Supreme Court Debates Patentability of Software

A seemingly simple case regarding whether Microsoft had the right to replicate speech recognition software it had licensed -- or rather, thought it had licensed -- from AT&T, and then sell that software abroad as a component of Windows Vista, has exploded into what is now extremely likely to become a landmark case in US patent and copyright law.

The US Supreme Court today took up oral arguments in Microsoft's appeal of a judgment against it in AT&T v. Microsoft, which has now become Microsoft v. AT&T in view of the appeal.

AT&T's position is that its speech recognition software is protected by US patent, on the grounds that it constitutes a "component of a patented invention." Microsoft was apparently granted license to utilize that software in the US, but AT&T contends that the duplication of that software outside of US boundaries, with the intent to sell the duplicates overseas, is a violation of that license. That view was upheld by the Federal Court of Appeals, and Microsoft is appealing that decision.

During oral arguments this morning, Microsoft attorney Theodore Olson, responding to a barrage of questions from Justices Anthony Kennedy and Antonin Scalia, attacked AT&T's position with a novel argument that you might not expect to hear from Microsoft: In short, you can't patent source code or object code.

"An idea or a principle [such as] two plus two equals four can't be patented," Olson told the Justices. "It has to be put together with a machine and made into a usable device." Acknowledging both Kennedy's and Scalia's questions, Olson built a case against AT&T's position: For foreign replication to work, a golden disk is shipped abroad to the replication service, containing the master of the Vista operating system that includes AT&T's drivers. It's not software at that point, Olson says, because no one can execute it. When it's installed onto a hard drive, then it becomes software, and it's the end customer who does that.

If you accept that argument, Olson's case goes on, then Microsoft did not copy AT&T's software. And since the physical components - the hard drive, processor, and optical drive - necessary for the copying process to happen may or may not have been supplied by manufacturers in the US, then US courts may not have jurisdiction anyway.

Last year, Microsoft argued before the Court of Appeals for the Federal Circuit that it wasn't really liable for infringing on AT&T's licensing rights because it only supplied the golden disk to the replicator one time, and that disk did not really contain software in a usable form anyway. That argument was rejected.

"It is inherent in the nature of software that one can supply only a single disk that may be replicated - saving material, shipping, and storage costs - instead of supplying a separate disk for each copy of the software to be sold abroad," the CAFC wrote. "All of such resulting copies have essentially been supplied from the United States."

Justice Samuel Alito cited the CAFC decision in questioning Olson further: "Isn't this an artificial distinction?" Justice Alito asked. "When you're talking about the making of a tangible part, there's at least some cost involved in doing it here or doing it abroad, and some time involved. But with software, the Federal Circuit's point was that it is so easy and inexpensive and fast to copy it that simply sending the information abroad, sending the object code abroad in the form of the golden disk, is tantamount to manufacturing copies overseas."

"I think there are three answers to that," Olson responded. "Surely the patent laws cannot be determined according to whether it's easy or fast or efficient to replicate something. There has to be a line that makes some sense. Number two, it may be fast and efficient, but there are certainly costs involved in taking the machines to do it. Number three, where would that take us?...Every product contains its own manifestation of its design. That would take us everywhere, because any product can be copied abroad."

In the midst of the discussion, Olson left Justice Ruth Bader Ginsburg's question hanging in the air: "Wasn't that the first question that you raised," Justice Ginsburg asked, "whether digital software code, an intangible sequence of 1's and 0's may be considered a component of a patent, patented invention?"

Representing the US and arguing CORRECTION:officially on Microsoft's behalf was Assistant Solicitor General Daryl Joseffer. Ginsburg grabbed her question out of the air and thrust it toward Joseffer, who fumbled with it for a bit before attempting an answer. "One side is telling us it's the component that's supplied [to the foreign replicator], whether it's the master disk or the object code," she said. "And the other side says this is just like a blueprint, like a mold, like a template. Can a blueprint be patented? Can a mold be patented?"

After using the better part of a long moment to collect his thoughts, Joseffer responded, "I think the most important point here is that the components of patented inventions do not have to be patentable. Many patented inventions are comprised of a bunch of parts where the parts themselves would not be patentable because say they were standard off the shelf parts."

So what's the component that AT&T says is worth patent protection? asked Justice John Paul Stevens. Joseffer started a response: "The component is the, is the actual machine readable copy of software that is inserted in..." and then stopped upon realizing he'd just said "inserted," implying that the disk itself constitutes a part of software.

Justice David Souter reiterated that argument for Joseffer, and asked if that's now the US position? "The United States view is that, for example, a blank disk is not a component of this invention because you don't need a blank disk to practice this invention. The actual component is the physical substantiation, the physical copy of the software that's inserted into a computer...The software could be on a disk or it could be on some other technology... And once it's copied on to the hard drive, then the copy on the hard drive is itself a component."

Immediately, Justice Steven Breyer interrupted. All this discussion implies that the Supreme Court believes software is patentable. But the Court has never actually ruled this on its own, Justice Breyer realized. "I take it that we are operating under the assumption that software is patentable? We have never held that in this Court, have we?" he asked."

No, answered Joseffer. "So what should we do here?" Breyer continued. "Since it's never been held that it's patentable in this Court, if I were writing something, should I say 'on the assumption that it's patentable?' Since the issue isn't raised?"

Joseffer's response to these questions was, to put it mildly, a novel one. The question of whether software is patentable, he argued, is irrelevant to this discussion, since the component whose existence infringes upon AT&T's patent isn't the software anyway. It's the computer that has its software installed on it. That's what's patentable, he argued.

"I think the reason that's not relevant here is that the patented invention in this case is not software," Joseffer said. "It's computer that has software loaded into it. And the components of a patented invention do not themselves have to be patented."

Justice Alito's next question indicated his astonishment. "If these computers are built abroad and are sold with Windows installed, the component is the electrons on the hard drive? That's your position?"

Joseffer responded yes, that's the US' position, but no, that's not AT&T's position. "It's the physical embodiment of the software which in some instances is manifested by -- by those electrons," said Joseffer, perhaps broaching for the first time in history the topic of whether electrons are patentable. "Now AT&T's contrary view is that the abstract code in the abstract is the component. The reason that can't be, is that object code in the abstract is just a series of 1's and 0's. In theory I could memorize in my head or write down on a piece of paper. But that's not going to combine with other, with other parts to make a patented invention."

In short, while the US on paper supports Microsoft, its oral arguments appear to state the US believes AT&T should prevail, but not for the reasons AT&T says it should. AT&T wants to maintain it holds a software patent, the nature of which the US would prefer to steer clear of.

Next: Can you copy software without copying the program?