Despite a negative brief from the Solicitor General’s Office, on Friday the Supreme Court granted cert. in Kimbell v. Marvell, 727 F.3d 856 (9th Cir. 2013) (a copy can be found at the end of this post). The single question presented is “Whether the Court should overrule Brulotte v. Thys” (379 U.S. 29 (1964)). This decision held that a patentee’s use of a royalty agreement extending royalty payments beyond the expiration date of the patent is unlawful per se. This decision had, in some cases, been extended to void licensee’s contract obligations when “hybrid royalty payments” where involved, e.g., when royalties due to both the use of patent and non-patent rights were involved but had not be clearly delineated, and in the case of deferred payments for profits obtained before patent expiration, but paid after expiration. On the other hand, cases like Aronson, which provided for reduced royalties after a fixed period of time if no patent ever issued, were found to be enforceable, since such agreements did not involve patent licenses.
Brulotte has been widely criticized since it issued – after all, expired patents can be practiced for free by any and all – unless a licensee sees something of value and contracts away its rights – and the Supreme Court may well have taken this case due to the cogent summary of the issues by the 9th Circuit. The decision, due in 2015, will be of particular interest to the “patent and licensing offices” of universities, which have long struggled with questions of best practices in obtaining some royalty stream from early-stage technologies whose maximum earning potential may not be realized until the patents covering them have expired, or are about to expire.
