Friday, December 12, 2014

Supreme Court - Kimble v. Marvel Entertainment - Reviewing If A Patent Licensee Must Pay After Patent Expiration

Today, the US Supreme Court granted a petition for certiorari in Kimble v. Marvel Entertainment Inc. to review if a patent licensee has an obligation to pay royalties after patent expiration.

As background, U.S. Patent No. 5,072,856 to Kimble (Kimble) relates to a Spider-Man glove, which Kimble discussed with Marvel's predecessor. Marvel decided it could make the "Web Blaster" without Kimble's help. Kimble sued for patent infringement and breach of an oral agreement. A district court granted summary judgment of non-infringement, but a jury decided Marvel breached the agreement. This led to a settlement where Marvel agreed to buy the patent and pay royalties on future sales. The patent expired but the contract required Marvel to continue to pay royalties for sales. Kimble sued for breach of contract when the settlement unraveled. Marvel filed a DJ arguing successfully that Kimble couldn't get royalties for post-expiration sales. The Ninth Circuit opinion affirmed. Kimble filed a petition for certiorari to the Supreme Court.

The petitioner asked Brulotte v. Thys Co. (1964) be overruled. Brulotte had held a royalty agreement that goes beyond patent expiration is unlawful per se. The petitioner argued "Brulotte is the most widely criticized of this Court’s intellectual property and competition law decisions. Three panels of the courts of appeals (including the panel below), the Justice Department, the Federal Trade Commission, and virtually every treatise and article in the field have called on this Court to reconsider Brulotte, and to replace its rigid per se prohibition on post expiration patent royalties with a contextualized rule of reason analysis."

Note the Solicitor General's brief advised against review, since it said Brulotte is not about competition, but the Court's interpretation of federal patent law of allowing free access to an invention after the patent expires.

Also see Marvel's opposition brief.

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