Post-expiration royalties barred for Spider-Man related patent

In Kimble, et. al. v. Marvel Entertainment, LLC[1], the Supreme Court upheld previous precedent[2] which created a bright line rule preventing patent owners from obtaining royalties from sales made after the patent term has expired. The dispute in this case resolved around an agreement between Marvel and Stephen Kimble for the sale of Mr. Kimble’s patent on a toy that allows a person to shot webs (i.e., pressurized foam string) “from the palm of [the] hand” similar to comic-book hero Spider-Man.[3] Pursuant to the agreement Mr. Kimble was to receive a 3% royalty on future sales from Marvel with no set end date for royalties.[4]

Marvel filed an action for declaratory judgment to determine that it was not required to pay Mr. Kimble royalties after the term of the patent expired based upon the Brulotte rule.[5] Mr. Kimble argued that the Brulotte rule should be abandoned and replaced by a case by case approach based upon antitrust law’s “rule of reason.”[6] The Supreme Court rejected this argument and upheld the Brulotte rule noting that while there is economic criticism of the rule, the question would be best resolved in Congress, which, to date, had “spurned multiple opportunities to reverse Brulotte.”[7] The Supreme Court also noted that there are ways around the Brulotte rule.[8]

As noted by the Supreme Court, “[p]atents endow their holders with certain superpowers, but only for a limited time.”[9] A patent typically expires 20 years from the date that the application was filed.[10] During the term of the patent, the owner has exclusive rights to sell or license the patented article. However, once the term expires, the right to make or use the article passes to the public. There are different types of patents, some of which expire in less than 20 years. Thus, agreements relating to patent rights can be complicated and involve consideration of several factors, such as how the term of the patent will affect the agreement. Please contact our office if you have any questions regarding patents or the information in this article.

Daniel Devine, Esq.
Santucci Priore, P.L.
Shareholder

[1] No. 13-720, 2015 WL 2473380 (U.S. Jun. 22, 2015).
[2] Specifically the case entitled Brulotte v. Thys, Co., 379 U.S. 29 (U.S. 1964).
[3] Kimble, supra.
[4] Id.
[5] Id.
[6] Id.
[7] Id.
[8] Kimble, supra.
[9] Id.
[10]35 U.S.C. § 154(a)(1).