Supreme Court Limits Reach of Patents and Raises Risk of Patent Invalidity
May 16, 2007
Supreme Court Limits Patent Infringement Liability for Some Software Exports
In a 7-1 decision, the Supreme Court in Microsoft Corp. v. AT&T Corp, No. 05-1056, 2007 WL 1237838, at *1 (U.S. April 30, 2007), significantly limited infringement liability for foreign activities, finding that exporting software for use in a patented product does not trigger infringement under the U.S. Patent Act when the patented product is made abroad using foreign-made copies of the exported software.
Although U.S. patent law generally does not extend protection to cover a patented product made and sold in another country, section 271(f) of the Patent Act provides an exception where the components of a patented product are exported from the United States for "combination" abroad. AT&T owns a patent directed to a computer apparatus for digitally encoding and compressing recorded speech. Microsoft conceded that its Windows operating system ("Windows") when installed on a computer manufactured in the U.S. infringes AT&T's patent. Microsoft, however, disputed that it was liable for infringement for installation of copies of Windows on computers produced outside the U.S.
Supreme Court Opens Patents Up To Attack and Makes Getting Patents More Challenging
On April 30, 2007, Justice Kennedy delivered the unanimous decision in KSR International Co. v. Teleflex Inc., No. 04-1350, 2007 WL 1237837, at *12 (U.S. Apr. 30, 2007), where the Supreme Court rejected the Federal Circuit's narrow, rigid test for determining whether an adjustable pedal assembly is obvious in light of the prior art. The Court overruled the Federal Circuit's rigid application of the teaching, suggestion, or motivation test ("TSM test") for obviousness determinations and adopted a new, flexible standard that will make it more difficult to obtain and defend patents, particularly patents for "inventions" that are combinations of existing and known elements: "Granting patent protection to advances that would occur in the ordinary course without real innovation retards progress and may, in the case of patents combining previously known elements, deprive prior inventions of their value or utility." However, the Court did not specify any other test to replace the TSM test, leaving the full impact of the decision to be hammered out by future litigation. Notably, the Federal Circuit issued several post-KSR decisions that loosened the rigidity of the TSM test. See In re Kahn, 441 F.3d 977, 988 (Fed. Cir. 2006); DyStar Textilfarben GmbH & Co. Deutschland KG v. C. H. Patrick Co., 464 F.3d 1356, 1367 (Fed. Cir. 2006); Alza Corp. v. Mylan Labs., Inc., 464 F.3d 1286, 1291 (Fed. Cir. 2006).
Click here to read in full about both cases in this e-Alert.
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