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Is Software a Section 271(f) 'Component' of a Patented Invention?

By Sean Chao

On Oct. 27, 2006, the Supreme Court granted certiorari in Microsoft Corp. v. AT&T Corp. (No. 05-1056), preparing to elucidate the contours of patent infringement under 35 U.S.C. '271(f) as applied to the exportation of software code. This case marks the first time in the 22 years since Congress enacted the provision that the Court will venture into this area. The outcome may have significant ramifications for the software industry because '271(f) was widely assumed to apply only to the tangible components of a physical machine. If '271(f) applies equally to software, then software companies will need to rethink their exposure to liability when exporting software abroad. Liability under '271(f) may extend beyond the initial act of exporting and further include downstream activities, such as copying and installing that are done entirely outside of the United States.

Congress enacted '271(f) in 1984 in response to the Supreme Court's ruling in Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518 (1972), which exposed a loophole in '271 that allowed potential infringers to escape liability by manufacturing the components of a patented invention in the United States and then shipping them abroad for assembly. In Deepsouth, the manufacturer attempted to avoid an injunction by manufacturing the parts of a patented machine in the United States and then shipping the parts in three separate boxes to its overseas customers for easy assembly. Because only the components were 'made' in the United States, there was no direct infringement under '271(a), which prohibits only the making, using, offering to sell, selling, or importing of a patented invention within the United States. Furthermore, as there was no direct infringer in the United States, indirect infringement under ”271(b) or (c) did not apply.

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