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February 21, 2007

Microsoft, AT&T and the Supremes

Posted by Benjamin J. Romano at 9:21 AM

Microsoft marked a milestone today, arguing for the first time before the U.S. Supreme Court in a patent dispute with AT&T.

While the company's long-running antitrust battle once looked like it would reach the highest court in the land, it never did.

Today's roughly hour-long argument stemmed from a patent claim filed by AT&T in 2001. A technology in Windows that converts recordings from analog to digital signals and back again for playback infringes on an AT&T patent. That's not disputed. The question is whether AT&T can collect royalties for copies of Windows made and sold overseas. It boils down to the reach of U.S. patent law. See this Bloomberg story we ran on Tuesday for more details.

A transcript of the oral arguments should be posted here later today.

Brad Smith, Microsoft's general counsel, gave this first take in an interview about 40 minutes after Microsoft's appearance before the Supreme Court:

The Justices were very well prepared and well informed and I think that contributed to a very good discussion with probing questions for both sides. But we certainly came away encouraged by our chances for success. We're certainly not going to predict any outcome on the basis of an oral argument. I don't think it's possible to do that. But I think we came out of the courtroom just as encouraged as we were when we went into it.

He said it was especially important to have the U.S. government arguing along side Microsoft in this case.

"That comes through very clearly when you read the transcript about why in the U.S. government's view and our view, it would be a mistake for the courts to seek to apply U.S. patent laws to activities that take place overseas," Smith said.

Smith seemed a bit awed by the stretch of the court's history:

"It's an amazing courtroom. It's the highest court in the country, obviously. It feels almost a little bit like a temple, a temple to justice. Here's a court that's over 200 years old, grappling with technology that is all very recent and is continuing to change very rapidly."

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