Microsoft on Friday won the agreement of the US Supreme Court to test he global reach of US patent law in a ruling that could have big implications for new technology industries such as software and biotechnology.
The court agreed to hear an appeal from the US software company in a dispute involving AT&T, the US telecommunications group. The dispute concerns whether Microsoft should be liable for damages overseas for infringing a software patent owned by AT&T for making synthetic speech.
The case will test the extraterritorial application of US patent law in the information age at a time when courts around the world are increasingly struggling to apply national legislation to globalised economic activity.
The federal appeals court that heard the Microsoft case gave US patent law a very broad reach but the US Supreme Court may take a more narrow view, giving high-technology companies more protection against patent lawsuits based on exports.
The case “presents recurring questions that are of vital importance not only to the software industry but to other high-tech industries in the United States’ increasingly information-based economy”, the Software & Information Industry Association said in brief to the court.
AT&T won a claim that Microsoft had infringed its patent by including its technology in Windows operating systems installed in computers built in the US. This case tests whether Microsoft must also pay when it sends Windows overseas for installation in foreign-made computers.
The dispute centres on a US law aimed at preventing companies from circumventing domestic patent law by shipping “components” overseas for assembly. The case tests whether software is a “component” and whether creating copies of software overseas from a US master disk is covered by that law.
Traditionally, American patent laws stopped at the US border. Microsoft has accused the federal appeals court of trying to expand the reach of the law to software dealings overseas.
The US government urged the court to hear the case, and agrees with part of Microsoft’s argument: that US patent law does not cover software copies made overseas from a US master.