On 30 April 2007, the US Supreme Court handed down its long awaited decision in Microsoft v AT&T.
It’s usually safe to assume that because IP rights must be granted by each country, then infringement of a particular IP Right can only occur in that country.
That’s the simple rule.
The loophole is equally simple - prepare the thing in such a way as to not infringe (for example, in a kit), and then export it. This is the loophole that the US Congress tried to fix (in response to the famous Deepsouth case) when it enacted section 271(f) of the US Act (35 USC 271(f)).
So, now we have a simple rule, with an exception – if you export something that if re-combined would infringe, then you still infringe (see below for the actual words of 271(f)).
AT&T owned a patent (for digital encoding of speech) which it argued was infringed by Microsoft’s Windows product. The catch was that Microsoft exported a single Master copy from the US which was not sold, but used to make copies for sale.
AT&T wanted to extend the exception to cover the alleged infringing copies sold abroad, which themselves had never been exported from the US nor even existed in the US.
The US Supreme Court said, no and left it to Congress to decide whether to change the law.
Just another example of technology getting ahead of statute drafters.
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The Supreme Court’s reasoning in Microsoft v AT&T:
1 – A (specific) copy of Windows and not ‘Windows in the abstract’ is a ‘component’ pursuant to 271(f). The copy which was exported was not installed on the foreign-made computers.
2 – The copies which were installed on the foreign-made computers were never themselves supplied from the USA.
3 – The presumption against extraterritoriality resolves any doubt that Microsoft’s conduct falls outside 271(f). Foreign law alone and not US law governs the manufacture and sale of components of patented inventions in foreign countries.
4 – The Court’s role is to interpret the statute. It is up to Congress to change the statute itself.
35 USC 271(f) states:
(1) Whoever without authority supplies or causes to be supplied in or from the United States all or a substantial portion of the components of a patented invention, where such components are uncombined in whole or in part, in such manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.
(2) Whoever without authority supplies or causes to be supplied in or from the United States any component of a patented invention that is especially made or especially adapted for use in the invention and not a staple article or commodity of commerce suitable for substantial noninfringing use, where such component is uncombined in whole or in part, knowing that such component is so made or adapted and intending that such component will be combined outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.
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