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Microsoft V. AT&T

In 2001, AT&T filed a law suit against Microsoft in the federal court in
New York saying without proof that the Microsoft® Windows® was violating on one of its patents for digitally coding and decoding speech. AT&T wanted to recover damages from Microsoft based on the copies the Windows software program made in the United States and, called a relatively obscure clause of the
U.S. patent laws that makes it an act of infringement to supply. From the
United States all or a substantial portion of the components of a patented invention  

What this means is that whether Microsoft violated AT&T’s domestic patent on sophisticated speech decoding technology by sending the software overseas to be replicated and installed in its Windows operating system. 

Microsoft and its supporters like Intel, Yahoo, and Amazon.com said that software is not a physical component, but intangible information. Microsoft argued that the software wasn’t technically supplied from the
United States because overseas manufacturers of its computers made copies of the software from a master disk and installed those copies into the operating system. Since the copies, and not the original software, were in the computers built somewhere, Microsoft says it can’t be considered a supplier 

But AT&T argued that Microsoft’s logic is simply a way to go around the patent law and violate against the company’s patent. The company successfully convinced the trial courts and the federal circuit that software is an important component of its speech decoding technology because the invention wouldn’t work without it. 

The infringement is on Article 1 section. 8, number #8 which deals with copyrights and patents. Another law infringement is on is mostly the section 35 U.S.C. 271 in the Patent Act which involves the export of components of patented inventions from the
U.S. This act was passed by Congress to keep companies from shipping components abroad for assembly in order to avoid patent claims.  

In a stunning 7-1 decision, the Federal Circuit ruling that was in favor of AT&T, turned to Microsoft. The supreme court said that Microsoft’s arguments that software coupled with the device on which the software is installed cannot be considered patentable Convinced them to rule Microsoft in favor 

So Microsoft won 

If AT&T would’ve won, then many companies involved in the practice of sending software overseas, would’ve cost the software industry billions of dollars for past infringement.  

And if AT&T won, then Microsoft would’ve owed them around 1 billion dollars.