On December 12, 2014, the U.S. Supreme Court granted
certiorari in the third patent case to be heard this term, this one presenting an issue
at the intersection of patent law and antitrust law. In Brulotte v. Thys Co., 379 U.S. 29 (1964), the Supreme Court ruled
that a patent license requiring the licensee to pay royalties after the licensed
patent expires is a per se violation of the antitrust laws. In addition, the
same conduct constitutes patent misuse, and may render a patent unenforceable
in a subsequent infringement action. Now, 50 years later, the petitioner in Kimble v. Marvel Enterprises, Inc., No.
13-720, asks the Court to overturn that per se rule.
Kimble is the inventor of a "Spiderman" toy that allows children (and perhaps some adults) to shoot foam webs from their wrists. He licensed the patent to Marvel. The license included a royalty based on sales of the toy, but did not provide for the royalties to end when the patent expired. Marvel relied on Brulotte to stop paying post-expiration royalties.
The Brulotte Rule has been
widely criticized as outdated. For example, Scheiber
v. Dolby Labs., Inc., 293 F.3d 1014 (7th Cir. 2002), Judge Richard Posner
criticized the rule as being wrong, lamenting that the Seventh Circuit had “no
authority to overrule a Supreme Court decision no matter how dubious its
reasoning strikes us, or even how out of touch with the Supreme Court’s current
thinking the decision seems.” The U.S. Department of Justice and Federal Trade
Commission also have criticized the rule in recent guidelines analyzing
anticompetitive provisions in intellectual property license agreements. In
recent years, the Supreme Court has
modernized its analysis of antitrust concerns relating to intellectual
property. See, e.g., Illinois Tool Works, Inc. v. Independent. Ink, Inc.,
547 U.S. 28 (2006) (overruling its prior decisions that, in an antitrust tying
claim, a patent does not necessarily confer market power upon a patentee). The Kimble case may be a vehicle for it to
dispense with the Burlotte rule as well. Oral arguments have not been
scheduled.
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