Now, I have already stated that I don't believe that software, in and of itself, is patentable. As U.S. Supreme Court Justice Antonin Scalia recently remarked, "There needs to be a device", and Microsoft's own attorneys agreed.

MR. OLSON [For Microsoft]: The '580 patent is a program, as I understand it, that's married to a computer, has to be married to a computer in order to be patented. JUSTICE SCALIA: You can't patent, you know, on-off, on-off code in the abstract, can you? MR. OLSON: That's correct, Justice Scalia. JUSTICE SCALIA: There needs to be a device. MR. OLSON: An idea or a principle, two plus two equals four can't be patented. It has to be put together with a machine and made into a usable device.

Much of the AT&T case hinged upon whether software can considered to be a "component" of a patented invention, as was argued against by Microsoft's attorney:

MR. OLSON: Physical things must be components under 271(f) because they must be supplied from somewhere. Ideas have no physical from. They're in the air. The words used, "supplied from" tells us that it must be a physical thing combined with. Ideas don't combine with physical things to make a patented invention. Physical things do.

Apparently, Justice Alito went even further with his concurring opinion [pdf].

I agree with the Court that a component of a machine, whether a shrimp deveiner or a personal computer, must be something physical. Ante, at 9 11. This is because the word "component," when concerning a physical device, is most naturally read to mean a physical part of the device. ... Furthermore, §271(f) requires that the component be "combined" with other components to form the infringing device, meaning that the component must remain a part of any. ... For these reasons, I agree with the Court that a set of instructions on how to build an infringing device, or even a template of the device, does not qualify as a component. Ante, at 9 10. ... Because no physical object originating in the United States was combined with these computers, there was no violation of §271(f). Accordingly, it is irrelevant that the Windows software was not copied onto the foreign-made computers directly from the master disk or from an electronic transmission that originated in the United States. To be sure, if these computers could not run Windows without inserting and keeping a CD-ROM in the appropriate drive, then the CD-ROMs might be components of the computer. But that is not the case here. * * * Because the physical incarnation of code on the Windows CD-ROM supplied from the United States is not a "component" of an infringing device under §271(f), it logically follows that a copy of such a CD-ROM also is not a component. For this reason, I join the Court's opinion, except for footnote 14.

My favorite part is this "To be sure, if these computers could not run Windows without inserting and keeping a CD-ROM in the appropriate drive, then the CD-ROMs might be components of the computer.". I actually have to run down to the USPTO right now, since it appears that Live CDs may be patentable... there isn't any prior art, is there?