In a rather breezy opinion filled with Spiderman puns and references, Justice Kagan, writing for a 6/3 Court, affirmed that Brulotte v. Thys Co., 379 U.S. 29 (1964) controlled the outcome of this dispute over Marvel’s decision to halt royalty payments on a web-slinger toy that it had apparently agreed to make “for as long as kids want to imitate Spider-Man (doing whatever a spider can).” Slip op. at 2. (A copy of the opinion is found at the end of this post.)
The toy was patented by Kimble, and the patent expired in 2010. The ninth circuit affirmed the district court’s grant of S.J. confirming that, in accord with Brulotte, a patentee cannot receive royalties for sales made after his/her patent’s expiration. Cert. was granted and the Court affirmed that stare decisis was operable to keep Brulotte as controlling law, particularly since the dispute involved statutory interpretation – [as opposed to, e.g., first amendment rights?] – and that Congress had rejected attempts to amend the law.
I posted on the “back-story” earlier – see archives under “Licensing” – so a lot of repetition seems unnecessary, but the Court spent some time discussing various work-arounds to the Brulotte bar. These include deferred royalty payments, licensing non-patent rights and alternative “business arrangements,” that universities and other developers of early stage technology might use to temper the loss of patent protection prior to the generation of maximum income from the patented technology. Slip op. at 5-6. Nonetheless, as Justice Kagan wrote: “Patents endow their holders with certain superpowers but only for a limited time.”