Supreme Court to Hear Argument on March 31 Whether to Overrule Brulotte v. Thys, Co.

Fifty years ago, the Supreme Court held in Brulotte v. Thys Co., 379 U.S. 29 (1964) that a license agreement requiring royalty payments for use of a patented invention after expiration of the patent term is unlawful per se.  On March 31, in Kimble v. Marvel Enterprises, Inc., No. 13-720, the Supreme Court will consider whether economics, the parallel antitrust law, and marketplace realities are such that Brulotte should be overturned.

Kimble arose out a licensing dispute over a patent settlement involving a glove that allows its wearer to mimic the comic-book hero Spider-Man by shooting pressurized foam string from the palm.  While expressing some reservation regarding whether the Brulotte rule continued to make sense, the Ninth Circuit held that the settlement royalty provision was unenforceable after the patent’s expiration.

The thrust of Kimble’s argument is that Brulotte was based on antitrust principles regarding the inherent market power of a patent and antitrust per se rules—principles that have been widely rejected.  Kimble advocates instead that Brulotte-type agreements be analyzed on a case-by-case basis under the antitrust rule of reason and only be invalidated if the patentee is actually shown to have market power.

The case has attracted over a dozen amicus briefs on all sides of the issues, including from the American Intellectual Property Law Association, the Licensing Executives Society, and Intellectual Property Owners Association.

Most notably, the Solicitor General has submitted a brief defending the Brulotte rule and has been granted the right also to present oral argument. The SG argues that the rule is based on sound patent law principles of free public access to unpatented and formerly-patented inventions and that antitrust considerations do not justify overruling Brulotte’s rule of patent policy.  The SG further contends that principles of stare decisis apply with particular force to statutory-interpretations decisions such as this one.

We will be monitoring the Supreme Court oral argument next week and will report further.

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