Kimble v. Marvel Entertainment, LLC

A patentee cannot continue to receive royalties after expiation of the patent, however, parties may use alternative arrangements to achieve similar payment deferral outcomes.

Petitioner owned a Spider-Man toy patent. Respondents agreed to purchase Petitioner’s patent and pay royalties for future sales over a period of time that extended beyond the life of the patent. Subsequently, Respondents discovered Brulotte v. Thys Co., 379 U.S. 29 (1964), which states that expired patents cannot earn royalties because of patent law policies aimed to promote free use and fair competition of expired patents. Citing Brulotte, Respondents sought confirmation in federal district court that they could cease paying Petitioner royalties when his patent expired. The court made a declaratory judgment in Respondent’s favor and the Ninth Circuit affirmed. On appeal, Petitioner asked the Supreme Court to overturn Brulotte and evaluate patent arrangements on a case-by-case basis. Petitioner argued that Brulotte’s reasoning is mistaken, harms the economy, and discourages future innovation. The Court held that, even if Petitioner’s claims were correct, the superpower of stare decisis should rarely be undone. The Court reasoned that Brulotte’s principles are reliable and predictable. Congress, as the only entity that can overturn the Court’s statutory interpretations, has chosen not to overturn Brulotte on several occasions. The court of appeals correctly adhered to stare decisis, even though Brulotte’s principles may be seen as wrong or outdated. Affirmed.