Term: 2014
Docket: 13-720
Kimble v. Marvel Enterprises, Inc.
- Pro
13-720 KIMBLE V. MARVEL ENTERPRISES, INC. DECISION BELOW: 727 F.3d 856 CERT. GRANTED 12/12/2014 QUESTION PRESENTED: Petitioners are individuals who assigned a patent and conveyed other intellectual property rights to Respondent. The court of appeals "reluctantly" held that Respondent, a large business concern, was absolved of its remaining financial obligations to Petitioners because of "a technical detail that both parties regarded as insignificant at the time of the agreement." App. 2-3; 23. Specifically, because royalty payments under the parties' contract extended undiminished beyond the expiration date of the assigned patent, Respondent's obligation to pay was excused under Brulotte v. Thys Co., 379 U.S. 29, 32 (1964), which had held that "a patentee's use of a royalty agreement that projects beyond the expiration date of the patent is unlawful per se." A product of a bygone era, Brulotte is the most widely criticized of this Court's intellectual property and competition law decisions. Three panels of the courts of appeals (including the panel below), the Justice Department, the Federal Trade Commission, and virtually every treatise and article in the field have called on this Court to reconsider Brulotte, and to replace its rigid per se prohibition on post--expiration patent royalties with a contextualized rule of reason analysis. The question presented is: Whether this Court should overrule Brulotte v. Thys Co., 379 U.S. 29 (1964). LOWER COURT CASE NUMBER: 11-15605
The case of Kimble v. Marvel Enterprises, Inc., revolved around a dispute over patent royalties between Stephen Kimble and Marvel Enterprises. In 1990, Kimble patented a Spider-Man toy that could shoot foam string from the palm of a glove. He sold his patent to Marvel in exchange for an upfront payment and three percent royalty on future sales. However, when the patent expired in 2010, Marvel stopped paying royalties arguing that under the Supreme Court's decision in Brulotte v. Thys Co., it was not required to pay post-expiration royalties as they were deemed unlawful per se (inherently). The district court sided with Marvel based on this precedent but acknowledged its ruling might be unfair. Kimble appealed to the Ninth Circuit which also upheld Brulotte despite acknowledging criticism towards it by various courts and commentators who argued it stifled innovation by discouraging long-term deals beneficial for both parties involved. In June 2015, the U.S Supreme Court affirmed lower courts' decisions maintaining that any change should come from Congress rather than judiciary given its role is not to correct supposed statutory or judicial 'mistakes', but interpret laws according to established legal principles.
In the dissenting opinion for Kimble v. Marvel Enterprises, Inc., Justice Samuel Alito argued that the court should have overruled Brulotte v. Thys Co., a 1964 decision which held that patent holders cannot charge royalties for use of an invention after its patent term has expired. He contended that this precedent was based on a misinterpretation of U.S. patent law and is not in line with modern economic theory or practice, pointing out it's been widely criticized by legal scholars and economists alike. Alito also noted that Congress had ample opportunity to correct Brulotte if it disagreed with its interpretation but chose not to do so, suggesting tacit approval of the ruling’s understanding of statutory intent.
