Cert. Petition Granted in Microsoft v. AT&T

On October 27, 2006, the U.S. Supreme court granted Microsoft's petition for a writ of certiorari in Microsoft Corp. v AT & T Corp., No. 05-1056, proceedings below, AT&T Corp. v. Microsoft Corp., 414 F.3d 1366 (Fed. Cir. 2005). The questions presented in Microsoft's Brief are:

"(1) Whether digital software code – an intangible sequence of ‘1's’ and ‘0's’ – may be considered a ‘component[] of a patented 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.’"

According to Harold C. Wegner, author of "A Foreign Square Peg in a Domestic Round Hole: The Eolas-AT&T-Carbide Trilogy," Hot Topics in Patent Law, George Mason University School of Law, July 18, 2006, Arlington, Virginia (available at http://www.foley.com), in asking for grant of certiorari, the United States government stressed the anti-American result of the Federal Circuit’s decision has on the domestic software industry:

Under the court of appeals’ decision, companies that design software in the United States cannot distribute their software abroad without running the risk that they will be compelled to pay royalties under United States patent law with respect to all of their foreign sales. Their foreign competitors, by contrast,
run no such risk of global liability under United States law, because they are exempt from application of Section 271(f) with respect to their foreign conduct.

As a result, United States software companies will find themselves at a substantial competitive disadvantage in foreign markets, and may even be foreclosed from competing in those markets altogether. That disadvantage will harm the software sector of the American economy and could ultimately compel
some software companies to relocate their research and development operations abroad. Moreover, the logic of the court of appeals’ decision could be extended to other high-technology industries.

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