Supreme Court Sides with Innovators Over Patent Holders

Includes: MSFT, T
by: Judith Levy

The U.S. Supreme Court has sided with technology companies in two rulings that limit the rights of those owning or seeking patents. In one ruling, the Court voted 7-1 that Microsoft does not owe damages to AT&T for copies of the Windows OS installed on computers abroad. AT&T claimed that Microsoft had infringed a company patent on digital voice transmissions. In the other ruling, the Court unanimously agreed to toughen the requirement that patent seekers show their products to be genuinely innovative and not merely "obvious." In the Microsoft case, the Court overturned the Federal Appeals Court's support for AT&T's claim that U.S. patent rights extend beyond American borders. "If AT&T desires to prevent copying in foreign countries, its remedy today lies in obtaining and enforcing foreign patents," Justice Ruth Bader Ginsburg wrote. Microsoft will use the ruling to ask the courts to cut the damages it owes from two other patent cases, including a record $1.52 billion verdict in a case won by Alcatel-Lucent. "It's a great ruling that will reduce substantially our exposure and potential exposure in these patent cases," said Andy Culbert, Microsoft's chief patent counsel. "We have 45 pending cases, and I would say this case affects at least 43 of them."

Sources: U.S. Supreme Court's decision on Microsoft v. AT&T [pdf], Wall Street Journal, Red Herring, Bloomberg, TMCnet
Commentary: Microsoft Gets Boost in Alcatel Patent BattleAlcatel-Lucent Wins $1.52 Billion Patent Judgment Against MicrosoftKeeping Software Free - One Man's Battle Against Software Patents
Stocks/ETFs to watch: Microsoft Corp. (NASDAQ:MSFT), AT&T Inc. (NYSE:T). Competitors: Google Inc. (NASDAQ:GOOG), International Business Machines Corp. (NYSE:IBM), Sprint Nextel Corp. (NYSE:S), Verizon Communications Inc. (NYSE:VZ). ETFs: iShares Goldman Sachs Technology (NYSEARCA:IGM), iShares Goldman Sachs Software (BATS:IGV), First Trust Morningstar Div Leaders Idx (NYSEARCA:FDL), WisdomTree High-Yielding Equity (NYSEARCA:DHS)
Conference call transcripts: Microsoft F3Q07 (Qtr End 3/31/07), AT&T Q1 2007

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