[JURIST] The US Supreme Court [official website; JURIST news archive] heard oral arguments [transcript, PDF] Wednesday in Microsoft Corp. v. AT&T Corp. [Duke Law case backgrounder; merit briefs], 05-1056, where the court must decide whether Microsoft [corporate website] should be held liable for patent infringement in Windows software sold abroad. AT&T [corporate website] claimed that Microsoft allows foreign computer manufacturers to replicate master discs of its Windows software. The discs contain computer codes patented by AT&T, and AT&T argued that the process infringes their patent under a federal law [text] prohibiting US companies from shipping "components" of products to foreign manufacturers that use them to manufacture products that infringe US patents. In July 2005 the US Court of Appeals for the Federal Circuit upheld [text, PDF] a district court decision favoring AT&T, finding that the Windows software could be considered a "component" of a patented invention and that Microsoft "supplied" the component to overseas manufacturers.

Justice Breyer [Oyez profile] expressed skepticism Wednesday about AT&T's argument, stating that it could pave the way for extensive patent infringement allegations whenever US patented products are copied overseas. Conversely, Justice Kennedy [Oyez profile] questioned the difference between the master discs supplied by Microsoft and the subsequently copied discs distributed to foreign manufacturers for installation on their computers, while Justice Alito [Oyez profile] noted that the ease of copying the discs abroad renders Microsoft's distinction "artificial." Chief Justice John Roberts, Jr. [Oyez profile] recused himself at the start of oral arguments; according to his financial disclosure form [PDF], Roberts owns between $100,001 and $250,000 worth of Microsoft stock. CNET has more.