Amicus Curiae Brief — Microsoft Corp. v. AT & T CORP.

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No. 05-1056 ———

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In the Supreme Court of the United States

MICROSOFT CORPORATION, PETITIONER

Vv.

AT&T CORP.

ON WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF \PPEALS

FOR THE FEDERAL CIRCUIT

BRIEF FOR THE UNITED STATES

AS AMICUS CURIAE SUPPORTING PETITIONER

JOHN J. SULLIVAN

PAUL D. CLEMENT

General Counsel

Solicitor General

Counsel of Record

JOAN BERNOTT MAGINNIS PETER D. KEISLER

Assistant General Counsel Assistant Attorney General

Department uf Com merce THOMAS G. HUNGAR

Washington, D.C. 20230

Deputy Solicitor General

DARYL JOSEFFER

Assistant to the Solicitor

JAMES A. TOUPIN

General Counsel

General

JOHN M. WHEALAN Scott R. MCINTOSH

Solicitor MARK R. FREEMAN

THOMAS W. KRAUSE Attorneys | )

HEATHER F. AUYANG Department of Justice

Associate Solicitors Washington, D.C. 20530-0001

l'uited States Patent and (202) 614-2217

Trademark Office

Alerandria, VA 22313

QUESTIONS PRESENTED

In certain circumstances, Section 271(f) of the Patent

Act prohibits the “supplly] * * * from the United

States * * * [of] all or a substantial portion of the com-

ponents of a patented invention * * * in such manner

as to actively induce the combination of such compo-

nents outside of the United States,” as well as the “sup-

pl{y] * * * from the United States [of] any component

of a patented invention that is especially made or espe-

cially adapted for use in the invention.” 35 U.S.C.

271(f)(1) and (2). For purposes of that statute, the ques-

tions presented are:

1. Whether software object code can be a “compo-

nent” of a patented invention; and, if so,

2. Whether copies of software object code are “sup-

plied” from the United States when those copies are

created overseas by replicating a separate master ver-

sion supplied from the United States.

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TABLE OF CONTENTS

Page

Rete OF Ge TOG I oo. oc vce vcsdccvsseccccoceuces 1

EE i od Fide wads SAbb dd Knees catudsdudtgtessedase ee 2

I OTR II og 6 io on ob diceccddccesenscecicces 7

Argument:

I. Section 271(f) applies to all components of patented

inventions, including software components .......... 10

A. Software falls within the ordinary meaning of

I I no's kivakscbdnacvesssces 11

B. The non-patentability of software in the

abstract does not prevent an executable copy of

software code from being a “component” ........ 12

C. A physical copy of executable software code

can be a “component” within the meaning of

IN, ccitabiceabetuneeeakensbienens 13

Il. Software copies that are created overseas are not

supplied from the United States ................... 16

A. Section 271(f) governs only the supply of

components from the United States for

CE ee ee err ee re 16

B. Copies made.in foreign countries are not

supplied from the United States ............... 19

C. Section 271(f) does not distinguish between

software .omponents and other components ..... 22

D. The presumption against extraterritoriality

confirms the statute’s plain meaning ............ 27

GEE ie cue edeunseweacdbedbe dense eivabbadeneuhen 30

(IIT)

TABLE OF AUTHORITIES

Cases: Page

Brown v. Duchesne, 60 U.S. (19 How.) 183 (1857) ... 27, 29

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

EE dh iwevcnnd <6 khevde Oka bannentsebens passim

Diamond v. Diehr, 450 U.S.175 (1981) ............... 13

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

EE SEU i. 665.60b dade vbUNCENN boned Koscee 27

EEOC v. Arabian Am. Oil Co., 499 U.S. 244

DE vie cadnnndaueshespsneeehonssc¥susecas 28, 30

Eolas Techs. Ine. v. Microsoft Corp., 399 F.3d 1325

(Fed. Cir.), cert. denied, 126 S. Ct. 568

-isuécéunbeeceehenceuduawsveiwes 5, 6, 10, 12, 15

FDIC v. Meyer, 510 U.S. 471 (1994) ..............008- 11

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

et as SEE 66 o venacducsedessensdane 28, 29, 30

Leeds & Catlin Co. v. Victor Talking Mach. Co.,

EE A cusindedskavesbbescuacsceccses 11

Miles v. Apex Marine Corp., 498 U.S. 19 (1990) ........ 13

Parker v. Flook, 437 U.S. 584 (1978)... 2... ee ee. 13, 23

Pellegrini v. Analog Devices, Inc., 375 F.3d

1113 (Fed. Cir.), cert. denied, 543 U.S. 1003

DEE cndecuuceedenneeneusanbeednnebaswes 16, 22, 28

Rotec Indus., Inc. v. Mitsubishi Corp., 215 F.3d 1246

MEE 20s swedicdeedeaueceepésseneroens 16

S.D. Warren Co. v. Maine Bd. of Envt'l Prot., 126

es ET “cweicandnddhut iccvnseseesusedes 11

Smith v. United States, 507 U.S. 1997 (1993) ....... 28, 29

Sony Corp. of Am. v. Universal City Studios, 464

EE Sod douketeeatdsaneben 06 00sr06nkees 23

Constitution and statutes: Page

ef 6 Gh OS eer oe ore 23

Digital Millenium Copyright Act, 17 U.S.C. 1201

WEEE ici ko cadevesevonestesbassheasscceuaneeat 23

Patent Law Amendments Act of 1984, Pub. L. No. 98-

622, § 101, 98 Stat. 3383 (35 U.S.C. 271(f)) ........... 3

SPEED «ck cc cnccesccucesedoaeuseceeesspaues 1

PRA EEED ocnccvendiasecnesnnqnensaseneuneuse 1

SP UNE cc cwenciccccdencwevessetceewest 27

PE konpa evencdcdcnscssucbavenvensarens 17

SPUD bunds ccvectedsccoccsonemeeneet passim

Se WAM as ENTE bc evccsvveccesdsoes 7, 10, 11, 15, 16, 29

DEORE MUINED 6066s tcedcuciuhavanie 10, 11, 15, 16, 22

Miscellaneous:

American Heritage Dictionary (2d coll. ed. 1991) ...... 19

130 Cong. Rec. (1984):

NE 6hs vi voutoscveuecersarsndésuchessdeneen 27

GD notbss cccccdceeucssvedivksedéunmianeenne 18

Dictionary of Computing (3d ed. 1990) ............... 12

Encyclopedia of Computer Science (Anthony Ralston

Gg TG TD oe cinccciiusasakesenesss 12

Jon L. Jacobi, How Jt Works: Hard Drives (visited

Dec. 14, 2006) <http://www.peworld.com/

SE ONE a cnccdccccidsuiescessvases 15

S. Rep. No. 663, 98th Cong., 2d Sess. (1984) ........... 18

3 The Oxford English Dictionary (2d ed. 1989) ........ 11

The Random House Dictionary of the English

eg KG Pe err 11

Miscellaneous: Page

Jeff Tyson & Dave Coustan, How RAM Works

(visited Dec. 14, 2006) <http://computer.

howstuffworks.com/ram.htm> ............c0ee005 14

US. Pat. & Trademark Office, Manual of Patent

Examination Procedure (8th ed., rev. 5, 2006) ...... 12

Webster’s New International Dictionary of the

English Language (2d ed. 1958)... 6... ce eee eee 11

In the Supreme Court of the Gnited States

No. 05-1056

MICROSOFT CORPORATION, PETITIONER

AT&T Corp.

ON WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

BRIEF FOR THE UNITED STATES

AS AMICUS CURIAE SUPPORTING PETITIONER

INTEREST OF THE UNITED STATES

The question in this case is whether United States

patent law restricts companies from sending master co-

pies of their software overseas when those master copies

are duplicated overseas and the foreign-made copies are

used in foreign-made computers sold in foreign markets.

The United States Patent and Trademark Office, which

is responsible for granting and issuing patents and ad-

vising the President on issues of patent policy, 35 U.S.C.

2(a)(1) and (b)(8), has a substantial interest in the reso-

lution of that question. The application of United States

patent law to the participation of United States compa-

nies in foreign markets also raises issues concerning the

competitiveness of American companies abroad and the

respective roles of the United States’ and other nations’

(1)

patent laws, issues of concern to the Department of

Commerce. At the invitation of the Court, the United

States filed a brief as amicus curiae at the petition stage

of this case.

STATEMENT

1. “[W]hoever without authority makes * * *

within the United States * * * any patented inven-

tion,” is generally liable for patent infringement. 35

U.S.C. 271(a). In Deepsouth Packing Co. v. Laitram

Corp., 406 U.S. 518 (1972), this Court held that a com-

pany did not violate that provision by manufacturing the

component parts of a patented shrimp deveining ma-

chine in the United States and then shipping those parts

overseas for final assembly. /d. at 523-524, 527-529.

The Court explained that “it is not an infringement to

make or use a patented product outside of the United

States,” id. at 527, and the patented invention (the

shrimp deveining machine) was not made until its com-

ponents were finally assembled abroad, id. at 528-529.

Congress responded by enacting 35 U.S.C. 271(f),

which provides:

(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 pat-

ented invention, where such components are uncom-

bined in whole or in part, in such manner as to ac-

tively induce the combination of such components

outside of the United States in a manner that would

infringe the patent if such combination occurred

within the United States, shall be liable as an in-

fringer.

(2) Whoever without authority supplies or causes

to be supplied in or from the United States any com-

ponent 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 noninfringing use, where

such component is uncombined in whole or in part,

knowing that such component is so made or adapted

and intending that such component will be combined

outside of the United States in a manner that would

infringe the patent if such combination occurred

within the United States, shall be liable as an in-

fringer.

Patent Law Amendments Act of 1984, Pub. L. No. 98-

622, § 101, 98 Stat. 3383 (35 U.S.C. 271(f)).

2. United States Reissue Patent No. 32,580 (the ’580

patent) claims an apparatus for digitally encoding and

compressing recorded speech. Respondent brought this

action against petitioner in the United States District

Court for the Southern District of New York, contend-

ing that computers loaded with copies of petitioner’s

Windows operating system infringe the ’580 patent be-

cause Windows incorporates software code for encoding

and compressing speech in the manner claimed by the

580 patent. Neither the Windows software nor a com-

puter standing alone infringes the 580 patent; instead,

the patent is infringed by a computer that has been

loaded with the Windows software and is capable of per-

forming as the patented speech processor. The parties

entered into a stipulated judgment in which petitioner

conceded that the ’580 patent was valid, enforceable, and

infringed. See Pet. App. 3a-4a.

The only issue on which the parties failed to reach

agreement was petitioner’s alleged liability under 35

U.S.C. 271(f) for Windows-based computers manufac-

tured and sold overseas. The relevant facts on that

_ point are undisputed. Petitioner conceives, writes, com-

piles, tests, and debugs its Windows operating system

software in the United States. It then provides the op-

erating system to foreign computer manufacturers in

one of several ways. First, petitioner creates a limited

number of “golden master disks” on which it stores the

machine-readable binary object code for the Windows

operating system.’ In some cases, petitioner ships those

golden master disks to foreign computer manufacturers,

who replicate the object code on the master disks to cre-

ate separate copies of the code and then install those

copies on the computers they assemble. In other in-

stances, petitioner ships golden master disks to foreign

replicators, who make copies of the object code and ship

those copies to foreign computer manufacturers, who

install the copies on their computers. Alternatively, pe-

titioner sometimes provides the Windows object code to

foreign computer manufacturers and replicators via en-

crypted electronic transmission. The transmitted code

is then decrypted and copied, and the copies are in-

stalled on foreign computer products. Pet. App. 45a-46a.

In each case, the computer hardware is manufac-

tured overseas; the Windows operating system is in-

stalled overseas from copies of the object code that were

created overseas; and the completed systems are sold

overseas to overseas end-users. Pet. App. 45a-46a. The

' Software in the form in which it is written and understood by hu-

mans is called “source code.” To be functional, however, software must

be converted (or “compiled”) into its machine-usable versior., which is

called “object code.” See Pet. App. 22a n.5.

golden master disk itself is “never installed on a com-

puter that is then sold.” /d. at 45a.

3. The district court held that petitioner is liable

under Section 271(f) for all foreign sales of Windows-

based computers. Pet. App. 2la-38a. After concluding

that software can be a “component” for purposes of Sec-

tion 271(f) because it is “well-established” in other con-

texts that “software can be a component of a patented

invention,” id. at 30a, the court went on to explain that

“there is no limitation of the term ‘components,’ either

in the statutory text or in the legislative history, to ma-

chines or other structural combinations,” 77. at 3la. The

court also held that copies of the object code that are

replicated overseas may be deemed supplied from the

United States because “the object code is originally

manufactured in the United States, and supplied from

the United States to foreign [companies] with the inten-

tion of incorporating such software into foreign-assem-

bled computers.” /d. at 35a.

In light of the district court’s decision, petitioner

acquiesced in a stipulated judgment of liability and en-

tered into a settlement with respect to damages, while

reserving the right to appeal the district court’s ruling

on the Section 271(f) issue. Pet. App. 42a-43a.

4. In a divided decision, the court of appeals af-

firmed. Pet. App. la-19a.

a. Relying on its decision in Eolas Technologies Inc.

v. Microsoft Corp., 399 F.3d 1325, cert. denied, 126 S.

Ct. 568 (2005), the Federal Circuit unanimously held

that software code may be a component of a patented

invention for purposes of Section 271(f). Pet. App. 4a;

see id. at lla (Rader, J., dissenting on other grounds).

The court reasoned that “software code alone qualifies

as an invention eligible for patenting,” and noted that

Section 271(f)’s text is not limited to “patented ‘ma-

chines’ or patented ‘physical structures.” Jd. at 4a

(quoting Eolas, 399 F.3d at 1339).

A majority of the panel further held that copies of

software that are created abroad by replicating a master

version exported from the United States “have essen-

tially been supplied from the United States” for pur-

poses of Section 271(f). Pet. App. 7a. On the theory that

“(cjopying * * * is part and parcel of software distribu-

tion,” the court held that “for software ‘components,’ the

act of copying is subsumed in the act of ‘supplying,’ such

that sending a single copy abroad with the intent that it

be replicated invokes § 271(f) liability for those foreign-

made copies.” /d. at 6a.

The majority expressed concern that a contrary hold-

ing would “emasculate § 271(f) for software inventions”

because “[i]t is inherent in the nature of software that

one can supply only a single disk that may be 1 eplicated

* * * instead of supplying a separate disk for each copy

of the software to be sold abroad.” Pet. App. 6a n.2, 7a.

In the court’s view, petitioner’s position would “permit{]

a technical avoidance of the statute by ignoring the ad-

vances in a field of technology—and its associated indus-

try practices—that developed after the enactment of

§ 271(f).” Id. at 9a-10a. If Congress’s response to Deep-

south “is to remain effective,” the majority asserted, it

must “be interpreted in a manner that is appropriate to

the nature of the technology at issue.” /d. at 10a.

b. Judge Rader dissented. Pet. App. 1la-19a. Al-

though he agreed with the majority that software code

can be a component of a patented invention, id. at lla,

Judge Rader concluded that the majority erred by con-

flating copying software with supplying it, id. at lla-

13a. That software must be copied to be distributed, he

7 \

explained, “does not actually distinguish software com-

ponents from physical components of other patented

inventions. The only true difference between making

and supplying software components and physical compo-

nents is that copies of software components are easier to

make and transport.” /d. at 14a. The majority’s reli-

ance on the relative ease of copying software, he rea-

soned, is not a relevant distinction under Section 271(f),

but instead “ignores this court’s case law that refuses to

discriminate based on the field of technology.” /bid.

Further, Judge Rader warned, the panel’s decision

threatens “endless liability in the United States under

§ 271(f) for products manufactured entirely abroad.”

Pet. App. lla. Because “[n]othing in § 271(f) or its en-

acting documents expresses an intent to attach liability

to manufacturing activities occurring wholly abroad,”

Judge Rader explained that respondent’s remedy lies in

“obtaining and enforcing foreign patents.” /d. at 16a,

18a-19a.

SUMMARY OF THE ARGUMENT

Section 271(f) regulates the “suppl{y] * * * from

the United States” of “components” of patented inven-

tions. 35 U.S.C. 271(f)(1). Copies of computer software

can constitute components of patented inventions, but

petitioner did not supply the copies at issue here from

the United States. Accordingly, petitioner is not liable

under Section 271(f).

I. The court of appeals correctly held that copies of

computer software can constitute components of pat-

ented inventions. A “component” is simply a part, ele-

ment, or ingredient of an invention. A copy of peti-

tioner’s software that is loaded onto a computer is a part

of respondent’s patented invention, because the com-

puter cannot digitally encode and compress recorded

speech, and thus does not infringe respondent’s patent,

unless and until a copy of the software is loaded onto it.

While petitioner argues that software is intangible

design information that cannot be physically combined

with other components, that argument misperceives the

nature of the software component. Petitioner is correct

that software code in the abstract is not a component.

But a specific, machine-readable, physical copy of the

software that is actually loaded onto a computer is a ©

component, because it combines with the other compo-

nents to form the patented invention.

II. Because computer software is a component in its

physical embodiment, rather than in the abstract, it is

clear that petitioner does not “suppl[y]” the components

at issue “from the United States” within the meaning of

Section 271(f). By its express terms, Section 271(f) is

violated only when components are supplied from the

United States and “such components”—i.e., the very

physical components actually supplied from the United

States, not foreign-made copies thereof—are to be com-

bined abroad to form the patented invention. Section

271(f) thus strikes a careful policy balance. It generally

prevents companies from manufacturing the components

of a patented invention in the United States for assem-

bly overseas—conduct that is similar to actually making

the patented invention in the United States. But the

statute permits the manufacture and assembly of identi-

cal components overseas—conduct that is properly the

domain of other nations’ patent laws.

Here, it is undisputed that the only thing petitioner

supplies from the United States is a golden master disk

that is never installed on any of the computers at issue.

Instead, copies made overseas from the golden master

are installed overseas in foreign-made computers for

sale in foreign countries. Because petitioner does not

supply those copies from the United States, it does not

supply a component of the relevant computers from the

United States, and it is not liable under Section 271(f).

The court of appeals nonetheless opined that foreign-

made copies of software should be “deemed” supplied

from the United States because computer software can

be easily copied overseas, an “advance[] in a field of

technology * * * that developed after the enactment

of § 271(f).” Pet. App. 4a, 10a. The court’s need to

“deem” rather than find a key statutory element—sup-

ply from the United States—should have been a warning

sign. The courts’ task is to interpret the statute, not to

update it. It may well be easier for software companies

to replicate their components overseas than for some

traditional manufacturing companies, but that fact does

not justify the linguistic leap necessary to equate over-

seas copying with supply from the United States.

Nor does the court of appeals’ revision of Section

271(f) support the statute’s purposes. As noted, Con-

gress was content to allow the manufacture of compo-

nents abroad to be governed by the law of the place of

manufacture. But the court of appeals’ decision pre-

vents overseas replication of software designed in the

United States by prohibiting even a single transmission

of a master copy abroad for copying. The court thereby

produced a regime under which liability for foreign

copying of patented components varies depending on the

nature of the patented technology, and United States

software developers are singled out for disfavored treat-

ment.

Were there any remaining doubt about the proper

interpretation of Section 271(f), the presumption against

extraterritorial application of United States law would

resolve it, because the court of appeals’ decision makes

petitioner liable for foreign conduct—specifically, for

each act of overseas software replication.

ARGUMENT

Section 271(f) prohibits, in certain circumstances, the

“suppl[y] * * * from the United States” of a “compo-

nent of a patented invention.” 35 U.S.C. 271(f)(1) and

(2). Petitioner sends master copies of software overseas,

and copies made overseas from those masters are in-

stalled on foreign-made computers for sale in foreign

countries. Pet. App. 45a-46a. On those facts, respon-

dent can satisfy either the “component” or the “sup-

plie[s} * * * from the United States” prong of Section

271(f), but not both. While the copies of the software

that are actually installed on computers overseas are

components of the patented invention, those copies are

not supplied from the United States, but instead are

made abroad. The only thing petitioner supplies from

the United States—a master copy—is never installed on

the foreign-made computers. As a result, petitidner

does not supply any components of those computers

from the United States.

I. SECTION 271(f) APPLIES TO ALL COMPONENTS OF

PATENTED INVENTIONS, INCLUDING SOFTWARE

COMPONENTS

The court of appeals correctly held that software can

be a component of a patented invention. Pet. App. 4a

(following Eolas Techs. Inc. v. Microsojt Corp., 399 F.3d

1325, 1338-1341 (Fed. Cir.), cert. denied, 126 S. Ct. 568

(2005)). The relevant component, however, is the actual,

machine-readable, physical copy of the software in-

stalled on a particular computer, not the software in the

abstract.

A. Software Falls Within The Ordinary Meaning Of The

Term “Component”

Because Section 271(f) does not define the term

“component,” that term takes its “ordinary or natural

meaning.” FDIC v. Meyer, 510 U.S. 471, 476 (1994);

accord S.D. Warren Co. v. Maine Bd. of Envt'l Prot.,

126 S. Ct. 1843, 1847 (2006). A “component” is ordi-

narily understood to be “a constituent part; element;

ingredient.” The Random House Dictionary of the Eng-

lish Language 419 (2d ed. 1987); see 3 The Oxford Eng-

lish Dictionary 620 (2d ed. 1989) (OED) (“A constituent

element or part.”); Webster’s New International Dictio-

nary of the English Language 547 (2d ed. 1958) (Web-

ster’s) (“A constituent part; an ingredient.”).

The statutory context confirms that the term “com-

ponent” takes its ordinary meaning here, because Sec-

tion 271(f) refers to the overseas “combination of [the]

components” of a patented invention. 35 U.S.C.

271(f)(1); see 35 U.S.C. 271(f)(2). A “combination” is a

“union of elements.” Deepsouth Packing Co. v. Laitram

Corp., 406 U.S. 518, 528 (1972) (quoting Leeds & Catlin

Co. v. Victor Talking Mach. Co., 213 U.S. 301, 318 ©

(1909)); see Webster’s 533 (“a union or aggregate made

by combining one thing with another”); 3 OED 514

(“{[cjombined state or union of two or more things”).

Thus, a “component” is a part, element, or ingredient of

an invention that is combined with the other parts, ele-

ments, or ingredients to form the completed invention.

Each copy of Windows that is actually loaded or in-

stalled onto a compter is a part, element, or ingredient

of the patented i.vention. That is particularly clear

here. The foreign-made computers at issue lack the ca-

pability to encode and compress recorded speech, and

thus do not constitute the “patented invention,” unless

and until they are loaded with an executable copy of the

Windows software. See Pet. App. 3a. Thus, a software

copy that is actually placed in a computer—and thereby

combined with the other components—is an indispens-

able part, element, or ingredient of the patented inven-

tion. Indeed, computer texts commonly describe “soft-

ware” as being a “component{]” of a computer system.

Dictionary of Computing 426 (3d ed. 1990); see Encyclo-

pedia of Computer Science 1599 (Anthony Ralston et al.

eds., 4th ed. 2000) (“The word software was * * *

coined to describe the non-hardware components of the

computer.”). Here, the installed Windows code “is not

only a component, it is probably the key part of this pat-

ented invention.” Holas, 399 F.3d at 1339.

B. The Non-Patentability Of Software In The Abstract

Does Not Prevent An Executable Copy Of Software Code

From Being A “Component”

Petitioner correctly contends that software code,

“uncoupled from any storage medium or computer,” can-

not be the subject of a patent. Pet. 3; see U.S. Pat. &

Trademark Office, Manual of Patent Examining Proce-

dure § 2106.01, at 2100-17 (8th ed., rev. 5, 2006) (“com-

puter programs” and other “‘descriptive material’ are

nonstatutory when claimed as descriptive material per

se”). The non-patentability of software code standing

alone has no bearing, however, on whether software can

be a component of a patented invention under Section

271(f). Nothing in the Patent Act requires that each

part of a claimed invention must be independently pa-

tentable before a patent will issue for the combination.

See, e.g., Deepsouth, 406 U.S. at 520-522.

Indeed, just three years before Congress enacted

Section 271(f), this Court held that an invention was not

unpatentable merely because it employed, as one step in

its claimed process, a computer software program. Dia-

mond v. Diehr, 450 U.S. 175, 187 (1981). The Court ex-

plained that an invention is not rendered unpatentable

“simply because it uses a * * * computer program, or

digital computer.” /bid.; see Parker v. Flook, 437 U.S.

584, 590 (1978) (“[I]t is * * * clear that a process is not

unpatentable simply because it contains * * * a mathe-

matical algorithm.”). There is no indication that Con-

gress intended to depart from that understanding when

it enacted Section 271(f). Cf. Miles v. Apex Marine

Corp., 498 U.S. 19, 32 (1990) (“We assume that Congress

is aware of existing law when it passes legislation.”).

Regardless of whether software code is independently

patentable, therefore, software can be a part, element,

or ingredient of a patented invention.

C. A Physical Copy Of Executable Software Code Can Be

A “Component” Within The Meaning Of Section 271(f)

Petitioner also argues (Pet. 12) that software is noth-

ing more than “design information” analogous to the

blueprints of a machine. To the extent that petitioner

means that software in the abstract cannot be a compo-

nent of a patented invention, the United States agrees.

But the specific physical copy of the executable software

code that is actually installed on a computer (and there-

by completes the assembly of the patented combination)

is a component.

Petitioner is correct (Pet. 12, 16 n.2) that for pur-

poses of Section 271(f), software in the abstract is simi-

lar in some respects to the blueprints of a machine or

the sequence of perforations on a player piano music

roll. If the code or sequence for the Windows object

code were written on paper or memorized in someone’s

head as a “sequence of 1s and 0s” (Resp. Supp. Br. 1), it

would not be a component of a patented invention, be-

cause the mere representation or description of the soft-

ware would not form the patented invention when com-

bined with a computer. Instead, it would simply be de-

sign information from which a component—an actual

copy of the executable machine code—could be created.

But when someone physically places a machine-readable

copy of the object code into a computer, and thereby

combines the copy with the computer, that copy—as

opposed to the abstract design or representation of the

software—becomes a part, element, or ingredient of the

patented invention. The same would be true of the phys-

ical music roll for a player piano, as opposed to the se-

quence of perforations in the abstract.

The same basic distinction addresses petitioner’s

other arguments. Petitioner argues (Pet. 15-17) that

software cannot be a “component” because it is “intangi-

ble information” rather than a “physical product.”

While the abstract concept or design of the Windows

software lacks physical existence, each machine-read-

able copy of the object code that is created overseas and

then installed in a computer overseas unquestionably

has physical existence. Software resident in a com-

puter’s random-access memory, for instance, has a de-

tectable physical existence in the form of the presence

or absence of electrons at different locations on millions

of capacitors located on the computer’s memory chips.

See, e.g., Jeff Tyson & Dave Coustan, How RAM Works

(visited Dec. 14, 2006) <http://computer.howstuffworks.

com/ram.htm>. Similarly, software residing in a com-

puter’s hard drive is physically embodied in the varied

orientation of particles in the magnetically sensitive

coating on the surface of the hard disk platters. See,

e.g., Jon L. Jacobi, How It Works: Hard Drives (visited

Dec. 14, 2006) <http://www.peworld.com/article/id,

18693-page,2/ article.html>. Indeed, it is only because

the object code has physical existence that the com-

puter’s central processing unit is able to detect and im-

plement the software.

Nothing in Section 271(f) imposes a further “tangi-

bility” limitation. The components of the shrimp devein-

ing machine at issue in Deepsouth were tangible in the

sense that they were detectable by the sense of touch,

but Congress did not confine Section 271(f) to the tangi-

ble parts of patented inventions any more than it re-

stricted the statute to shrimp deveining machines. By

its plain terms, Section 271(f)(1) applies to all “compo-

nents” of a patented invention, while Section 271(f)(2)

applies to “any” component of such an invention—not

only tangible components. 35 U.S.C. 271(f)(1) and (2);

see Kolas, 399 F.3d at 1339; Pet. App. 4a.

Petitioner argues (Pet. 16) that because the statute

refers to the “combination of * * * components,” it is

necessarily limited to tangible components, because in-

tangible items cannot be combined with physical ones.

As discussed, however, that contention misperceives the

nature of the software component. It is true that the

software in the abstract could not be combined with

computer hardware to form the patented invention any

more than blueprints could be combined with building

materials to form a house. But physically placing an

actual, machine-readable copy of the Windows object

code in a computer to complete the patented system

does combine that software copy with the other compo-

nents so as to make the patented invention.

Il. SOFTWARE COPIES THAT ARE CREATED OVERSEAS

ARE NOT SUPPLIED FROM THE UNITED STATES

Although the court of appeals correctly held that

software can be a component of a patented invention, it

erred in holding that the creation of software copies

overseas by replication of a master version provided

from the United States constitutes the “suppl[y]” of soft-

ware “from the United States” within the meaning of

Section 271(f). See Pet. App. 4a-11a.

A. Section 271(f) Governs Only The Supply Of Components

From The United States For Assembly Abroad

Section 271(f) does not prohibit the manufacture of

components overseas, the inducement of others to manu-

facture components overseas, or the assembly overseas

of components that were made overseas. Rather, the

statute prohibits only the supply of components “from

the United States * * * in such manner as to actively

induce the combination of such components”—i.e., the

very components the defendant supplied from the

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

see 35 U.S.C. 271(f)(2) (prohibiting supply from the

United States of a component “intending that such com-

ponent will be combined outside of the United States”).

Conduct that merely induces the combination of for-

eign-made components in foreign countries does not

violate Section 271(f), because “such components” were

not themselves supplied from the United States—even

if the design information and instructions for their pro-

duction emanated from the United States. See Pelle-

grini v. Analog Devices, Inc., 375 F.3d 1113, 1115-1118

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

Indus., Inc. v. Mitsubishi Corp., 215 F.3d 1246, 1258

(Fed. Cir. 2000).

The text of Section 271(f) thus makes clear that Con-

gress struck a balance between the interests of domestic

patent holders and the traditional “right of American

companies to compete with an American patent holder

in foreign markets,” subject to the laws of the foreign

markets. Deepsouth, 406 U.S. at 531. Section 271(f)

generally prevents companies from manufacturing com-

ponents of patented inventions in the United States for

assembly overseas, but it leaves them free to manufac-

ture and assemble identical components overseas. Reg-

ulating the manufacture of components in foreign coun-

tries is the domain of foreign, not United States, law.

That distinction is rooted not only in the statutory

text, but also in Congress’s intent to overrule Deep-

south. In Deepsouth, a manufacturer of shrimp devein-

ing machines sought to avoid infringing a competitor’s

patent by shipping the component parts manufactured

in the United States abroad and assembling the pat-

ented machine abroad. 406 U.S. at 523-524. If the man-

ufacturer had assembled the machines in the United

States, it would have been liable under 35 U.S.C. 271(a)

for making a patented invention in the United States.

This Court held, however, that the company was not

liable because “it is not an infringement to make or use

a patented product outside of the United States,” 406

U.S. at 527, and the patented invention (the shrimp

deveining machine) was not “made” until its components

were actually assembled to complete the machine, id. at

528-529.

Four dissenting Justices argued that the “machine

was made in the United States,” and therefore infringed

the patent, because the components were manufactured

in the United States and “everything was accomplished

in this country except putting the pieces together as di-

rected.” Deepsouth, 406 U.S. at 533 (Blackmun, J., dis-

senting). The dissenters noted, however, that in their

view “(t]he situation, perhaps, would be different were

parts, or even only one vital part, manufactured

abroad.” /bid. Their concern was protecting against

“an infringer who manufactures in the United States.”

Id. at 534 (emphasis added; citation omitted).

When Congress responded by enacting Section

271(f), it agreed with the Deepsouth dissenters that the

manufacture of component parts in the United States is

sometimes so analogous to making the assembled pat-

ented invention in the United States as to warrant liabil-

ity. See S. Rep. No. 663, 98th Cong., 2d Sess. 2-3 (1984).

But Congress did not take the additional step of prohib-

iting companies based in this country from competing

abroad by manufacturing component parts abroad or

assembling foreign-made components abroad. As the

Senate Report explains, “[{t]he bill simply amends the

patent law so that when components are supplied for

assembly abroad to circumvent a patent, the situation

will be treated the same as when the invention is ‘made’

or ‘sold’ in the United States.” /d. at 3. Thus, “the bill

provides that a product’s patent protection cannot be

avoided through the manufacture of component parts

within the United States for assembly outside the

United States.” 130 Cong. Rec. 28,073 (1984) (statement

of Rep. Kastenmeier); see S. Rep. No. 663, supra, at 6

(explaining that Section 271(f) prohibits “shipping over-

seas the components of a product patented in this coun-

try so that the assembly of the components will be com-

pleted abroad”).

Contrary to respondent’s suggestion (Resp. Supp.

Br. 4-5), the government’s view is not that Section

271(f) is limited to the specific facts of Deepsouth. Ra-

ther, the point is that Section 271(f) governs only the

supply of components from the United States for assem-

bly overseas, in order to prevent circumvention of the

prohibition against making a patented invention in the

United States. Nothing in the text, legislative history,

or background of the statute suggests an intent to reach

farther.

B. Copies Made In Foreign Countries Are Not Supplied

From The United States

The court of appeals disregarded the limited scope of

Section 271(f) by holding petitioner liable for inducing

the combination, outside the United States, of for-

eign-made copies of computer software code with for-

eign-made computer hardware for sale in foreign coun-

tries. It is undisputed that the only thing petitioner pro-

vides from the United States is a golden master disk

that “is never installed on a computer that is then sold.”

Pet. App. 45a; see id. at 47a. Because the master copies

supplied from the United States are not installed on any

of the computers at issue, petitioner has not supplied a

component of those computers from the United States.

Respondent contends that software “is present in the

foreign-made computers only because [petitioner] ‘pro-

vided’ or ‘furnished’—in a word, supplied—it from the

United States.” Resp. Supp. Br. 3 (quoting American

Heritage Dictionary 1222 (2d coll. ed. 1991)). But re-

spondent glosses over a crucial point: The “it” that peti-

tioner supplied from the United States is not the same

“it” that is physically present in any of the foreign-made

computers at issue, 7.e., is not a component within the

meaning of the statute. As discussed, the only thing

petitioner furnishes or provides from the United States

is a golden master that is not installed on any of the

foreign-made computers at issue. The distinct physical

copies that are installed in those computers (and consti-

tute components of the patented device) are instead

made in, and thus supplied from, foreign countries.

Respondent thus errs in contending (Resp. Supp. Br.

3) that the government “forgets its own characterization

of the ‘component’ at issue” in concluding that petitioner

does not supply components from the United States. To

the contrary, the physical embodiment of the software

code—as opposed to “the Windows object code, a binary

sequence of numbers that ‘lacks physical existence,’” id.

at 4 (quoting U.S. Inv. Br. 8-9)—is precisely what is

manufactured or copied abroad. A “binary sequence of

numbers that lacks physical existence” may originate in

the United States, but it is not a “component” of a pat-

ented invention that can be “combinfed]” with other

components to make the patented item, precisely be-

cause it “lacks physical existence.” Only the physical

copy of the machine-readable object code, not the ab-

stract design or concept of the software, can qualify as

a “component” the supply of which from the United

States could give rise to liability under Section 271(f).

See U.S. Inv. Br. 8-9 (“while the concept of the Windows

software lacks physical existence, each copy of the ob-

ject code that was created overseas and then installed in

an allegedly infringing computer overseas unquestion-

ably had physical existence”).

Respondent’s contrary position relies on conflating

the master copy made in the United States with the cop-

ies made abroad, eliding the fact that they are separate

and distinct physical components with separate physical

existence, and that the master copy is not itself installed

on any computer abroad. Respondent argues (Br. in

Opp. 18), for example, that “[t]he very same zeros and

ones created in the U.S. by [petitioner’s] programmers

are installed on the foreign computers.” But that is ei-

ther legally irrelevant (to the extent respondent means

only that the foreign-made copy is a perfect duplicate of

the master copy) or factually incorrect (since the physi-

cal orientation of particles that embodies the object code

in a particular foreign-made computer is plainly not

composed of the same particles physically embodying

that object code on the golden master). While the same

pattern of zeros and ones (or, more precisely, the same

pattern of electrical impulses that can be denoted by

zeros and ones) is reflected on every computer that uses

the Windows operating system, a different copy of that

pattern is installed on each computer. Two copies of any

item (such as a book or a player-piano music roll) may be

identical, but that does not mean that supplying the first

copy constitutes supplying the second.

Under respondent’s contrary theory, when petitioner

supplied a single master copy of Windows from the

United States, petitioner in that instant also supplied

from the United States every copy of Windows that

would ever be made from that master in the future.

There is no warrant for construing the statute to reach

that absurd result. A copy installed on an overseas com-

puter did not exist until it was created by replication

overseas, and a component cannot have been supplied

from the United States before it even existed. As Judge

Rader explained in dissent below, “[a]s a matter of logic,

one cannot supply one hundred copies * * * without

first making one hundred copies.” Pet. App. 13a.

Nor can one supply a component from a country in

which it was never present. As the Federal Circuit

noted in another context, Section 271(f) “is clear on its

face. It applies only when components of a patent[ed]

invention are physically present in the United States

and then either sold or exported.” Pellegrini, 375 F.3d

at 1117. Because the copies at issue here were never

physically present in the United States, but instead

were made abroad, they were not supplied from the

United States.

The court of appeals all but acknowledged as much

by concluding that the foreign-made copies at issue here

“may be deemed ‘supplied’ from the United States,” and

have “essentially been supplied from the United States.”

Pet. App. 4a, 7a (emphases added). But the role of the

courts in applying Section 271(f) is limited to discerning

whether the statute is actually satisfied, and does not

extend to deeming the statute satisfied when it is, in

fact, not.

C. Section 271(f) Does Not Distinguish Between Software

Components And Other Components

The court of appeals was tempted to deem copies

actually made abroad “supplied from the United States”

because the modern “realities of software distribution”

make the manufacture (i.e., copying and distribution) of

software abroad much less costly than the manufacture

of traditional components. Pet. App. 7a; see id. at 6a

n.2. However, Section 271(f)’s requirements apply

equally to “any component of a patented invention,” 35

U.S.C. 271(f)(2), without regard to the identity of the

component or the cost of replication. See p. 15, supra.

Any tailoring of the statute to deal with the “realities of

software distribution” is a task for Congress.

1. The court of appeals asserted that Section 271(f)

“should be construed broadly to effectuate its purposes”

in order to ensure that the statute will “remain effec-

tive” in light of “advances in a field of technology * * *

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

App. 9a, 10a (citation omitted). In patent cases, how-

ever, this Court has endorsed the opposite rule of con-

struction: “It is our duty to construe the patent statutes

as they now read * * * , and we must proceed cau-

tiously when we are asked to extend patent rights into

areas wholly unforeseen by Congress.” Flook, 437 U.S.

at 596; see Deepsouth, 406 U.S. at 531. The patent laws

strike a “difficult,” constitutionally mandated balance

between rewarding innovation and not unduly stifling

competition. See Sony Corp. of Am. v. Universal City

Studios, Inc., 464 U.S. 417, 428-429 (1984); U.S. Const.

Art. I, § 8, Cl. 8. As new technologies have developed,

“our patent and copyright statutes have been amended

repeatedly” as Congress has discharged its constitu-

tional responsibility to balance the competing interests

in “fashion[ing] the new rules that new technology made

necessary.” Sony, 464 U.S. at 429-431.

Congress is fully aware of the ease with which soft-

ware can be copied, and at times it has adopted special

rules to modify intellectual property rights for computer

software and other new technologies. See, e.g., Digital

Millennium Copyright Act, 17 U.S.C. 1201 et seq. The

court of appeals erred by arrogating the authority to

expand the statute’s coverage beyond the limits of its

text in order to ensure that Section 271(f) will “remain

effective” for new technologies. Pet. App. 10a.

2. The statute’s purposes do not in any event sup-

port imposing liability for overseas copying of software.

The court of appeals sought to distinguish software from

traditional machine parts on the theory that “for soft-

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

act of ‘supplying.’” Pet. App. 6a. There is, however,

nothing unique about the fact that supplying software

involves copying it. Numerous items might be repli-

cated abroad with the aid of a master copy provided

from the United States. Keys or machine parts might be

copied from a master; chemical or biological substances

might be created by reproduction; and paper products

might be made by electronic copying and printing, to

name just a few examples. The overall economic result

may be the same whether the copying occurs in the

United States or abroad, but the location of the relevant

conduct is not, and Section 271(f) distinguishes between

supply from the United States and supply from abroad.

As Judge Rader explained below, “[t]he only true

difference between making and supplying software com-

ponents and physical components is that copies of soft-

ware components are easier to make and transport.”

Pet. App. 14a. It may well be that, because software is

significantly easier to reproduce than most machine

parts, software companies can comply with Section

271(f) more easily than many traditional manufacturers

by supplying their components from abroad. But that

does not justify the linguistic leap necessary to conclude

that supplying one copy from the United States also con-

stitutes supplying foreign-made copies from the United

States. Indeed, the court of appeals identified only a

difference in degree, not in kind, and there is no princi-

pled basis in the text of Section 271(f) for determining at

what point overseas copying becomes sufficiently inex-

pensive that it should be prohibited by United States

law. Such line-drawing requires a legislative judgment

that Congress has not yet made and may never make.

Moreover, the court of appeals’ decision does not

promote, but instead distorts, the statutory policies.

Congress did not seek to protect American patent hold-

ers from all competition by other American companies

in foreign markets. Section 271(f) prohibits only domes-

tic, not overseas, manufacture of components for assem-

bly abroad. Under the court of appeals’ decision, how-

ever, once software is designed in the United States, any

transmission abroad for copying and sale abroad is sub-

ject to Section 271(f). See Pet. App. 5a-7a. By imposing

liability for a single transmission to a foreign country,

the court of appeals denied companies that create soft-

ware in the United States any realistic avenue of com-

peting in overseas markets without risking liability un-

der Section 271(f). In contrast, companies in other in-

dustries that design components in the United States

can replicate those components abroad without fear of

Section 271(f) liability. See pp. 16-17, supra.

As respondent concedes (Resp. Supp. Br. 4), “there

is absolutely no indication that Congress meant to treat

software—of which it was clearly aware when it enacted

Section 271(f)—any differently from any other compo-

nents of patented inventions.” Yet the court of appeals’

interpretation does precisely that, and thereby frus-

trates the goal of a technology-neutral statutory scheme.

Under the court of appeals’ approach, the software in-

dustry alone is regulated in a manner that differs signif-

icantly from the fundamental] balance struck by Con-

gress, which prohibits the manufacture of components in

the United States while permitting it abroad.”

* That does not mean that software companies are exempt from

Section 271(f), as respondent suggests (Resp. Supp. Br. 4). If petition-

er sent copies of its Windows software from the United States to a

foreign country and those copies were loaded onto computers, petition-

Respondent only confirms that point by suggesting

(Resp. Supp. Br. 5) that software companies in the Uni-

ted States “can still perform much of the fundamental

research that goes into software development and * * *

convey their ideas to foreign manufacturers for the cre-

ation of software.” The suggestion that United States-

based software companies should escape liability by sell-

ing incomplete work product to foreign firms simply

underscores the extent to which the court of appeals

upset the balance struck by Congress. Under the court

of appeals’ holding, software companies based in this

country must either relocate at least some of their oper-

ations to foreign countries or incur the competitive dis-

advantage of facing liability under Section 271(f) for

overseas copying directed at overseas markets while

their overseas competitors do not face liability under

United States law in those markets.

While respondent contends (Resp. Supp. Br. 7) that

Section 271(f) inherently presents a risk that “manufac-

turers of ‘components’ [will] move their operations off-

shore,” the court of appeals’ decision not only encour-

ages overseas manufacturing, but also overseas design,

because software developed in this country could not be

transmitted abroad for replication. Respondent’s con-

tradictory assertion (id. at 8) that its position would

“level[| the playing field among jurisdictions” by ensur- .

ing that the burdens imposed by Section 271(f) “will be

the same wherever the manufacture occurs” further un-

derscores that respondent is pursuing a different policy

than the one underlying Section 271(f), which prohibits

er would likely be liable under Section 271(f) for each such infringing

copy. But petitioner did not do so here, and accordingly there is no

basis for liability in this case. See Deepsouth, 406 U.S. at 525 n.7.

only the supply of components from the United States,

not from abroad.*

D. The Presumption Against Extraterritoriality Confirms

The Statute’s Plain Meaning

If there were any doubt about the proper interpreta-

tion of Section 271(f), the presumption against extrater-

ritoriality would resolve it. The court of appeals’ deci-

sion runs afoul of that presumption by applying United

States law to the foreign conduct of reproducing the

Windows object code overseas for combination overseas

with foreign-made computers sold in foreign countries.

1. As this Court observed in Deepsouth, “[oJur pat-

ent system makes no claim to extraterritorial effect,”

and our laws “correspondingly reject the claims of oth-

ers to such control over our markets.” 406 U.S. at 531;

accord Dowagiac Mfg. Co. v. Minnesota Moline Plow

Co., 235 U.S. 641, 650 (1915). Thus, “the use of [a paten-

tee’s invention] outside of the jurisdiction of the United

States is not an infringement of his rights, and he has no

claim to any compensation for the profit or advantage

the party may derive from it.” Brown v. Duchesne, 60

U.S. (19 How.) 183, 195-196 (1857).

That venerable principle follows from the text of the

Patent Act, which provides that a patent confers exclu-

sive rights “throughout the United States.” 35 U.S.C.

* Respondent errs in arguing that “Section 271(f) was enacted ‘to

avoid encouraging manufacturing outside the United States.’” Resp.

Supp. Br. 8 (quoting 130 Cong. Rec. at 28,069). While a different provi-

sion of the same bill had that effect by prohibiting the importation of

goods produced by a patented process, see 130 Cong. Rec. at 28,069,

Section 271(f) inherently encourages a degree of overseas manufactur-

ing by prohibiting domestic manufacturing of components for assembly

abroad. Respondent’s position would extend that incentive to design as

well as mannfacture in the software context.

154(a)(1). It also reflects considerations of international

comity, as courts must “assume that legislators take

account of the legitimate sovereign interests of other

nations when they write American laws.” F. Hoff-

mann-La Roche Ltd. v. Empagran S.A., 542 U.S. 155,

164 (2004); see EEOC v. Arabian Am. Oil Co., 499 U.S.

244, 248 (1991). Foreign conduct is traditionally the

domain of foreign law, which may embody different pol-

icy judgments about the relative rights of inventors,

competitors, and the public in patented inventions.

2. Under the presumption against extraterritorial-

ity, Congress must provide a “clear * * * indication of

intent to extend the patent privilege” abroad before the

patent laws will be construed to govern extraterritori-

ally. Deepsouth, 406 U.S. at 532; see F. Hoffmann-La

Roche, 542 U.S. at 164, 174; Arabian Am. Oil Co., 499

U.S. at 248. Although Section 271(f) manifests a clear

intent to prevent American companies from manufactur-

ing the components of patented inventions in the United

States for assembly abroad, it does not manifest an in-

tent, much less a clear one, to regulate the reproduction

of those components outside the United States. See

Pellegrini, 375 F.3d at 1118-1119.

Respondent errs in arguing (Resp. Supp. Br. 5-6)

that the presumption against extraterritoriality is inap-

plicable because Congress was not “silent on the ques-

tion of foreign applicability,” but instead enacted Section

271(f) for the very purpose of addressing “the interplay

between U.S. and foreign law.” As this Court has ex-

plained, “[t|he applicability of the presumption [against

extraterritoriality] is not defeated * * * just because

|a statute] specifically addresses the issue of extraterri-

torial application.” Smith v. United States, 507 U.S.

197, 204 (1993). Instead, the presumption remains rele-

(

vant to determining the extent of a statute’s reach. See,

e.g., ibid.; F. Hoffman-La Roche, 542 U.S. at 161-162,

164 (applying presumption to antitrust statute with ex-

press provisions governing its extraterritorial applica-

tion to some foreign conduct). In any event, Section

271(f)’s restriction on the supply of components “from

the United States” expresses a domestic, not extraterri-

torial, focus, further confirming the presumption’s rele-

vance here. 35 U.S.C. 271(f)(1).

3. Although respondent argues (Br. in Opp. 20-22;

Supp. Br. 5) that Section 271(f) governs only the domes-

tic conduct of supplying components of patented inven-

tions, the court of appeals’ holding is wrong precisely

because it is not so limited. When the statute is read

correctly to regulate only the supply of components from

the United States for assembly abroad, it has no direct

extraterritorial application. But the critical aspect of

the court of appeals’ decision is that it converts a single

act of supply from the United States into a springboard

for liability each time a copy of the software is subse-

quently made overseas and combined with computer

hardware overseas for sale overseas. As Judge Rader

noted, petitioner is subjected to open-ended liability in

the United States “for products manufactured entirely

abroad.” Pet. App. lla. Imposing liability for conduct

that occurs in foreign countries and is directed toward

foreign markets fully implicates the comity concerns

underlying the presumption against extraterritoriality.

Cf. Brown, 60 U.S. (19 How.) at 194-195, 198 (applying

the presumption against extraterritoriality to hold that

a foreign ship was not liable for its use of a patented

invention when “coming into or going out of a port of the

United States,” even though the patented invention was

briefly used in the United States).

4. Respondent’s contention (Br. in Opp. 25) that pe-

titioner should not be able to “misappropriat{e] an-

other’s patented technology,” simply misses the point

that foreign law, not United States law, governs the

manufacture and sale of components of patented inven-

tions in foreign countries. If respondent desires to pre-

vent copying in foreign countries, its remedy lies in ob-

taining and enforcing foreign patents, not in attempting

to apply United States law to acts occurring abroad. See

Pet. App. 12a, 18a-19a (Rader, J., dissenting).

Respondent complains (Resp. Supp. Br. 6) that some

foreign jurisdictions are less protective of patent rights

than is the United States. But, of course, whatever the

‘margin of reduced protection abroad is equally the mar-

gin of competitive disadvantage for United States com-

panies if they, unlike their foreign competitors, are sub-

ject to United States patent law for overseas manufac-

turing. Moreover, the presumption against extraterrito-

riality exists in large part to protect each jurisdiction’s

right to make its own policy decisions, and thereby “pro-

tect against unintended clashes between our laws and

those of other nations which could result in international

discord.” Arabian Am. Oil Co., 499 U.S. at 248; see F.

Hoffman-La Roche, 542 U.S. at 164. Comity is more,

not less, important when foreign law differs from United

States law.

CONCLUSION

The judgment of the court of appeals should be re-

versed.

Respectfully submitted.

JOHN J. SULLIVAN

General Counsel

JOAN BERNOTT MAGINNIS

Assistant General Counsel

Department of Commerce

JAMES A. TOUPIN

General Counsel

JOHN M. WHEALAN

Solicitor

THOMAS W. KRAUSE

HEATHER F.. AUYANG

Associate Solicitors

United States Patent and

Trademark Office

DECEMBER 2006

PAUL D. CLEMENT

Solicitor General

PETER D. KEISLER

Assistant Attorney General

THOMAS G. HUNGAR

Deputy Solicitor General

DARYL JOSEFFER

Assistant to the Solicitor

General

ScoTT R. MCINTOSH

MARK R. FREEMAN

Attorneys

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