Software Companies Face Threat Of Patent Infringement Suits For Overseas Sales But Is It Serious
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Software Companies and the Threat of Overseas Patent Infringement Suits: Is It a Real Concern?
A pivotal case now before the U.S. Supreme Court could potentially increase high-tech companies' liability for patent infringement on products assembled and sold overseas. However, the comments and questions from most Justices during oral arguments suggest that a significant policy shift is unlikely regarding patent infringement for products produced and sold outside the United States.
Historically, U.S. companies have avoided liability for actions that could have constituted patent infringement domestically if the products were manufactured and sold abroad. This precedent might change with the Supreme Court's upcoming decision in Microsoft Corporation v. AT&T Corp. The central issue is the scope of an exception that previously allowed companies to avoid infringement suits when components of a patented invention were supplied to a foreign assembler, provided the finished product was sold overseas.
AT&T argues that Microsoft is bypassing patent laws by enabling its digital speech processor technology to be assembled and sold abroad. Microsoft, however, contends that their overseas packages only include instructions for digital speech processing, not actual components as defined by law. Microsoft asserts that AT&T should seek foreign patents to safeguard its interests.
During oral arguments, Justices Souter and Breyer expressed concerns that a ruling favoring AT&T might subject many high-tech firms to potential liability under U.S. patent laws. Justice Kennedy, however, showed some support for AT&T’s perspective on the component issue, while the Chief Justice has recused himself from the case.
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