LES INSIGHTS FEATURED ARTICLE
Kimble v. Marvel
By Brian P. O'Shaughnessy and Brian S. Seal, RatnerPrestia
On June 22, 2015, the Supreme Court issued its opinion in Kimble v. Marvel, upholding the longstanding per se rule against patent licensing agreements that include royalties accruing after the patent’s expiration. In doing so, the Court adopted the rationale urged by LES (U.S.A. and Canada), Inc. in an amicus brief prepared by Brian P. O’Shaughnessy, LES Regional Vice President, USA, and Brian Seal, both of RatnerPrestia, Washington, D.C.
First established in Brulotte v. Thys Co., 379 U.S. 29 (1964), the per se rule has since attracted significant criticism as an unnecessary impediment to parties’ freedom to contract. That criticism culminated in theKimble case, in which the petitioner asked the Court to overturn the rule. In its amicus brief in support of neither party, LES (USA and Canada) noted that the rule as originally issued was a narrow one impermissibly broadened by subsequent case law and invited the Court to clarify the rule’s scope.
Authored by Justice Kagan, the Court’s opinion does just that, stating that the rule applies only in limited circumstances while providing ample opportunity for parties to draft around the prohibition on post-expiration royalties. For example, the Court noted that the rule does not bar amortization agreements, agreements that include non-patent rights, or agreements that include non-expired patent rights, all of which were examples provided in our amicus brief. Thus clarified, the Brulotte rule is restored to its narrow original boundaries, which offer parties needed flexibility in licensing.