WASHINGTON - The Supreme Court sided with Microsoft Corp. yesterday in a case that restricts the reach of U.S. patents overseas.
In a 7-1 decision, the court found that Microsoft was not liable in a patent dispute with AT&T Inc.
In a separate unanimous ruling against Limerick-based Teleflex Inc., the justices made it easier to invalidate patents, scaling back a legal test that has fueled an era of protection for new products.
The Microsoft decision could affect other lawsuits against the company and save it billions because of the global scope of its operations.
AT&T had sued Microsoft, alleging that computers running the Windows operating system infringed on an AT&T technology that compresses speech into computer code.
AT&T said it was entitled to damages for every Windows-based computer manufactured outside the United States that used the digital speech-coder system.
Microsoft acknowledged violations in the United States regarding the AT&T patent, while insisting the infringement should not be extended internationally.
AT&T said Microsoft ran afoul of a 1984 law making it patent infringement for a company to ship components of a patented product to a foreign country for assembly there.
Microsoft ships its Windows operating system to foreign countries on master disks or via electronic transmissions. That data is copied by foreign companies, which install it on the computers they manufacture.
"The presumption that United States law governs domestically but does not rule the world applies with particular force in patent law," Justice Ruth Bader Ginsburg wrote in the majority opinion.
The case of KSR International Co. v. Teleflex Inc. addressed one of the most basic issues in patent law: How to determine whether a product is obvious and therefore not worthy of a patent.
The U.S. Court of Appeals for the Federal Circuit in the District of Columbia had supported a Teleflex patent for adjustable gas pedals.
"Granting patent protection to advances that would occur in the ordinary course without real innovation retards progress and may . . . deprive prior inventions of their value," Justice Anthony M. Kennedy wrote.
KSR's gas pedals, supplied to General Motors Corp., can be adjusted for a driver's height. When pushed, the pedals send an electronic signal to accelerate.
Teleflex alleged that KSR had infringed by combining the adjustable gas pedal and the electronically actuated fuel system in a way that Teleflex had patented. KSR said that the Teleflex approach to adjustable-gas-pedal technology was obvious and that the patent should be invalidated.
A federal judge threw out the lawsuit that Teleflex filed, but the appeals court reinstated it. The Supreme Court reversed the appeals court and sent the case back to U.S. District Court in Detroit.
"The justices have decided that something is awry and that too many patents are being issued," said Washington lawyer Tom Goldstein, who argued on behalf of Teleflex before the Supreme Court.