On Monday, the US Supreme Court ruled 7-1 that US patent law doesn't apply to software sold in foreign countries. The decision is a victory for Microsoft, which was being sued for damages by AT&T because copies of Windows sold outside the United States include technologies that infringe on AT&T digital speech patents.

"Today's Supreme Court decision is important for the entire information technology industry, adding clarity and balance to our patent system," Microsoft wrote in a statement issued Monday. "This decision promotes a global patent system that works. The ruling ensures that U.S. courts, like courts elsewhere, can respect the patent laws of other countries, helping promote cooperation among patent systems worldwide."

AT&T argued that Microsoft was violating a 1984 law which stated that patent infringement occurs when a company ships components of a patented product to a foreign company for assembly and sale outside the US. Previously, a US District Court and the US Court of Appeals for the Federal Circuit had both ruled in favor of AT&T. But the Supreme Court agreed with Microsoft, ruling that computer code is not a component, in a legal sense, until it is copied to a PC's hard drive or installation disk.

Microsoft will potentially save billions of dollars in fines and other legal fees as a result of the decision. Previously, the company had been fined $2 billion in separate patent infringement cases involving Eolas Technologies and Alcatel-Lucent. Microsoft says both of these cases "will be revisited" as a result of the ruling.