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Recent U.S. Court Decisions And Developments Affecting Licensing

By John Paul and D. Brian Kacedon

U.S. Supreme Court Upholds Ban on Post-Expiration Royalties in Patent LicensesIn the 1964 decision Brulotte v. Thys Co., the U.S. Supreme Court held that a patent owner cannot receive royalty payments that “accrue” after a patent expires. Under this ruling, the patent owner cannot receive royalties for a licensee’s sales or other activities covered by the patent that occur after the patent expires. The Court viewed such royalties as improperly extending “the patent monopoly beyond the [patent] period.” Recently, in Kimble v. Marvel Entertainment, LLC, the Supreme Court declined to overturn this bright-line rule, instead emphasizing that the policy issues raised should be left to Congress. In addition, the Court noted that while the Brulotte rule prevents some parties from entering into contracts having some particular terms they may desire, it still leaves open ways for them to enter into other contracts with other terms that allocate risk and reward in commercializing inventions.

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