Principles of Patent Policy, and Microsoft vs. AT&T in the Supreme Court

On Wednesday, February 21, 2007, the Supreme Court heard oral argument in the case of Microsoft vs. AT&T. Because BayhDole25 had filed an amicus brief in the case, I attended the oral argument.

It was very interesting to see what aspects of the case were the most important to the Justices and what points were stressed by the attorneys (Ted Olsen for Microsoft, Daryl Joseffer for the U.S. Department of Justice, and Seth Waxman for AT&T). Microsoft seemed to gain substantial sympathy for the view that an affirmation of the Court of Appeals for the Federal Circuit (CAFC) decision would create open-ended liability for U.S. corporations commercial activities abroad.

There was, for example, apparent confusion over whether reading a patent over the phone to someone in Germany who then makes use of the information would open up the U.S. actor to liability for patent infringement. No one pointed out to the Court the right of anyone in the U.S. or abroad to gain access to published patents without that access constituting an infringing act, which is one of the principles underlying the social contract of patent policy.

In a nutshell, the right to apply for a patent is balanced by the public's right to access the entire patent application, no later than 18 months after the effective filing date or priority date claimed by the patent applicant. And once a patent is published, reading the patent it cannot constitute a violation of the patent rights and the PTO in fact provides internet access to all published patents.
Here are the related questions of Justice Breyer, as transcribed by the Alderson Reporting Company. (The full transcript is attached to this post.):

MR. WAXMAN: Excuse me?
JUSTICE BREYER: Suppose I send someone to the Patent Office, goes there, picks up the patent, and this patent is written very, very, very concretely and specifically. Gets on the phone, phones somebody in Germany and reads it to him. And that person, having an excellent memory, takes everything in and now he has the precise instruction necessary to change the machine around or put various things into it. So now it is precise copy of the machine in the United States.
(Transcript, p. 29)

And in the following exchange:

JUSTICE BREYER: How would you, how would you -- go back for a second please, because, if you're finished with that, because I don't see how to decide for you without at the same time permitting a person to walk over to the Patent Office, to read that application and the description, which after all at least can be a very highly detailed set of instructions of how to make a machine, getting on the phone, explaining just like that the blueprint which it is just like to somebody in Europe. They then make it. And that on your reading would violate the statute. It can't be right that that would and you don't even think it would. (Transcript p. 37)

Here are the PTO rules about how and when the contents of U.S. patent applications become publicly available information are clearly spelled out on the Patent and Trade-mark Office (PTO) website:

Publication of Patent Applications

Publication of patent applications is required by the American Inven-tors Protection Act of 1999 for most plant and utility patent applications filed on or after November 29, 2000. On filing of a plant or utility application on or after November 29, 2000, an applicant may request that the application not be published, but only if the invention has not been and will not be the subject of an application filed in a foreign country that requires publication 18 months after filing (or earlier claimed priority date) or under the Patent Cooperation Treaty. Publication occurs after the expiration of an 18-month period following the earliest effective filing date or priority date claimed by an application. Following publication, the application for patent is no longer held in confidence by the Office and any member of the public may request access to the entire file history of the application. (www.uspto.gov/web/offices/pac/doc/general/index.html#gen)

As described above, all applications must be published no later than 18 months after filing or earlier claimed priority date. This means that reading a patent application or otherwise conveying its contents to someone else is a right of the public, not an infringement of patent rights. Similarly, any actions taken exclusively abroad with respect to a patent held in the U.S. could not result in liability as a result of the CAFC decision in Microsoft.

In fact, neither Microsoft nor the U.S. DOJ which supports its position in this case provided any substantial rejoinder to Seth Waxman's point that any single electronic trans-mission of the software code by Microsoft to its German business partner constitutes infringing activity under the statute. I fear that in trying to tell the story of the electronic transmission more concrete, Seth Waxman lost the Court in the details, as follows:

And in paragraph 7 of the stipulation Microsoft acknowledges that it supplies the Windows object code by transmitting it to manufacturers overseas. And the way that happens is the code, the machine language, is resident in Redmond, either in the pits and lands of a CD or on the various magnetic orientations of a hard drive, and a, some engineer from Microsoft presses a button and it is essentially, it is taken and converted into photons which stream whatever it is, 7,000 miles, under the land and under the Atlantic Ocean and emerges into a machine, a computer, an otherwise inanimate parts that are sitting there in Dusseldorf, where it is loaded onto the hard drive, its converted from photons to a set of electrical pulses.(Transcript, p. 31, 32)

This argument may have looked good on paper, but in open court it was neither poetic nor persuasive. In fact, this line of argument led to a series of confusing and ultimately fruitless questions from the Court that I will not reproduce here, but which can be viewed in the transcript itself available at the U.S. Supreme Court website, at www.supremecourtus.gov/oral_arguments/argument_transcripts.html.

There also appeared to be additional confusion about a number of other issues relating to IP policy that may sway the outcome of the case, namely: the difference between a patentable invention and a component of an invention (for example, both sides agree that the abstract software is not patentable in isolation from the hardware needed to change it from an algorithm to an invention, but does that mean that it cannot be a com-ponent of a patentable invention?); the importance of patent protection for intangible in-ventions based on the importance of intangible assets to the biotechnology industry and to the economy as a whole (see the BayhDole25 brief on this point), the fundamental differences between blueprints, patents and copyrights and their application to software and machinery (too many exchanges on these points to mention), not to mention the Congress clear intent to seek broad international respect for U.S. IP right holders (again, see the BayhDole25 brief).

As someone who knows little about the Court, it was a curious introduction to the way that high-level judicial precedent may be created for patent policy by generalists with little theoretical or practical experience. It reminded me of the New York Times where I generally have a high degree of respect and faith in its probity, despite major errors in articles where I have pre-existing knowledge.