The US Supreme Court has overturned a ruling that Microsoft should be held liable for patent infringement on copies of the Windows operating system sold overseas.
By a 7-1 vote, the justices rejected arguments by AT&T that Microsoft software code that infringes on its patents could be deemed a "component" of a computer, making overseas sales of the Windows operating system an infringement under US patent law.
Bill Gates, Chairman of Microsoft. Image: Getty Images.
The Microsoft-AT&T dispute is one of a series of important patent cases that the court has agreed to hear in the last year. It hinges on a provision of US patent law that holds products sold overseas can be held liable for infringement if they include a US-supplied "infringing component".
A US appeals court upheld a lower court decision that, under that provision, Microsoft was liable for infringing an AT&T patent for converting speech into computer code in copies of Windows sold overseas.
The US Court of Appeals for the Federal Circuit said the world's largest software maker was liable for the unauthorised distribution of codec technology, used to compress speech signals into data, in copies of Windows overseas.
But the Supreme Court's majority opinion, written by Justice Ruth Bader Ginsburg, reversed the appeals court's ruling.
The Justice Department has sided with much of Microsoft's argument and said the appeals court ruling "improperly extends United States patent law to foreign markets" and puts US software companies at a competitive disadvantage.