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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

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