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

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0243%3A24

## Record

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

## Text

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21LA

No. 05-1056

IN THE

Supreme Court of the United States

MicrOsOFT CORPORATION,
Petitioner,
v.
AT&T Corporation,

Respondent.

On Wait oF CERTIORARI TO THE
Unitep States Court OF APPEALS
FOR THE FEDERAL CIRCUIT

—— -—o-_-_oC- —_—-

BRIEF OF AMICUS CURIAE THE HOUSTON
INTELLECTUAL PROPERTY LAW ASSOCIATION IN
SUPPORT OF NEITHER PARTY

-—-- Orel

— -———
wore SEnEEnEnEiEnenEn

Abert B. Kimsa t, JR.
President

MICHAEL G LOcKLAR*

THomMas M. Morrow

HOUSTON INTELLECTUAL

PROPERTY LAW ASSOCIATION
4720 Three Allen Center
333 Clay Street
Houston, TX 77002
(713) 860-3303

* Counsel of Record Counsel for Amicus Curiae

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COUNSEL PRESS
(ROO) 274-3321 + (ROO) 389-6859

i
QUESTION PRESENTED
The amicus curiae will address the following question:

1. Whether digital software code—an intangible sequence
of _“‘l’s” and “O’s”—may be considered a “component[]
of a patent invention” within the meaning of section
271(f)(1); and if so,

2. Whether copies of such a “component[]” made in a
foreign country are “supplie[d] ... from the United
States.”

TABLE OF CONTENTS

Page
QUESTION PRESENTED 2... ccccccccvccccess i
TABLE OF CONTENTS ............0c0ee0e0e: ii
TABLE OF CITED AUTHORITIES ............ iv
INTERESTS OF THE AMICUS CURIAE ....... l
ED 6 vauwis bbe uee deeb SEKE OKO DEDS 2
SUMMARY OF ARGUMENT ................. 3
PE Wa6 coc pcasshebbetassebemriéne ss 5

A. The Federal Circuit’s Conclusion that Digital

Software Code Constitutes a “Component”

Under Section 271(f) is Consistent with the

Text and the Legislative History of the
Statute, and Should Be Affirmed ......... 5

1. Neither Section 271(f) nor its Legislative

History Limit the Term “Component” in a
Manner that Excludes Software .......... 5

2. None of the Arguments Raised By Microsoft
Before the Federal Circuit Justify Excluding
Software from the Coverage of Section
BOER sci nddenenesacceapeaseberVeccdwds 6

iil

Contents
Page
B. The Federal Circuit’s Reading of “Supplied”
to Include “Copying” is _ Strained,
Unsupported by Section 271(f), and Should
ED a 6.55 bd reas ch bdebeennbiawe 8

CONCLUSION

iv

TABLE OF CITED AUTHORITIES

Page

Cases: ’
AT&T Corp. v. Microsoft Corp., 2004 WL 406640,

71 U.S.P.Q.2d 1118 (S.D.N.Y. 2004) .......... 2,6
AT&T Corp. v. Microsoft Corp., 414 F.3d 1366

es POE noi sc cbnnees dencswcdao wn 3, 10, 11
Deepsouth Packing Co. v. Laitram Corp., 406 U.S.

PETE i cWoleeé Ki xegaccbmavetanevawnays 9, 12
Eolas Techs., Inc. v. Microsoft Corp., 399 F.3d 1325

ey eee Pee 5, 10
In re Beauregard, 287 F.3d 1583 (Fed. Cir. 1995) ... 12
In re Berhart, 417 F.2d 1395 (C.C.P.A. 1969) .... 8
Statutes:
SUSE (Ie ............ ee aay 3, 12
SP OOD. cscdcbasccediesesivessaaent 3

I i de a wis aoe passim

v

Cited Authorities
Page
‘Miscellaneous:
130 Cong. Rec. 28,073 (1984) ................. 6,9
. .g § & & PPE pep Te 2,3

Replacement-Reply Brief for Def.-App. Microsoft
Corp. before the Federal Circuit ............. 6

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1
INTERESTS OF THE AMICUS CURIAE

The Houston Intellectual Property Law Association
(HIPLA) is an association of over 400 lawyers and other
professionals who work in the Houston, Texas area.'
The practice of most of the HIPLA membership relates in
substantial part to the field of intellectual property law.
Founded in 1961, HIPLA is one of the largest associations
of intellectual property practitioners. No HIPLA member has
served as record counsel to any party in the subject of this

appeal.

HIPLA members often are called upon to advise their
clients in matters involving the statute at issue in this case,
35 U.S.C. § 271(f). HIPLA believes that the Federal Circuit
correctly determined that the term “component” in section
271(f) is properly read to include “software.” However, the
other holding by the Federal Circuit in this case, that the
term “supplying” in section 271(f) is properly read, for
software cases only, to include “copying,” is a holding that
HIPLA believes to be erroneous.

Section 271(f) is a statutory provision of great
consequence to many clients of HIPLA members. These
clients depend upon HIPLA members for reliable advice in
determining whether current or prospective activities will or
will not run afoul of the statute. Because the Federal Circuit’s
holding that software constitutes a component within the
meaning of section 271(f) is a natural reading of the statute

' No counsel for a party authored this brief in whole or in part,
and no person or entity other than amicus curiae, its members or
counsel, has made a monetary contribution to the preparation or
submission of this brief.

2

and legislative history, this amicus respectfully requests this
Court to affirm such holding. Because the Federal Circuit’s
holding that “supplying” software under section 271(f)
includes copying is a strained reading of the statute and
legislative history, and requires the creation of an
unwarranted special exception in software cases, this amicus
respectfully requests this Court to reverse such holding.

BACKGROUND

Microsoft creates and tests in the United States certain
software related to digitally encoding and compressing
recorded speech. AT&T Corp. v. Microsoft Corp., 2004 WL
406640 at *1, 71 U.S.P.Q.2d 1118 (S.D.N.Y. 2004). Microsoft
distributes this software by first inscribing it on a “golden
disk” in the United States. Jd. This golden disk is then sent
to a foreign country where foreign original equipment
manufacturers replicate the code, and load the replicated code
onto foreign-assembled computers, which are then sold to
consumers. Jd. While the golden disk is created in and
shipped from the United States, all other steps described
above take place outside the United States. Jd. The software
on the golden disk is never directly incorporated into its
ultimate consumer’s computer system, but is always first
replicated outside the United States from the golden disk
and the replicated code transferred to the foreign-assembled
computer. /d.?

AT&T’s patent, RE 32,580, has claims drawn to
“a speech processor” and an “[a)]pparatus for encoding a
speech pattern.” See, e.g., RE 32,580 (claims 11 and 24). In

? Alternatively, rather than ship a “golden disk,” the transfer is
accomplished via electronic transmission. /d.

3

general, these claims include computer hardware on which
software is loaded that enables the hardware to encode speech
patterns. Jd.’ On June 4, 2001, AT&T filed suit against
Microsoft, alleging that certain of Microsoft’s products
containing “speech codecs”—software programs—infringed
AT&T’s patent. Jd. at *1 & n.1.

At trial, the parties stipulated to infringement of the
apparatus claims for sales in the United States under
35 U.S.C. §§ 271(a) and (b).AT&T Corp. v. Microsoft Corp.,
414 F.3d 1366, 1368 (Fed. Cir. 1995). The issue addressed
by the trial court and now on appeal is whether Microsoft
should be liable for sales in foreign countries under 35 U.S.C.
§ 271(f). The trial court and the Federal Circuit both found
liability under section 271(f) for Microsoft’s foreign
activities. According to the Federal Circuit, software
constitutes a “component” under section 271(f) and “[g]iven
the nature of the technology, the ‘supplying’ of software
commonly involves generating a copy.” AT&T, 414 F.3d at
1370. Based on this interpretation, the Federal Circuit found
that copying was subsumed in “supplying” for purposes of
section 271(f)(1) and liability attached to all of Microsoft's
computer systems created and sold outside of the United
States. According to the majority of the panel, “[t]o decide
otherwise would emasculate 271(f) for software inventions.”
Id. at n.2.

SUMMARY OF ARGUMENT

With regard to the first question presented, HIPLA agrees
with the district court and the Federal Circuit that software

> RE32580 also has method claims that are not at issue in this
appeal.

4

does constitute a component under section 271(f). This result
follows naturally from the statutory text and legislative
history, neither of which contain any suggestion that
“component” should be limited by technology so as to |
exclude software. Moreover, the arguments raised by
Microsoft in its briefing to the Federal Circuit do not justify
the judicial carve-out of an exception for software.

However, with regard to the second question presented,
HIPLA believes that “supplying” under section 271(f) does
not include copying, and Microsoft should not be liable under
section 271(f) for its overseas copying of golden disks
containing software loaded onto those disks in the United
States. Just as software should be treated the same as other
elements when determining whether it is a “component”
under section 271(f), so should software be treated when
determining whether it has been “supplied” within the
meaning of the statute. The Federal Circuit’s decision to read
“supplying” to include “copying,” exclusively for cases
involving software, is unsupported by the text of section
271(f) and its legislative history, and also directly conflicts
with the Federal Circuit’s own precedent. This holding by
the Federal Circuit greatly expands the extraterritorial reach
of the statute, and ignores viable alternative strategies that
companies such as AT&T could pursue to better compete
with companies like Microsoft overseas.

5
ARGUMENT

A. The Federal Circuit’s Conclusion that Digital
Software Code Constitutes a “Component” Under
Section 271(f) is Consistent with the Text and the
Legislative History of the Statute, and Should Be
Affirmed

The Federal Circuit held that software constitutes a
component under section 271(f), noting that the text of the
statute does not limit the term “to patented ‘machines’ or
patented ‘physical structures.’” /d. at 1369 (citing Eolas
Techs., Inc. v. Microsoft Corp., 399 F.3d 1325, 1339
(Fed. Cir. 2005)). Because this holding by the Federal Circuit
is consistent with the text and legislative history of the statute,
and because Microsoft has shown no justification for a
judicially-created exception for software, this Court should
affirm the Federal Circuit’s holding.

1. Neither Section 271(f) nor its Legislative History
Limit the Term “Component” in a Manner that
Excludes Software

Neither of the twin prongs of section 271(f) restrict the
term “component” so as to exclude software from the
meaning of the term. Paragraph (1) of section 271(f) places
no limitations on “component”, and paragraph (2) limits
“component” only in that the “component” be “especially
made or especially adapted for use” in the patented invention,
and thus “not a staple article or commodity of commerce
suitable for substantial noninfringing use... .” 35 U.S.C.
§ 271(f). Nothing in paragraph (2) automatically excludes
software from constituting a component of a patented
invention. Software can be written for a particular purpose

6

that falls within the scope of a patented invention, as in this
case. Microsoft does not dispute that its object code is
especially made for use in its Windows operating system,
which was found to infringe AT&T’s patent. AT&T Corp.,
2004 WL 406640, at *3. Having been written for such
purpose, Microsoft’s object code—software—is not a staple
article or commodity suitable for substantiai noninfringing
use.

The legislative history of section 271(f) similarly
provides no justification for the exclusion of software from
the statute’s scope. See 130 Cong. Rec. 28,073 (1984)
(statement of Rep. Kastenmeier). Software is not mentioned
in the legislative history, nor does anything in the legislative
history evidence an intent by Congress to exclude software
from coverage by the statute.

2. None of the Arguments Raised By Microsoft
Before the Federal Circuit Justify Excluding
Software from the Coverage of Section 271(f)

In its briefing to the Federal Circuit, Microsoft
sought to split “software” into two forms—” intangible
software information” and “tangible software media.”
See Replacement-Reply Brief for Def.-App. Microsoft Corp.
before the Federal Circuit, at 6-7. Having made this
distinction, Microsoft then frames the issue for appeal as
whether intangible software information qualifies as a
component under Section 271(f). /d. at 8. Microsoft argues
that it cannot, on the grounds that intangible software
information constitutes nothing more than a set of
instructions, which could even be expressed in a form stored,
for example, in the human mind. /d. at 7. Microsoft also
emphasizes that intangible software information is not
separately patentable. /d. at 10.

7

Accepting arguendo Microsoft’s division of software
into tangible and intangible portions, such division does
nothing to further Microsoft’s argument for an exception from
section 271(f). Neither the statutory text nor its brief
legislative history make reference to tangibility as a
requirement for coverage under the statute. Similarly, despite
the emphasis Microsoft places on the non-patentability of
intangible software information, protection under section
271(f) is not limited to only those components that
themselves could be separately patentable. Put simply, though
software information may be intangible and unpatentable by
itself, neither of these attributes bars it from constituting a
“component” under section 271(f).

Microsoft’s attempt to liken intangible software
information to a set of instructions, or a pattern for a key for
a lock, a pattern for a tire mold, or a pattern for a circuit
chip, id. at 11, disguises the critical difference separating
software from all of these comparators: software is capable
of becoming incorporated (i.e., stored) within a patented
product, whereas the others cannot. A keymaker, for example,
can lay a paper set of instructions next to his machinery while
creating the key, but the paper cannot become incorporated
within the key. The pattern depicted on the paper set of
instructions, or the tire mold, subsequently may be illustrated
by the appearance of the key, or the outer surface of the tire,
when the key or tire are created so as to resemble the pattern
depicted on the paper or the mold, respectively, but neither
the paper nor the mold have become incorporated within
the object they were used to create. In contrast, intangible
software information, unique among all the foregoing
examples, is capable of becoming incorporated within a
patented computer product.

8

Indeed, Microsoft’s treatment of the Berhart case
supports this conclusion. /d. at 12 (citing Jn re Berhart,
417 F.2d 1395 (C.C.P.A. 1969)). Microsoft acknowledges
without argument Berhart’s recognition that a programmed
computer “is physically different from the machine without
that program.” /d. (citing Berhart at 1400). This difference
arises because the programming of a computer using
intangible software information rearranges its memory
elements. Jd. Though Microsoft emphasizes that
“no molecules are added or subtracted during the
programming process,” it agrees that the computer is
“physically changed” by the incorporation of the software.
Id. Whether the physical change involves a numerical
difference in the number of molecules incorporated
within the product is unlikely to have been a concern of
Congress, and does not justify creating an exception from
section 271(f) for software.

Whether in tangible or intangible form, software is
capable of becoming incorporated into a patented product,
and thus is capable of being a component of a patented
product so as to qualify for protection under section 271(f).
This Court should affirm the Federal Circuit’s holding that
software constitutes a component within the meaning of
section 271(f).

B. The Federal Circuit’s Reading of “Supplied” to
Include “Copying” is Strained, Unsupported by
Section 271(f), and Should Be Reversed

Section 271(f) was enacted to “prevent copiers from
avoiding U.S. patents by supplying components of patented
products in this country so that the assembly of the
components may be completed abroad” and responded

9

“to the United States Supreme Court decision in Deepsouth
Packing Co. v. Laitram Corp., concerning the need for a
legislative solution to close a loophole in patent law.”
130 Cong. Rec. 28,073 (1984) (statement of Rep.
Kastenmeier) (citation omitted). There is no specific
discussion of the meaning of “supplying,” except as is
implied by the Deepsouth case.

In Deepsouth, this Court considered a defendant who
manufactured all of the parts of a shrimp-deveining machine
in the United States that would have infringed the plaintiff's
patent had it been assembled in the United States. Deepsouth
Packing Co. v. Laitram Corp., 406 U.S. 518, 523-24 (1972).
Instead, the defendant intended to ship all of the parts of the
machine outside the United States for assembly and use there
by foreign buyers. /d. at 523. Assembly was so minor as to
take less than an hour once all the parts were received.
Id. at 524. In Deepsouth, the components that were
manufactured in the United States were those that were
assembled into a device that fell within the claims of the
patent. /d. at 523. However, because there was no direct
infringement in the United States, this Court declined

to find liability in the absence of Congressional directive.
Id. at 526-27 & 532.

In contrast to the Deepsouth case, in this case, the
component that is shipped from the United States is never
combined into an apparatus that falls within the scope of the
claims. The golden disk is not combined into the apparatus,
nor is the software that is on the disk ever loaded onto the
apparatus—The Federal Circuit found liability for this
operation by redefining, for software only, “supplying” to-
include a manufacturing operation that operates wholly
outside of the United States, deciding that “copying” should

10

be included within the definition of “supplying.” AT&T, 414
F.3d at 1370.

If the component manufactured in the United States and
shipped to a foreign country for combination in the claimed
invention had been a special type of bolt and that prototype
bolt had been copied millions of times outside of the United
States for inclusion in machines that fell within the claims,
the Federal Circuit would have not found infringement of
the patent claims.‘ Yet, aside from the ease of copying
software, the Federal Circuit does not provide any reason
why software should be treated differently from other
components. Nothing in the statute implies that for software,
“copying” should be included in “supplying,” nor is any such
indication found in the legislative history.

: The Federal Circuit’s own precedent is to the contrary.

In Eolas Techs. Inc. v. Microsoft Corp., the Federal Circuit
found that “sound policy again counsels against varying the
definition of ‘component of a patented’ invention according
to the particular form of the part under consideration [].”
399 F.3d 1325, 1339-40. No sound reason exists to require
that software should be treated the same as other elements
when determining whether it is a “component” under section
271(f), and differently when determining whether it has been
“supplied.” The Federal Circuit’s reasoning in the Eolas case
was sound that software should be treated equally with all
other components under section 271(f).

* “Accordingly, 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.” AT&T, 414 F.3d at 1370
(emphasis added).

1]

As argued by the dissent, the majority’s reasoning does
not support reading “copying” into “supplying,” even for
software:

To the contrary, copying and supplying are
separate acts with different consequences—
particularly when the “supplying” occurs in the
United States and the copying occurs in
Diisseldorf or Tokyo. As a matter of logic, one
cannot supply one hundred components of a
patented invention without first making one
hundred copies of the components, regardless of
whether the components supplied are physical
parts of intangible software.

AT&T, 414 F.3d at 1373 (Rader, J., dissenting). It would no
doubt surprise a software manufacturer to learn that by
“supplying” a single copy of software to one of his customers
he was in fact also allowing that customer to copy the
software for use on many other machines.’

By expanding the scope of “supplying” to include
copying, the Federal Circuit greatly extends the
extraterritorial reach of section 271(f). With physical
components, the manufacture is largely within the United
States and the infringing act, that of shipping the items

* Had Microsoft chosen to stream its software electronically
and directly onto its ultimate customers’ computers, the Federal
Circuit’s decision result may very well have been the correct one.
In such a case, the software component would have been supplied
from the United States for incorporation into a machine that would
infringe th patent claims, had it been assembled in the United States.
Microsoft did not choose such a method of supplying its software to
its foreign customers and so docs not fall within section 271(f).

12

abroad, takes place within the United States. By including
copying within “supplying,” the Federal Circuit includes in
the infringing act an entire manufacturing operation that takes
places wholly outside of the United States. Congress has not
evidenced an intent to capture such activities.

“Supplying,” as used in the context of section 271(f)
means what would be expected from a fair reading of the
Deepsouth case and the congressional response — the
component that originates in the United States is incorporated
into a product that falls within the scope of the claims.
Manufacturing processes that occur outside the United States
do not fall within the definition of “supplying.”

The Federal Circuit’s fear of “emasculating” the statute
for software inventions is an ill-founded one. Many options
exist in drafting claims for software. For instance, software
developers have the option of drafting patent claims to
computer programs fixed in a tangible medium, such as the
golden disks used by Microsoft. The use of such claims would
protect the patentee from the unauthorized manufacture in
and shipment from the United States of software on “golden
disks,” as these unauthorized activities would be covered by
section 271(a).° It is unnecessary to stretch the definition of
“supplying” to encompass acts wholly outside of the United
States to accommodate claim-drafting decisions by a
patentee.

This Court should reject any expansion of the scope of
section 271(f) beyond that specifically covered by the statute.

° These claims are termed “Beauregard claims”, based on the

case in which they were first allowed. See In re Beauregard,
287 F.3d 1583 (Fed. Cir. 1995).

No special “software” scope expansion has been mandated
by Congress and no sound reason exists for this Court to

include one.

HIPLA respectfully requests that this Court affirm the
Federal Circuit’s holding that software constitutes a
component within the meaning of section 271(f), and reverse
the Federal Circuit’s holding that “supplying” software under

13

CONCLUSION

section 271(f) includes copying.

* Counsel of Record

Respectfully submitted,

ALBERT B. KIMBALL, JR.
President

MicHAgeL G LOcKLAR*
THomMas M. Morrow
HousTON INTELLECTUAL
Properry Law ASSOCIATION
4720 Three Allen Center
333 Clay Street

Houston, TX 77002

(713) 860-3303

Counsel for Amicus Curiae

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0243%3A24. Public record. Not legal advice.