The Supreme Court has granted certiorari in the patent licensing case of Kimble v. Marvel Enterprises (13-720) with the following question:
Whether the Court should overrule Brulotte v. Thys Co., which held that “a patentee’s use of a royalty agreement that projects beyond the expiration date of the patent is unlawful per se.”
The policy goal behind the 1964 Brulotte decision is to avoid the potential antitrust harm associated with an ongoing patent monopoly beyond the 20-year term. However, antitrust law has generally moved away from this sort of per se rule – especially as to freedom-of-contract.
In this case, the patentee’s patent has expired, but the license agreement seemingly calls for ongoing payments even beyond expiration. The Ninth Circuit held that, under Brulotte, Marvel is no longer required to pay royalties on its sales of the Spider-man toy. The Solicitor General recommend that the Supreme Court not take the case — a move that I called “somewhat surprising” since the government had previously noted that Brulotte does not mesh well with contemporary antitrust practice.
With Brulotte on the chopping block, we can also expect that the holding in Lear v. Adkins, 395 U.S. 653 (1969). In that case, the court held that a contractual promise not to challenge a patent’s invalidity is unenforceable.