, 174 (2004).

The presumption against the extraterritorial application

of U.S. law is especially strong in the patent context because

the application of U.S. patent law to foreign commercial ac-

tivity intrudes upon other nations’ intellectual property law

systems and thereby creates a significant risk of international

discord. This Court has thus long recognized that U.S. patent

laws generally are “not intended to[] operate beyond the lim-

its of the United States.” Brown, 60 U.S. (19 How.) at 195;

see also 35 U.S.C. § 154(a)(1) (“Every patent shall . . . grant

to the patentee ... the right to exclude others from making

... or selling the invention throughout the United States’’)

(emphasis added); id. § 271(a) (“whoever without authority

makes, uses, offers to sell, or sells any patented invention,

within the United States, . . . infringes the patent”) (emphasis

added). Indeed, this Court has recognized that, because U.S.

patent law is territorially limited, it does not prohibit a pat-

entee’s competitors, in overseas markets, from duplicating or

reverse-engineering inventions patented in the United States,

or assembling such inventions from foreign-manufactured

component parts. See Dowagiac Mfg. Co. v. Minn. Moline

Plow Co., 235 U.S. 641, 650 (1915) (concluding that a de-

fendant could not be held liable under U.S. law for making

unauthorized sales of patented inventions in Canada).8

8 Although U.S. law does not protect U.S. patent holders from over-

seas activities, they are not without recourse against foreign competition.

U.S. patent holders are able to seek protection for their intellectual prop-

erty under foreign patent law and to invoke these foreign legal remedies

in response to foreign acts of infringement. The Federal Circuit expressly

stated that it would take no account of foreign patent laws. Pet. App. 6a-

7an.2. But AT&T holds patents on its Digital Speech Coder in Canada,

France, Germany, Great Britain, Japan, and Sweden. C.A. J.A. 1477.

Extending Section 271(f) to reach foreign-produced copies of the Win-

dows operating system would not only displace the infringement reme-

dies that AT&T may have under those countries’ laws, but create the sub-

AT&T has maintained that the presumption against ex-

traterritoriality should not be applied here because Section

271(f} “was enacted for the sole and express purpose of ad-

dressing the interplay between U.S. and foreign law.” Sec-

ond Supp. Cert. Br. 6. But in so doing, Congress did not

mark out an exception to the territorial limitations of the Pat-

ent Act. To the contrary, in responding to Deepsouth, Con-

gress expanded the scope of infringing acts to include addi-

tional activity that occurs entirely within the United States—

that is, “suppl[ying] or caus[ing] to be supplied in or from the

United States.” 35 U.S.C. §271(f)(1) (emphasis added).

The prohibited activity—supplying components “in or from”

this country—is entirely domestic; Section 271(f) as enacted

by Congress thus has no extraterritorial effect. Waymark

Corp. v. Porta Sys. Corp., 245 F.3d 1364, 1368 (Fed. Cir.

2001).

The Federal Circuit’s decision in this case, however,

would impermissibly give Section 271(f) extraterritorial ef-

fect by extending infringement liability to conduct—the mak-

ing of copies overseas—that occurs entirely on foreign soil.

Pet. App. 12a (Rader, J., dissenting). Section 271(f) prohib-

its domestic companies from inducing foreigners to assemble

infringing devices (by “combin[ing]” “components” shipped

from the United States); it does not prohibit a domestic com-

pany from inducing the manufacture of components overseas.

Thus, there is an important difference between engineering

and manufacturing. Microsoft's engineers design computer

programs in the United States; but Microsoft relies on other

companies, both domestic and foreign, to manufacture the

[Footnote continued from previous page]

stantial risk of overlapping and duplicative liability for the same conduct.

In contravention of the firm territorial restrictions on U.S. patent law, the

Federal Circuit’s approach would effectively transform the Patent Act

into a supranational! body of intellectual property law. See Pet. App. 18a

(Rader, J., dissenting).

physical media by which Microsoft software is delivered to

end-users. Where, as here, the copies are made in a foreign

country, imposing infringement liability for that overseas ac-

tivity would be an extraterritorial application of the statute.

It therefore runs counter to the rule that the statute should be

construed to avoid such extraterritorial application. Empa-

gran S.A., 542 U.S. at 174.

AT&T has responded that “Microsoft has been held li-

able not for conduct performed abroad, but for conduct per-

formed in the United States with the knowledge that the con-

duct may have particular consequences abroad.” Second

Supp. Cert. Br. 5. To be sure, Microsoft knows that foreign

manufacturers will use the golden master disks and encrypted

transmissions to make copies of the Windows object code;

but those copies are made overseas. Section 271(f) does not

make it an act of infringement to make overseas copies (or

assemble devices overseas). Rather, the infringing act is

supplying components from the United States. The “conduct

performed [by Microsoft] in the United States” did not in-

clude supplying foreign-manufactured components; the Fed-

eral Circuit’s contrary conclusion transgresses the presump-

tion against extraterritoriality.

Il. WHAT MIcrRosortT Dip SupPLY FROM THE UNITED

STATES WERE NOT COMPONENTS OF A PATENTED

INVENTION COMBINED ABROAD

Rather than the “machine-readable object code” that the

parties stipulated was the applicable “component” in this

case—or, as AT&T put it in its brief to the Federal Circuit,

“the actual object code that causes the computers to operate,”

the “functional, operational, useful and patentable software,”

Resp. C.A. Br. 13, 35 (emphasis omitted)--AT&T now as-

serts that it is the computer programming instructions them-

selves, in the abstract—‘intangible 1s and Os,” “a binary se-

quence of numbers that ‘lacks physical existence’”—that is

the “‘component’ at issue.” Second Supp. Cert. Br. 1, 4.

This duck-and-dodge tactic fails here for two reasons: First,

whatever its briefs might next assert is the “‘component’ at

issue,” AT&T is bound by the facts to which the parties

stipulated below. There, AT&T “agree[d] that, other than the

‘golden master disks’ and the encrypted transmissions of

Windows object code, Microsoft does not supply any ‘com-

ponent’ from the United States for assembly abroad.” Pet.

App. 47a 4 10. But even if this Court could disregard those

stipulated facts—and clearly, it cannot—the abstract “se-

quence of numbers” AT&T now claims is “at issue” is nei-

ther a component of AT&T’s patented invention, nor could it

be under Section 271(f).

A. Under The Parties’ Stipulation, The Physical

Media At Issue In This Case Are Not

“Components” Of A Patented Invention

In the district court, the parties framed the second ques-

tion presented thusly: “AT&T alleges, and Microsoft dis-

putes, that the ‘golden master disks’ and the encrypted

transmissions of Windows object code constitute ‘compo-

nents’ within the meaning of 35 U.S.C. 271(f).” Pet. App.

46a 410. The parties further “agree[d] that, other than the

‘golden master disks’ and the encrypted transmissions of

Windows object code, Microsoft does not supply any ‘com-

ponent’ from the United States for assembly abroad.” Jd. at

47a 4 10 (emphasis added).

Thus, to resolve this case, the Court need not decide

whether software can ever be a “component of a patented in-

vention” within the meaning of Section 271(f).2 The Court

9 Microsoft does not contend that “software” can never be a compo-

nent of a patented invention. In fact, Microsoft agrees with the United

States (U.S. Cert. Br. 8) that physical media containing the machine-

readable object code, combined with a general purpose computer to per-

form the functions of a special purpose speech coding device, could con-

stitute a component of AT&T’s Digital Speech Coder invention. See also

Resp. C.A. Br. 28. The Microsoft patents to which AT&T has pointed

need only decide the much narrower question whether the

two things that Microsoft actually supplied from the United

States—the golden master disks and the encrypted electronic

transmissions—constitute “components” of the foreign-

assembled computers that allegedly infringe upon AT&T’s

patented speech coder invention. That question must be an-

swered in the negative.

Liability attaches under Section 271(f) where a person

supplies the “components of a patented invention” from the

United States and “induce[s] the combination of such com-

ponents” in a manner that would infringe a U.S. patent if

done domestically. 35 U.S.C. §271(f)(1); see also id.

§ 271(f)(2) (the defendant must “intend{] that such compo-

nent will be combined”). A “component” is “a constituent

part” or “ingredient” of something else. RANDOM HOUSE

UNABRIDGED DICTIONARY 419. It is undisputed, however,

that neither the golden master disks nor the master code they

contain was ever installed on a computer that was sold. In-

deed, the parties stipulated that they were not. Pet. App. 45a

45. Likewise, neither the electronic transmissions nor the

machine-readable code they store was ever installed on a

computer that was sold. See id. at 46a 47. Only foreign-

made “copies” of the object code for the Windows operating

system were installed on the foreign computers. /d. at 46a

"| 7, 9. Of course, as discussed above, those foreign-made

copies are not “supplie[d] . . . from the United States.”

Under these stipulated facts, the golden master disks and

electronic transmissions themselves —the only alleged “com-

ponents” at issue under the stipulation in this case—cannot

be “components of a patented invention” under Section

[Footnote continued from previous page]

(Br. in Opp. to Pet. for Cert. 14) refer to “software components” in pre-

cisely that sense. See Supp. J.A. 29, 50, 62. No such component, how-

ever, is supplied by Microsoft from the United States on the stipulated

facts of this case.

271(f) because they were never (and were never intended to

be) “combin{fed]” with other components in a manner that

infringes upon AT&T’s patent. The disks and transmissions

were never integrated (or intended to be integrated) into the

foreign-assembled computers that allegedly infringe AT&T’s

patent and therefore are not “constituent parts” of those com-

puters. Just as a mold or die used to produce copies of one of

the parts of a shrimp deveining machine would not be a

“component”—a constituent part—of the assembled ma-

chines, the master disks used to produce copies of Micro-

soft’s Windows software—whether glass or “golden”—are

not components of the computers onto which those copies are

installed. They are templates that are themselves never in-

tended to be combined in-a computer apparatus, and thus

cannot be “components of a patented invention” within the

meaning of Section 271(f).!®

10 That design templates are not statutory components is confirmed by

the legislative history of Section 271(f). Congress explained that Section

271(f) was a response to this Court’s Deepsouth decision that “prevent[s]

copiers from avoiding U.S. patents by supplying components of a pat-

ented product in this country so that the assembly of the components may

be completed abroad.” 130 Cong. Rec. H10,525 (Oct. 1, 1984) (emphasis

added); 130 Cong. Rec. H12,231 (Oct. 11, 1984) (statement of Rep. Kas-

tenmeier) (“a product’s patent cannot be avoided through the manufacture

of component parts within the United States for assembly outside the

United States”) (emphasis added). The legislative history’s emphasis on

the “assembly” of components and on Deepsouth indicates that Congress

was concerned with the specific facts of Deepsouth when enacting Sec-

tion 271(f)}—the shipment overseas of the constituent parts of an inven-

tion and the final assembly of those same constituent parts overseas—not

with the export of templates used by foreign companies to manufacture

an invention’s parts.

B. A “Binary Sequence Of Numbers That Lacks

Physical Existence” Cannot Be A

“Component Of A Patented Invention”

Under Section 271(f)

Apparently recognizing that the golden master disks and

the encrypted transmissions are not “components of a pat-

ented invention,” AT&T argues in this Court that the infor-

mation conveyed via those media—“the Windows object

code, a binary sequence of numbers that ‘lacks physical exis-

tence’”—is the relevant “component.” Second Supp. Cert.

Br. 4. This argument contravenes the stipulation that AT&T

signed in the district court, which unequivocally states that

“other than the ‘golden master disks’ and the encrypted trans-

missions ... Microsoft does not supply any “component.”

Pet. App. 47a 4 10. It is also an about-face from the position

that AT&T took in the court of appeals, where it disclaimed

any contention that “Microsoft’s provision of ‘information,’”

or “product designs,” constituted an infringing act under Sec-

tion 271(f). Resp. C.A. Br. 12-13, 34-35; see also Br. in

Opp. to Pet. for Cert. 16 (arguing that “software is not ‘in-

formation’”’).

Microsoft agrees with the United States that the com-

puter-readable and -executable “software copy that is actu-

ally loaded onto [a] computer[]” may be a “component of a

patented invention” under Section 271(f). U.S. Cert. Br. 8;

see note 9, supra. Indeed, Microsoft acknowledged in the

district court that the exportation of individual copies of

physical media containing computer programs to be executed

on a foreign-manufactured computer (as opposed to a single

golden master disk) might give rise to liability under Section

271(f). J.A. 26; see also Cert. Reply Br. 7 n.4.!!

11 For such liability to attach, the exporter would have to intend or ex-

pect that the end-user would run the computer program directly from the

U.S.-supplied disk, rather than from a copy made in a foreign country.

See note 2, supra. For example, many video game systems require that

Contrary to AT&T’s latest theory, however, a “binary

sequence of numbers that ‘lacks physical existence’” is not a

“component” under the statute, for two related reasons.

First, such a digital sequence is design information, analo-

gous to product specifications, or a recipe; while that infor-

mation can be used to make products, machines, or speech

coding devices (and is so used by foreign manufacturers), the

design information is not itself a component of the manufac-

tured device. Second, a digital sequence “that ‘lacks physical

existence’” is incapable of being “combined” with other

components (e.g., a general purpose computer, a microphone,

and a speaker) to practice the invention. Such a digital se-

quence can direct a general purpose computer to function as

the device claimed in the patent only when it is readable and

executable by a computer. A digital sequence that exists

only in the ether is neither.

1. Uncoupled from any computer-readable medium, ob-

ject code—what AT&T now calls a “binary sequence of

numbers that ‘lacks physical existence’”’—is simply design

information. It is a set of instructions directing the com-

puter’s microprocessor to open or close one of its millions of

switches and align its circuits in a particular manner. Object

code thus can instruct a general purpose computer to alter its

circuitry to become a special purpose computer (including a

digital speech coder device). See In re Alappat, 33 F.3d

1526, 1545 (Fed. Cir. 1994) (en banc).

What differentiates object code from other types of de-

sign information is that object code is readable and executa-

ble by a computer. But stripped of that key characteristic—

as an abstract “binary sequence of numbers” most surely is—

object code is just instructions for doing something, no dif-

[Footnote continued from previous page]

the disk containing the game be physically present in the machine for the

program to run.

ferent from the design instructions one may glean from blue-

prints, recipes, computer program listings, and patents.

Those instructions are not “components” of the finished pro-

ducts to which they pertain.

Section 271(f) applies in the situation where “everything

was accomplished in this country except putting the pieces

together as directed.” Deepsouth, 406 U.S. at 533 (Black-

mun, J., dissenting). Congress specifically addressed the

“pieces” (components); but it did not prohibit the supply of

“direct[ions}.” Thus, if a manufacturer sends abroad all of

the parts of a shrimp deveining machine with assembly in-

structions, it has violated Section 271(f); but if the manufac-

turer sends to its foreign counterparts on/y the instructions,

with the expectation that the parts will be produced and as-

sembled abroad, there is no infringement. Pellegrini, 375

F.3d at 1118.

In Pellegrini, the Federal Circuit correctly held that a

domestic manufacturer was not liable under Section 271(f)

for sending foreign manufacturers the design specifications

for an allegedly infringing circuit chip. The court explained

that the U.S. manufacturer had not “supplie[d]” a “compo-

nent” of the chip from the United States because Section

271(f) “refers to physical supply of components, not simply

to the supply of instructions” used to fabricate a patented de-

vice overseas. 375 F.3d at 1118.

In Eolas Technologies Inc. v. Microsoft Corp., 399 F.3d

1325 (Fed. Cir.), cert. denied, 126 S. Ct. 568 (2005), how-

ever, the Federal Circuit erroneously concluded that master

code conveyed overseas via golden master disk “is much

more than a prototype, mold, or detailed set of instructions.”

Id. at 1339. This was so, according to the Eolas court, be-

cause unless “[e]xact duplicates of the software code on the

golden master disk are incorporated as an operating element

of the ultimate device,” “the invention would not work at

all.” /bid. But that reasoning shows only that the foreign-

produced, computer-readable and “‘opera[ble}” copies of the

Windows code might be components; it says nothing at all

about whether the master code from which those copies are

produced (or, for that matter, an abstract sequence of digits in

the ether) can also be considered a component.!2 If a pat-

ented shrimp deveining machine will not work without a par-

ticular part, that part might well be a statutory component;

but the design specifications for that part—which allow pro-

duction of it and assembly of the patented invention over-

seas—are not themselves components. Likewise, contrary to

the Eolas court’s entirely unsupported non sequitur, the mas-

ter Windows code here operates as nothing other than a “de-

tailed set of instructions” for the overseas fabrication of a

special purpose computer; it cannot be considered a “compo-

nent” of that special purpose computer.

In the decision below, the Federal Circuit said that “what

is being supplied abroad is an actual component, i.e., the

Windows operating system, that is ready for installation on a

computer to form an infringing apparatus—not instructions

to foreign software engineers for designing and coding Win-

dows.” Pet. App. 8a. This statement is at war with the par-

ties’ stipulation, which explains that the object code stored on

the golden master disks, “ready” or not, is “never installed on

a computer that is then sold.” /d. at 45a 45. Rather, the in-

fringing apparatus is “form[ed]” only by the installation of a

copy of Windows made by the foreign manufacturer pursuant

to the instructions embodied in the master version. /d. at 46a

47. The “binary sequence of numbers that ‘lacks physical

\2 In fact, Eolas strongly suggests that an abstract digital sequence can-

not be a component of a patented device. Eolas took pains to emphasize

that the claimed component was “‘computer readable program code.”

399 F.3d at 1339. Computers lack the capability to read and interpret a

“binary sequence of numbers that ‘lacks physical existence."” Second

Supp. Cert. Br. 4. Such a sequence must be recorded on a physical me-

dium, like a disk, to be readable and executable by a general purpose

computer. See U.S. Cert. Br. 9.

existence’” now cited by AT&T constitutes, at most, abstract

design instructions and cannot itself be viewed as a compo-

nent of AT&T’s patented invention. !3

2. Moreover, AT&T’s theory that a “binary sequence of

numbers that ‘lacks physical existence’” can be a “compo-

nent” under Section 271(f) cannot be reconciled with the text

of the statute. As discussed above, a “component” is “a con-

stituent part” or “ingredient.” RANDOM HOUSE UNABRIDGED

DICTIONARY 419. In a patented cake, the sugar, eggs, and

flour would be “components”; but the recipe (assembly in-

structions) clearly would not be. And likewise, abstract in-

structions floating in the ether, which are neither readable nor

executable by a computer, cannot constitute a component of a

programmed-computer invention. To return to the player

piano, the “perforated rolls” constitute “component parts of a

machine which executed the composition.” Goldstein v.

California, 412 U.S. 546, 565 (1973). But the pattern of per-

forations (a “binary sequence of numbers that ‘lacks physical

existence”) is not such a component.

13 Indeed, AT&T’s own patent compels this conclusion. The apparatus

claims of the ’580 patent are uniformly stated in means-plus-function

format. See, ¢.g., "580 patent, cols. 23-24 (Supp. J.A. 19) (“Apparatus for

producing speech message comprising: means for receiving ... means

for converting ... and means jointiy responsive’’) (italics omitted). See

generally SA DONALD S. CHISUM, CHISUM ON PATENTS § 18.03{5]

(2005) (discussing means-plus-function specification of patent claims).

The patent laws provide that claims written in such means-plus-function

format “shall be construed to cover the corresponding structure, material,

or acts described in the specification.” 35 U.S.C. § 112 46. Claims writ-

ten in such language do not, by force of law, “cover” essential nonphysi-

cal predicates to the invention, such as its design. See, e.g., Symbol

Techs., Inc. v. Opticon, Inc., 935 F.2d 1569, 1575 (Fed. Cir. 1991) (“the

scope of such a claim is not limitless, but is confined to structures ex-

pressly disclosed in the specification and corresponding equivalents”)

(emphasis added).

Section 271(f) requires the “combination” of compo-

nents. “Combine” means to “join in a close union” or to

“unite.” RANDOM HOUSE UNABRIDGED DICTIONARY 408; see

also Deepsouth, 406 U.S. at 528 (defining “combination” as

“union of elements”). Just as one cannot unite a recipe and

an egg, a “binary sequence of numbers that ‘lacks physical

existence’” cannot be joined physically with anything. And,

in fact, the object code supplied on the golden master disks is

not “combined” with other components to practice the pat-

ented invention. The foreign-made, computer-readable cop-

ies are; but the statute applies only to combinations involving

the original component shipped overseas.” See 35 U.S.C.

§ 271(f)(1) (prohibiting the supply of components “in such

manner as to actively induce the combination of such com-

ponents”) (emphasis added).

Moreover, abstract design information like an accused

nonphysical sequence of numbers cannot be “supplie[d] .. .

from the United States” as Section 271(f) requires. To be

sure, it is possible to “supply” “information.” See, e.g., 26

U.S.C. § 7203 (prohibiting the willful failure to “supply any

information” required by tax laws and regulations). But be-

fore information can be “supplied,” i.e., provided or fur-

nished, it first must be reduced to some physical format, be it

a piece of paper, an electromagnetic impulse, or a radio

wave. Abstract information that “lacks physical existence” is

not susceptible to transmission. More than that, until infor-

mation is given a physical manifestation, it is impossible to

determine the location from which it is supplied. Information

cannot be supplied from the United States if it is never physi-

cally present in the United States. See Pellegrini, 375 F.3d at

1118.14

14 The implied requirement that a “component” be physical in nature is

further supported by other uses of the term “component” in Section 271.

Section 27 1(g)}—the companion provision to Section 271(f) that prohibits

the importation into the United States of products manufactured overseas

Still, though, the mere fact that design information has

been reduced to a physical format does not necessarily mean

that it is a component that may be combined with other com-

ponents into a patented invention. The fact that a recipe for a

patented cake is printed on paper does not remotely suggest

that the paper may be combined with eggs, flour, and sugar

to become part of the cake. Accordingly, AT&T conceded

below that “a printed copy of program source code” could

not be a component because “it lacks practical application

until it is put in a form that a computer can actually use.”

Resp. C.A. Br. 34-35. Similarly, a manuscript copy of the

Windows object code could not be a component because it

could not be read or execused by a general purpose computer.

And it necessarily follows that a “binary sequence of num-

bers that ‘lacks physical existence’” cannot be a component,

because, like the source code manuscript, such an abstract

[Footnote continued from previous page]

using a process patented under U.S. law—provides that “[a] product

which is made by a patented process will, for purposes of this title, not be

considered to be so made after . . . it becomes a trivial and nonessential

component of another product.” 35 U.S.C. § 271(g) (emphases added).

In Bayer AG v. Housey Pharms., Inc., 340 F.3d 1367 (Fed. Cir. 2003),

the Federal Circuit recognized that because the term “product” necessar-

ily implies a physical object of manufacture, the term “component” must

also refer only to “a physical product.” /d. at 1372-73. Similarly, both

Section 271(c) and Section 271(f)(2) prohibit the furnishing of a “compo-

nent” that is “especially made or especially adapted for use” in a patented

invention, but carve out exceptions for a component that is a “staple arti-

cle or commodity of commerce.” 35 U.S.C. § 271(c), (f(2). This Court,

however, has never found anything other than a physical product—an

object of manufacture—to constitute a staple article of commerce. See

Sony Corp. of Am., 464 U.S. at 490 n.41 (“The ‘staple article of com-

merce’ doctrine protects those who manufacture products mcorporated

into or used with patented inventions—-for example, the paper and ink

used with patented printing machines, or the dry ice used with patented

refrigeration systems’) (emphasis added; citations omitted).

sequence of digits cannot be ead or executed by the com-

puter. It cannot direct a computer to do anything.

One final example, drawn from AT&T’s patent itself, il-

lustrates the futility of its argument that a “binary sequence

of numbers that ‘lacks physical existence’” can be a “compo-

nent” within the meaning of Section 271(f). As noted above,

the inventor appended to the 580 patent the source code for

a computer program, which if compiled and executed would

cause a compatible computer to function as the claimed

speech coder apparatus. Once compiled into object code,

that very program could be expressed as a “binary sequence

of numbers that ‘lacks physical existence.”” If a Microsoft

programmer were to memorize that sequence, fly to a foreign

country, and use the sequence to program 100 computers to

function as speech coders, would Microsoft have committed

100 acts of infringement under Section 271(f)? Or, equiva-

lently, would Microsoft commit 100 infringing acts if it were

to mail a copy of AT&T’s patent to a foreign country, where

a programmer compiles the program, makes 100 disk copies

of the object code, and installs them on 100 computers?

Each of these questions must be answered in the negative, for

the simple reason that in neither instance has Microsoft sup-

plied a statutory “component” from the United States. For

the same reason, the decision below should be reversed.

CONCLUSION

For the foregoing reasons, the judgment of the court of

appeals should be reversed.

Respectfully submitted.

T. ANDREW CULBERT THEODORE B. OLSON

MICROSOFT CORPORATION Counsel of Record

One Microsoft Way MIGUEL A. ESTRADA

Redmond, WA 98052 MARK A. PERRY

(425) 706-6921 MATTHEW D. MCGILL

DALE M. HEIST AMIR C. TAYRANI

— GIBSON, DUNN & CRUTCHER LLP

a por lope agg uP 1050 Connecticut Avenuc, N.W.

Philadelphia, PA 19104 oye he 20036

(215) 564-8939 (202) 9_5-

Counsel for Petitioner

December 15, 2006

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