US patent law reformers lauded a crucial decision by the US Supreme Court on Monday. A near-unanimous decision found Microsoft is not liable for using patented AT&T technology in versions of the Windows operating system running on computers outside of the US.
Following sweeping patent reform legislation introduced in the US House and Senate, the high court rulings indicate with clarity that reform is in the air, reform advocates said. Reformers such as the Coalition for Patent Fairness, a group of more than 60 technology vendors, have raised concerns about an explosion in frivolous patent litigation in recent years. Microsoft is one of its members.
"Today's Supreme Court decision is important for the entire information technology industry, adding clarity and balance to our patent system," says Microsoft General Counsel Brad Smith in a statement. "This decision promotes a global patent system that works. The ruling ensures that US courts, like courts elsewhere, can respect the patent laws of other countries, helping promote cooperation among patent systems worldwide."
He says the decision will have implications on other patent cases, as well, and predicted that damages against Microsoft in two cases involving Alcatel-Lucent and Eolas "will be revisited in light of [today's] ruling."
AT&T issued a statement expressing its disappointment. "All US-based sources of innovation, including the software development community, could benefit from patent laws that enable fair, appropriate protection and valuation of new technologies and inventions domestically and overseas," says Scott Frank, CEO of AT&T Knowledge Ventures. "Our intellectual property protection and licencing programme continues to focus on maximizing global access to AT&T innovations, while also ensuring that AT&T receives fair and appropriate compensation in return for its investments in research and innovation."
Matt Tanielian, director of federal government affairs for Cisco Systems says Monday's two rulings bring to five the number of recent patent cases where the high court has come down "almost unanimously." The court has ruled against "frivolous" litigation in the five cases going back to May 2006, when it ruled for eBay after the online auction site was sued for patent infringement by web auction site Mercexchange.
"The court is ... rebalancing the patent system and overturning the federal circuit courts," Tanielian says. "We think the patent system has serious problems."
Patent reform is Cisco's highest legislative priority this year, and Tanielian says despite the wave of Supreme Court decisions, further legislative reforms are needed.
The coalition supported the Patent Reform Act of 2006, legislation that was not acted upon, and supports similar reforms reintroduced last week on the House and Senate sides, he noted.
The Supreme Court ruled 6-1 in favor of Microsoft on the issue of whether many millions of copies of its Windows operating system sold abroad were subject to patent infringement damages sought by AT&T.
Microsoft had already settled with AT&T in the US after admitting it violated AT&T's patent for converting speech to computer code. Microsoft argued that Windows software running on computers overseas was not covered by the patent. Justice John Paul Stevens dissented and Chief Justice John Roberts did not vote.
One analyst, Allan Krans of Technology Business Research says Microsoft's strategy with the AT&T case shows that Microsoft has remained aggressive.
"Microsoft is not afraid to walk the thin line between aggressively competing and violating patent and antitrust legislation," he claims. "Microsoft wins some cases and loses others, and in this instance, the ruling was in its favour. We believe the legal costs and any potential fines, such as those levied by the [European Union], are seen as a cost of doing business for Microsoft."