Dennis Crouch's Patently-O: SCOTUS: Post-Expiration-Licensing

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SCOTUS: Post-Expiration-Licensing Posted: 05 Apr 2015 07:49 PM PDT Last week the Supreme Court heard oral arguments in the patent licensing dispute known as Kimble v. Marvel Enterprises, Docket No. 13-720.   In that case the license of Mr. Kimble’s patent covering a web-shooter-toy appears to extend beyond the expiry date of the patent and Supreme Court’s prior precedent holds that such post-expiry royalty arrangements are not enforceable. Brulotte v. Thys, 379 U.S. 29 (1964) (post expiry patent license is per se patent misuse). The per se rule created in Brulotte is what Chief Justice Roberts called a “problem with the ’60s.” More recently, the Supreme Court has overruled a whole set similar per se antitrust cases — and instead applying a rule of reason. The patentee’s basic argument is that it makes sense to allow parties to negotiate for their own contract terms and decouple a private contract from the patent’s right to exclude. MR. MELNIK (for patentee):  The way that I would reconcile it … is to decouple the notion of the right to exclude, which is what the statutory term is about, the right to prevent the public as a whole from using the patented invention from the specific royalty arrangement. Under a rule of reason, a post-expiry license could still be seen as misuse, but that result would depend upon the particular circumstances. One reason not to overrule Brulotte is that such a course is a rather drastic policy-based action. JUSTICE SOTOMAYOR: How long has Brulotte been around? MR. MELNIK: 50 years. JUSTICE SOTOMAYOR: Why don’t we just let Congress fix it, because if it’s wrong, people can complain to [Congress]. . . . JUSTICE KAGAN: It may or may not be right, but there’s nothing incredibly sort of wierd and anomalous about it. . . . we have a very strong rule of statutory stare decisis.  We need some special justification to break away from that rule. . . .  But [this issue] surely is a question for Congress, to go back to what Justice Sotomayor was saying, you know, to the extent that there’s a real world problem, and maybe there is and maybe there’s not, it’s a little bit hard to tell from the amicus briefs.  I mean, they’re surely better equipped than we are to deal with that. The response to the Court here is that the court has been revising statutes for many years without much concern for stare decisis – i.e., that it is really too late for the court to claim it is not an activist court. On the policy side – the basic reason to keep the rule is as a mechanism for better insuring that inventions are available to the public at the patent term’s expiration.

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