[A2k] Financial Times: Fears over reach of US patent law

[Thiru Balasubramaniam]

Fears over reach of US patent law

By Patti Waldmeir in Washington

Published: February 22 2007 02:00 | Last updated: February 22 2007 02:00

Several justices of the US Supreme Court yesterday expressed concern
about the risks of extending the reach of US patent law to other
countries, as they struggled to find a way to bring the law into the
digital age.

The case before them pitted Microsoft, the software company, against
AT&T, the telecommunications group, and the technology involved in it
clearly baffled several justices, who spent most of yesterday's hearing
asking technical questions about the nature of software.

The case, which could have big implications for new technology
industries such as software andbiotechnology, concerns whether
Microsoft should be liable for damages overseas for infringing a
software patent owned by AT&T for making synthetic speech.

"We need a global patent system, and that requires each country to have
a healthy respect for its borders," said Brad Smith, general counsel of
Microsoft. However, Seth Waxman, AT&T's attorney, said that in a
digital world, where borders are increasingly porous, Microsoft's
overseas shipments effectively stripped AT&T's patent of all value.

The dispute centres on a US law aimed at preventing companies from
circumventing US patent law by shipping "components" overseas for
assembly. The case tests whether software is such a "component" and
whether creating copies of software overseas from a master disk shipped
from the US is covered by that law - or whether the software on
Microsoft's "golden disk" is more like a blueprint, which only provides
instructions on how to make something, and is not covered by the law.

Several justices appeared worried that, if AT&T wins, then many
products manufactured abroad using patented US components would also be
held to violate US patent law. An attorney for the Bush administration
told the court such a result would anger foreign governments, whose own
patent laws should apply on their territory. If the court rules for
AT&T, said Justice Stephen Breyer, "suddenly our patent law, and not
the foreign patent law would govern".

Experts said it was clear the justices were concerned about the
extraterritoriality issue but unclear which company would win the
lawsuit.



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Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International (KEI)
voice +41.22.791.6727
fax +41.22.723.2988
mobile +41 76 508 0997
thiru@keionline.org