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Supreme Court Shows Reluctance to Overturn Brulotte’s Prohibition on Post-Expiration Royalties

Yesterday the Supreme Court heard oral argument in Kimble v. Marvel Enterprises, one of the most important cases on the Court’s docket this term for antitrust and patent law practitioners.  As we previously discussed, in Kimble the Court is considering whether to overturn Brulotte v. Thys Co., a 1964 decision holding a patentee’s use of a royalty agreement that projects beyond the expiration date of the patent is per se unlawful.

Judging from the questions at oral argument, the Court seems disinclined to overturn Brulotte.  Justice Kagan suggested the Court did not have sufficient justification to upend this longstanding precedent, stating there is “nothing incredibly weird and anomalous” about Brulotte’s bright-line rule.  Justice Breyer questioned how Kimble’s desire to extend royalties beyond the life of the patent could be reconciled “with the Constitution’s requirement that patents are for limited terms.”  Justice Ginsberg pointed out that licensing agreements can be crafted to circumvent Brulotte by making clear that payments, even if continuing post-expiration, are for the pre-expiration period.  Additionally, Justices Kennedy, Sotomayor, and Kagan each suggested that the issue of whether Brulotte should be overturned is best left to Congress, not the Court.

Chief Justice Roberts, however, questioned Marvel’s attorney about the economics behind Brulotte, noting that economists “are almost unanimous in saying this is a very bad rule.”

The Justices also seemed circumspect about importing antitrust principles into patent law.  Justice Sotomayor, in particular, questioned Kimble’s counsel about imposing complicated rule of reason analysis into this area of patent law, noting that antitrust principles “already have their own set of problems.”  Justice Scalia also asked Kimble’s counsel on rebuttal whether the petitioner had any basis for suggesting that a rule-of-reason-type analysis should be applied in a patent law case.  The Office of the Solicitor General—which has appeared as amicus curiae in this case and urges the Court not to overturn Brulotte—seized on the Court’s apparent reluctance to apply antitrust law to this case.  The Deputy Solicitor General noted the Court’s key patent decisions had not applied a rule of reason test, and pointed out that Brulotte did not rely on antitrust principles or economic analysis.

The Court’s ruling is expected by June.