Rebuffing Critics, Supreme Court Re-Affirms Ban on Post-Expiration Patent Royalties

Morrison & Foerster LLP

Fifty years ago, in Brulotte v. Thys Co., the U.S. Supreme Court held that the collection of royalties after a patent’s expiration constitutes per se patent misuse. Brulotte has been widely criticized as economically irrational. In particular, critics have contended that Brulotte was based on a faulty view of the competitive effects of post-expiration royalties and that the Court, as it has in several antitrust cases, should abandon the per se rule in favor of a “rule of reason” approach.

In Kimble v. Marvel Enterprises, Inc., the critics finally had their day in court; the question presented was whether the Court should overrule Brulotte. While acknowledging that a “broad scholarly consensus” supports the “view of the competitive effects of post-expiration royalties,” the Court nevertheless refused to overrule Brulotte, adhering to principles of stare decisis. The Court was not convinced by claims that Brulotte posed a significant barrier to efficient licensing or that the case has discouraged technological innovation. Moreover, the majority emphasized that Brulotte involved an interpretation of the Patent Act, which requires stricter adherence to stare decisis than in antitrust cases. Brulotte may therefore have implications for other patent cases in which antitrust and competition policies concerns are at issue.

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