Interesting tidbits from today’s oral argument in “Microsoft v. AT&T”February 21, 2007

A few interesting exchanges took place in today’s oral arguments before the Supreme Court in the Microsoft v. AT&T case. Click to read these portions of the arguments.The first related to jurisdiction. The parties had entered into a “high/low” settlement before the arguments, which essentially means that they have settled the case, but depending on how the Court comes out, the terms of the settlement will be different.

JUSTICE SCALIA: Mr. Olson, before you get into the merits I have a question, a preliminary question. I understand from AT&T’s brief that there has been a stipulation entered into between the parties after the judgment below which preserved Microsoft’s right to appeal and prescribed different dollar amounts that Microsoft must pay AT&T depending on the outcome of the appeal. Does that raise any, any muteness problem? Can you sort of wager on the outcome of an appeal that way? MR. OLSON: No, I don’t believe so, Justice Scalia. JUSTICE SCALIA: Well, suppose two parties just, you know, parties that otherwise do not have a case or controversy, bet each other that the district court will come out one way or the other way in, in a trumped-up suit. Does that create a standing – MR. OLSON: This is by no means a trumped-up suit. It’s a very serious suit. The outcome, the judgment, the amount of damages that must be paid is not a matter of wager. It depends upon the decision of a matter of law of an interpretation of a statute of the United States. JUSTICE SCALIA: Well, you could say the same thing in the hypothetical I gave. It is a matter of wager, which way the Court will come out. MR. OLSON: This is an entirely legitimate, I submit, means by which parties may preserve a legal issue depending upon how a legal question is decided. The only thing that’s been resolved is the amount that will be paid as damages depending upon the outcome of the appeal.

Another series related to Justices Breyer and Stevens questioning Daryl Joseffer, Assistant Solicitor General arguing on behalf of the United States, whether software is even patentable subject matter:

JUSTICE BREYER: I take it that we are operating under the assumption that software is patentable? We have never held that in this Court, have we? MR. JOSEFFER: No, but as I was saying before – JUSTICE BREYER: So what should we do here? Should, if we are writing this, since it’s never been held that it’s patentable in this Court – MR. JOSEFFER: I think if – JUSTICE BREYER: If I were writing something, should I say on the assumption that it’s patentable? Since the issue isn’t raised? MR. JOSEFFER: No. I think, I think the reason that’s not relevant here is that the patented invention in this case is not software. It’s computer that has software loaded into it. And the components of a patented invention do not themselves have to be patented. . . . JUSTICE STEVENS: Your time is up, but I want to ask you one yes or no question. In your view is software patentable? MR. JOSEFFER: Standing alone in and of itself, no.

Also, the Justices (at least some of them) seem skeptical of AT&T’s position:

JUSTICE BREYER: . . . I don’t see how to decide for you without at the same time permitting a person to walk over to the Patent Office, to read that application and the description, which after all at least can be a very highly detailed set of instructions of how to make a machine, getting on the phone, explaining that just like the blueprint which it is just like to somebody in Europe. They then make it. And that on your reading would violate the statute. It can’t be right that that would and you don’t even think it would. MR. WAXMAN: I don’t because – JUSTICE SOUTER: And so what’s the difference between that and this case for you? . . . JUSTICE BREYER: . . . I understand your point now, I think, but however you put it, it has to come down to the fact that this very, very complex and detailed thing that is being supplied is an abstract set of numbers. And I can understand how the patent application does not itself contain that set of numbers, but rather contains an instruction as to how to generate that set of numbers. But I then would be quite frightened of deciding for you and discovering that all over the world there are vast numbers of inventions that really can be thought of in the same way that you’re thinking of this one, and suddenly all kinds of transmissions of information themselves and alone become components. [MR. OLSON]: . . . You’re right, Justice [Breyer], that the court of appeals for the Federal Circuit thought it was bringing this statute up to date and it even said so. We are making an extension of the statute to keep up to date with the technology. That is not for courts to do.

And, as usual, Justice Scalia was good for a laugh:

JUSTICE GINSBURG: Mr. Waxman, this may, this may help focus that question. Suppose the master disks were made abroad. You would be taking the same position, would you not? MR. WAXMAN: If — that depends how it were made. If it were– JUSTICE SCALIA: I hope we can continue calling it the golden disk. It has a certain Scheherazade quality that really adds a lot of interest to this case. (Laughter.)

Overall, it looks at this point that the Court may come down in Microsoft’s favor, perhaps holding, like it did in Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518 (1972), that it was not the Court’s place to expand the reach of United States patent law, but rather it required Congressional action. Of course, in 1984, Congress added § 271(f), legislatively overruling the Court’s Deepsouth decision. Perhaps if the Court follows the same reasoning from Deepsouth, in 2019 Congress will make a similar amendment.