In Brulotte v. Thys Co., 379 U.S. 29 (1964), the Supreme Court of the United States declared that an agreement requiring the payment of royalties beyond the expiration of a patent is an abuse of patent rights. Consequently, such agreements cannot be enforced under the Supremacy Clause of the U.S. Constitution, which establishes federal laws and treaties as the supreme law of the land.
Despite facing criticism from the academic community, the Supreme Court upheld the Brulotte decision and refused to overturn it in Kimble v. Marvel Entertainment, LLC, 576 U.S. 446 (2015).
Kimble v. Marvel Entertainment, LLC Facts: In 1997, Stephen Kimble sued Marvel Entertainment, LLC for patent infringement of his invention, the Toy web-shooting glove, which allowed users to mimic Spider-Man’s abilities by shooting webs from their hands.
The parties reached a settlement in which Marvel Entertainment, LLC agreed to purchase the patent rights by paying a lump sum and a running royalty of 3% on future sales of products with similar features. However, they failed to specify an end date for the royalties, assuming they would continue as long as the products were available in the market. Eventually, Marvel Entertainment, LLC learned about the Brulotte decision, which relieved them from paying royalties after the patent’s expiration.
Consequently, they stopped making royalty payments, leading Stephen Kimble to sue for breach of contract, while Marvel Entertainment, LLC counterclaimed for a court decree exempting them from paying patent royalties beyond the expiration of the patent.
Opinion of the Court: Writing the majority opinion, JUSTICE KAGAN stated that, adhering to the principle of stare decisis, the court declined to overturn the Brulotte decision, which prohibited patent holders from collecting royalties for the use of their inventions after the patent’s expiration. The court noted that once the statutory term of a patent monopoly ends, the public gains the right to make and use the invention without restrictions.
The court reasoned that an expired patent is akin to a non-patentable article in the public domain, which can be freely made and sold by anyone. Previous decisions by the court have deemed contractual provisions limiting the use of such inventions unenforceable.
However, in dissent, JUSTICE SAMUEL ALITO argued that the court’s use of stare decisis in this case represents judicial overreach. He contended that the Brulotte decision was not a plausible interpretation of the Patent Act but was instead based on debunked economic theory. According to him, the decision hinders parties from negotiating licensing agreements that reflect the true value of a patent and disrupts contractual expectations. Alito asserted that stare decisis does not require the retention of this unfounded and harmful precedent, as Brulotte was a policy decision rather than a case of incorrect statutory interpretation.