Spiderman Toy Not Granted Patent Royalties Beyond the Life of the Patent

On 22 June 2015, the Supreme Court of the United States (SCOTUS), in a 6-3 decision, left undisturbed the 51-year-old decision in Brulotte v. Thys Co. (1964). The rule has been and continues to be that patent royalty agreements cannot require payments after the expiration of a patent. Kimble v. Marvel Entertainment, LLC, Case No. 13-720.

In this case, Marvel agreed to purchase Kimble’s patent for a lump sum plus a 3% royalty on future sales. The contract gave no expiration on the royalty. Toward the end of the life of the patent, Marvel asked a trial court to confirm that Marvel was not obligated to pay the royalty beyond the expiration of U.S. Patent No. 5,072,856. The court agreed. According to long-standing public policy, any invention as claimed in a patent falls into the public domain and thus grants the public free use of the invention after the patent expires. SCOTUS confirmed this understanding. According to SCOTUS, there are many other ways ways to structure contracts that include payments and other benefits to avoid this rule.