Kimble V Marvel Entertainment Case Study

Introduction
In Kimble v. Marvel Entertainment Inc. the Supreme Court was asked to overturn the 50-year old Brulotte rule that states, “a patent holder cannot charge royalties for the use of his invention after its patent term has expired”. In a decision that hinged on the principle of stare decisis the Court upheld the decision of the Brulotte.
Background
In the early 1990’s, Kimble obtained a patent for a toy, web-shooting glove. In 1997 he filed an infringement suit against Marvel for selling an identical toy. To resolve litigation the parties came to a settlement agreement in which Marvel agreed to pay lump sum to Kimble, in addition to royalties on all future sales of products using the patent. There was no end date specified in the settlement agreement. Upon the end of Kimmel’s patent, Marvel ceased to pay royalties. Kimble then sued for breach of contract. The District Court of Arizona ruled that Marvel’s obligations ended on the date the patent expired- May 25th, 2010. Kimble appealed to the Ninth Circuit which

This leaves parties free to contract around Brulotte. For example, the Court stated a licensee could make an arrangement defer pre-expiration payments for use of a patent into the post-expiration period. For Example, “A licensee could agree, for example, to pay the licensor a sum equal to 10% of sales during the 20–year patent term, but to amortize that amount over 40 years”. Furthermore the court argued there were other ways around Brulotte where there were other rights involved, because Brulotte allows post expiration Royalties when tied to a non-patent right. Thus a licensee could contract for patent royalties during the patent term and a non-patent right tied royalty such as trade secret royalties post-expiration. Finally, the court stated the parties were free to enter other business arrangements such as joint