Prologue — Microsoft Corp. v. Eolas Technologies Inc.

i | Supreme Court, U.S.

FILED

05-28 8 AUG 31 2005

No. 05- OTFICE OF THE CLEKK

IN THE

Supreme Court of the United States ~

MICROSOFT CORPORATION,

Petitioner,

Vv.

EOLAS TECHNOLOGIES INCORPORATED AND

THE REGENTS OF THE UNIVERSITY OF CALIFORNIA,

Respondents.

On Petition for a Writ of Certiorari

to the United States Court of Appeals

for the Federal Circuit

PETITION FOR A WRIT OF CERTIORARI

DAVID T. PRITIKIN CARTER G. PHILLIPS*

CONSTANTINE L. TRELA, JR. SIDLEY AUSTIN BROWN &

RICHARD A. CEDEROTH WOOD LLP

ROBERT N. HOCHMAN 1501 K. STREET, N.W.

SIDLEY AUSTIN BROWN & WASHINGTON, D.C. 20005

WOOD LLP (202) 736-8000

BANK ONE PLAZA

10 SOUTH DEARBORN STREET

CHICAGO, IL 60603

(312) 853-7000

Counsel for Petitioner

August 31, 2005 * Counsel of Record

Sie me rene ans eh: naan RNes ome laser ence teller wt Rana

WILSON-EPES PRINTING Co., INC. — (202) 789-0096 -— WASHINGTON, D.C. 20001

QUESTION PRESENTED

Whether 35 U.S.C. § 271(f}—which imposes infringement

liability on one who “supplies” “components” of a patented

invention from the United States for “combination” abroad—

is satisfied if no physical parts are supplied from the U.S. and

all that is supplied is software code that foreign computer

manufacturers use to program computers that are made and

sold entirely outside the U.S.?

(1)

ii

PARTIES TO THE PROCEEDING

There are no parties to the proceeding other than those

listed in the caption.

Petitioner Microsoft Corporation has no parent company,

and no publicly held company owns 10 percent or more of the

petitioner’s corporate stock.

TABLE OF CONTENTS

Page

hy i

PARTIES TO THE PROCEEDING. ...........cccccscsessserereeees ii

TA Ge RT Tete OM cccncncsnscerccccrenvtcscnsssesseresnseses iv

ee i cciteciiircncensinntevsisiesuntmstivintnigniatanapetialaisiinns I

ee TT ecktimaiitisinnbinnediniginiinsituniineds isideitalbcaiioi 2

STATUTORY PROVISION INVOLVED.............:00c00e0: 2

STATEMENT OF THE CASE. ..cccccccccccccsccsscccsescocsesccssoce 3

A. Nature Of The Case...............00 esisciotnthlemilasitiihdale

B. Software Code Is Design Information ............... 4

C. Installing Windows® On Computer Hard

ti eellchcscchenvieinectatanistennpiptinescninepeeviseiatcamaneapiiie 6

a ENE BIEN ctncniivtionscattincsninnibinccieendntniesss 7

REASONS FOR GRANTING THE PETITION............. 10

eee ei ecsciunesbelicertenbiocivcbinicinectadhniihepusbiiaditanaiiatiagie 24

(iit)

iv

TABLE OF AUTHORITIES

CASES ; Page

AT&T Corp. v. Microsoft Corp., 414 F.3d 1366

CPOE: CR, FOR e Prvccccersest icsescnsieniscevesestinationation passim

In re Alappat, 33 F.3d 1526 (Fed. Cir. 1994).......... 3,4

Bayer AG v. Housey Pharms., Inc., 340 F.3d

SF CEO. Cale AOE Pekcnencncatantntencasoainionsansiinaziibens 15, 18

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

Ce iccokecicnstaenersshtsccdsuscisbcicbetlichouiiestnticonipbieanioians 17

Deepsouth Packing Co. v. Laitram Corp., 406

,_ «7 Na Pas CUTTER cenit easilipnciedabtictebicdatvsiniaiiteeds passim

Dewsnup v. Timm, 502 U.S. 410 (1992)... 20

Diamond v. Diehr, 450 U.S. 175 (1981) ....c:ceceeeee 3

Dowagiac Mfg. Co. v. Minnesota Moline Plow

Cay Rae OE LEP CD ieccscicctitorersicarindenscnebesiia 12,17

FDIC v. Meyer, 510 U.S. 471 (1994)... ceeeeseeeceeees 20

F. Hoffman-La Roche Ltd. v. Empagran S.A., 124

he is SEE LaNE eicansnchanecaianpetnsdeecenabianidapiadbelivandots 12

NTP, Inc. v. Research in Motion, Ltd., No. 03-

1615, 2005 U.S. App. LEXIS 15920 (Fed. Cir.

py | nena mewn Moke mos 1 15

In re Noll, 545 F.2d 141 (C.C.P.A. 1976) ...cccccceesees 4

Parker v. Flook, 437 U.S. 584 (1978)........ccccccccseeee 19

z Paul v. Davis, 424 U.S. 693 (1976) ....ccccccccccescesceree 19

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

(Fed. Cir.), cert. denied, 125 S. Ct. 642 (2004)... 15

Pfaff v. Wells Elecs., Inc., 525 U.S. 55 (1998)........ 17

Standard Havens Prods., Inc. v. Gencor Indus., -

Inc., 953 F.2d 1360 (Fed. Cir. 1991) .........cecceeeees 15

United States v. Dubilier Condenser Corp., 289

I PED CRI Di ctscdiinsis duitinniciliplineaaatenucatad iudeciiaes 19

West Virginia Univ. Hosps., Inc. v. Casey, 499.

SI SPE BIPITE Pckcsciisccnistnncidcnceviuiinegitcsastiistanminaannmuad 20

STATUTE

BP Cras BED cccsccccrssnndseteces toctoesntinintogseamivanitvets p iy A

v

TABLE OF AUTHORITIES—continued

RULE Page

Ri Gas Tie ee ctaicecectntiinieavnnsinciiianinttnaneicitieaniiintiiann’ 1c

LEGISLATIVE HISTORY

130 Cong. Rec. H10525 (daily ed. Oct. 1, 1984),

98th Cong., 2d Sess., reprinted in 1984

SAGs te NEE qectaesscicstintisnemmcsnqungnattinemaiben 13

a

INTERNATIONAL AGREEMENTS

Trade-Related Aspects of Intellectual Property

Rights, Apr. 15, 1994, Marrakesh Agreement

Establishing the World Trade Organization,

Annex IC, Legal Instruments—Results of the

Uruguay Round, 33 I.L.M. 1197 (1994)............ 16, 23

World Intellectual Prop. Org. [WIPO], Paris

Convention for the Protection of Industrial

PO GN Bile CO OED toreittceneniinincitagninneinn 12, 23

OTHER AUTHORITY

- Stacy Lawrence, Corporate R&D Scorecard

2004, Tech. Rev., Dec. 2004, available at

http://www.technologyreview.com/articles/

04/1 2/scorecard2 1204. pdf... .......ccccecceeseceeeeees 21

INTHE -

Supreme Court of the United States

No. 05-

MICROSOFT CORPORATION,

Petitioner,

~~

Vv.

EOLAS TECHNOLOGIES INCORPORATED AND THE REGENTS OF

THE UNIVERSITY OF CALIFORNIA,

Respondents.

On Petition for a Writ of Certiorari

to the United States Court of Appeals

for the Federal Circuit

PETITION FOR A WRIT OF CERTIORARI

Petitioner Microsoft Corporation respectfully requests that

a writ of certiorari issue to review the judgment of the United

States Court of Appeals for the Federal Circuit in this case.

OPINIONS BELOW

The opinion of the United States Court of Appeals for the

Federal Circuit was entered on March 2, 2005, and is included

in the Appendix (“App.”) at la-26a. It has been officially

reported and can be found at Eolas Technologies, Inc. v.

Microsoft Corp., 399 F.3d 1325 (Fed. Cir. 2005). The

opinion of the district court ruling on the issue presented for

review in this petition was entered on July 31, 2003, and is

included in the Appendix at 27a-30a. That opinion has also

been reported and can be found at Eolas Technologies, Inc. v.

Microsoft Corp., 274 F. Supp. 2d 972 (N.D. Ill. 2003).

2

JURISDICTION

The © strict court had jurisdiction of this patent

infringement action under 28 U.S.C. §§ 1331 & 1338. The

court of appeals entered its opinion and judgment on March 2,

2005. The court of appeals entered an order on May 3, 2005,

denying a timely petition for rehearing and rehearing en banc.

App. 3la-32a. On July 21, 2005, the Chief Justice extended

the time for filing this petition up to and including August 31,

2005. The jurisdiction of this Court is invoked under 28

U.S.C. § 1254(1).

STATUTORY PROVISION INVOLVED

The statute at issue in this case is 35 U.S.C. § 271(f), which

provides:

(1) Whoever without authority supplies or causes to be

supplied in or from the United States all or a substantial

portion of the components of a patented invention,

where such components are uncombined in whole or in

part, in such manner as to actively induce the

combination of such components outside of the United

States in a manner that would infringe the patent if such

combination occurred within the United States, shall be

liable as an infringer.

(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

noninfringing use, where such component is

uncombined in whole or in part, knowing that such

component is so made or adapted and intending that

such component will be combined outside of the United

States in a manner that would infringe the patent if such

combination occurred within the United States, shall be

liable as an infringer.

3

STATEMENT OF THE CASE

A. Nature Of The Case.

Respondents sued Microsoft, alleging that computers

programmed with Microsoft's Windows® with Internet

Explorer (“IE”) software infringe claims | and 6 of U.S.

Patent No. 5,838,906 (“the-’906 patent”). The "906 patent

generally claims a computer program product (e.g., a Web

browser) and method of using a computer automatically to

launch another application to enable users to interact with

animations and other “objects” embedded in Web pages.

Consistent with prior decisions of this Court and the Federal

Circuit concerning patentable subject matter, see, e.g,

Diamond v. Diehr, 450 U.S. 175 (1981); In re Alappat, 33

F.3d 1526 (Fed. Cir. 1994) (en banc), the “computer program

product” claimed in the °906 patent is not software code or

the instructions or underlying algorithms it represents, but

rather “a computer usable medium”—such as, for example, a

computer hard drive—with operabie computer-readable code

installed on it. App. 6a (quoting "906 patent, Claim 6).

After a trial on infringement, a jury returned a verdict in

favor of respondents. Respondents asserted that if

Windows® with IE infringes, then they are entitled to royalty

damages on the worldwide sales of Windows® with IE, not

just sales in the U.S. The trial court had earlier ruled in their

favor on that issue, and so the jury was directed to calculate

its royalty award based on worldwide sales of Windows®

with IE, including units produced and sold outside the United

States. The resulting award exceeded $520,000,000.

This petition seeks review of the Federal Circuit's ruling

that 35 U.S.C. § 271(f) entitles respondents to royalties based

on foreign manufacture and sale of an infringing software-

related product.’ Specifically, the Federal Circuit ruled that

‘The Federal Circuit vacated the judgment in favor of respondents

based on the trial court's erroneous rulings that prevented Microsoft

4

all foreign-made and sold computers cn which Windows®

software has been installed by foreign Original Equipment

Manufacturers (“OEMs”) can infringe a United States patent

because the software was designed in the United States and a

single disk on which the software code was recorded was

transmitted from the United States and replicated abroad by

the foreign OEMs. The Federal Circuit reached this result

despite the fact that not a single physical part of any of the

foreign-made computers was supplied from the United States,

and in the face of its own prior decisions holding that

section 271(f) refers to the supply of physical components,

not instructions or information. This ruling accounts for more

than 64% of the $520,000,000 that the jury awarded. If

allowed to stand, the ruling would dramatically expand the

extraterritorial scope of U.S. patents contrary to this Court’s

rulings and longstanding U.S. patent policy.

B. Software Code Is Design Information.

Software code, standing alone, is a set of instructions for

use by a digital computer, instructions that embody an

algorithm or set of algorithms. When used to program a

computer, software code “creates a new machine” by

physically transforming a “general purpose computer” into a

“special purpose computer.” /n re Alappat, 33 F.3d at 1545;

see In re Noll, 545 F.2d 141, 148 (C.C.P.A. 1976) (a

programmed computer “comprises physical structure,

including storage devices and electrical components uniquely

configured to perform specified functions through the

physical properties of electrical circuits to achieve controlled

results.”). ‘That is, a computer on which software code is

installed and running has its internal circuitry physically

arranged in a particular way that produces particular results.

from presenting evidence and argument in support of its defense that

the patent is invalid in light of certain prior art. The Federal Circuit

also vacated the trial court's ruling in favor of respondents on

Microsoft's inequitable conduct defense.

5

Any particular expression of software code is, thus, a

particular form of design instructions for computers—

instructions that dictate how the millions of switches in a

computer’s central processing unit will be configured, ie.,

which will be open and which closed. A designer of

computer software proceeds like any other designer. He or

she imagines what the computer should be able to do (e.g.,

perform as a simple calculator) just as, for example, a tire

designer imagines what a particular tire should do (e.g.,

provide improved traction in wet conditions). Each idea will

find expression in a physical product. The tire designer’s idea

will become rubber formed in a particular way to direct the

flow of water so that traction is improved. The software

designer's idea will become a rearrangement of the switches

of a microprocessor to direct the flow of current so that

calculations are performed and their results displayed.

Each designer produces a set of instructions for making the

desired product. The tire designer produces drawings of a

tread design, indicating the thickness of the rubber, the shape

and depth of the grooves, efc. These drawings instruct a

manufacturer who will turn the written design into a mold that

a machine can use to form the tires. The software designer

cannot draw a picture of how the millions of switches in a

modern microprocessor ought to be arranged to perform as

desired. Instead, the software designer expresses processor

design instructions in a standard computer format called

“source code.” Source code is then passed through a

“compiler,” which produces the equivalent of a tire mold:

computer-readable “object code” in which the processor

design instructions are expressed in binary form, the “|’s”

and “O’s” used by digital computers. Then, just as a tire-

making machine would use the tire mold to shape rubber into

tires, a general purpose computer will use the object code to

rearrange its processor’s switches to produce a special

purpose (calculating) computer.

6

In sum, the software code is like any other set of design

instructions, which can be seen by considering how a single

set of instructions can be used to make countless units of the

product. A tire designer need produce only one set of design

instructions that can be used to make a single mold which

then produces as many tires as desired. Likewise, a software

designer need produce only one version of source code which

can be used to make a single computer-readable version of the

code, and countless additional (new) copies of that object

code can be made and installed on computers, transforming

them into as many “special purpose”—programmed—

computers as desired.

Cosmetically, the tire-making process is different from the

special purpose computer-making process: the process of

following the design instructions of computer software is

automated and largely invisible to humans. But in substance,

the two processes are the same.

C. Installing Windows® On Computer Hard Drives.

Microsoft develops its Windows® software and records the

object code form of that software on a “gold. . master’’ disk,

on which the ones and zeros of the object code are stored.

Microsoft does not itself install Windows® onto any

computers. Instead, Microsoft licenses its software to OEMs

and sends the golden master to them. The OEMs then use the

golden master as part of a process which creates new copies

of the Windows® code installed on the hard drives of their

computers. Thus, as the district court recognized in this case,

the Windows® code installed on the hard drive of, for

example, a French-made computer is actually made in France,

replicating the information provided on the golden master

sent from the United States. App. 28a. These Windows®-

programmed computers are alleged to infringe the 906

patent

When an OEM “installs” the Windows® code onto the hard

drives of its computers, it takes nothing physical off the