Skip to main content

Patent holder cannot charge royalties after expiry of patent term

Indulging in an interesting discussion as to whether the decision given in Brulotte v. Thys Co., 379 U. S. 29 (1964) that a patent holder cannot charge royalties for the use of his invention after its patent term has expired is still a good law, the Court with a majority of 6:3 held that the rule of Stare decisis requires to adhere to the law laid in Brulotte and overturning Brulotte would thus upset expectations, most so when long-dormant licenses for long-expired patents spring back to life. Giving reasons, Kagan J., who delivered the opinion of the Court, explained the reason for not overturning the ruling is that Brulotte’s statutory and doctrinal underpinnings have not eroded over time and the core feature of the patent laws on which the case relied remains just the same. The Court also observed that overruling a case always requires “special justification”, over and above the belief “that the precedent was wrongly decided” which cannot be established with Brulotte.

In the instant case respondent Marvel Entertainment’s corporate predecessor agreed to purchase petitioner Stephen Kimble’s patent for a Spider-Man toy in exchange for a lump sum plus a 3% royalty on future sales. The agreement set no end date for royalties. As the patent neared the end of its statutory 20-year term, Marvel discovered Brulotte v. Thys Co., 379 U. S. 29, sought a declaratory judgment in federal district court confirming that it could stop paying Kimble royalties.

Considering the contention rose by the petitioner that Brulotte suppresses technological innovation and harms the national economy by preventing parties from reaching agreements to commercialize patents, the Court stated that Brulotte leaves parties free to enter alternative arrangements that may suffice to accomplish parties’ payment deferral and risk-spreading goals. Hence, the Court declined Kimble’s invitation to overrule Brulotte. [Kimble v. Marvel, decided on 22.06.2015]

 Article referred: http://blog.scconline.com/post/2015/07/06/brulotte-still-a-good-law-declared.aspx

Comments

Post a Comment

Most viewed this month

Michigan House Approves 'Right-to-Work' Bill

Amid raucous protests, the Republican-led Michigan House approved a contentious right-to-work bill on  Dec 11 limiting unions' strength in the state where the (Union for American Auto Workers)  UAW was born. The chamber passed a measure dealing with public-sector workers 58-51 as protesters shouted "shame on you" from the gallery and huge crowds of union backers massed in the state Capitol halls and on the grounds. Backers said a right-to-work law would bring more jobs to Michigan and give workers freedom. Critics said it would drive down wages and benefits. The right-to-work movement has been growing in the country since Wisconsin fought a similar battle with unions over two years ago. Michigan would become the 24th state to enact right-to-work provisions, and passage of the legislation would deal a stunning blow to the power of organized labor in the United States. Wisconsin Republicans in 2011 passed laws severely restricting the power of public s...
Post a Comment
Read more

Power to re-assess by AO and disclosure of material facts

In AVTEC Limited v. DCIT, the division of the Delhi High Court held that AO is bound to look at the litigation history of the assessee and cannot expect the assessee to inform him.  In the instant case, the Petitioner, engaged in the business of manufacturing and selling of automobiles, power trains and power shift transmissions along with their components, approached the High Court challenging the re-assessment order passed against them. For the year 2006-07, the Petitioner entered into a Business Transfer Agreement with Hindustan Motors Ltd, as per which, the Petitioner took over the business from HML.  While filing income tax return for the said year, the petitioner claimed the expenses incurred in respect of professional and legal charges for the purpose of taking over of the business from HML as capital expenses and claimed depreciation. Article referred: http://www.taxscan.in/assessing-officer-bound-look-litigation-history-assessee-delhi-hc-read-order/8087/
Post a Comment
Read more

The recovery of vehicles by the financier not an offence - SC

Special Leave Petition (Crl.) No. 8907  of 2009 Anup Sarmah (Petitioner) Vs Bhola Nath Sharma & Ors.(Respondents) The petitioner submitted that  respondents-financer had forcibly taken away the vehicle financed by them and  illegally deprived the petitioner from its lawful possession  and  thus,  committed  a crime. The complaint filed by the petitioner had been  entertained  by  the Judicial Magistrate (Ist Class), Gauhati (Assam) in Complaint Case  No.  608 of 2009, even directing the interim custody of the vehicle (Maruti  Zen)  be given to the petitioner vide order dated  17.3.2009.  The respondent on approaching the Guwahati High  Court against this order, the hon'ble court squashed the criminal  proceedings  pending   before  the  learned Magistrate. After hearing both sides, the Hon'ble Supreme Court decided on 30th...
7 comments
Read more