Intellectual Property E-Lert -- Rule Against Royalties Past Patent Expiration Upheld

On June 22, 2015, the Supreme Court in Kimble v. Marvel Enterprises, Inc., ruled that royalty agreements that extended past the life of a patent are void. Kimble had a patent on a toy for spraying foam webbing that he licensed to Marvel for a Spider-man toy. In a very entertaining opinion where Justice Kagan describes the rights that patents grant as “superpowers” and, when describing the Court’s authority to “undecide” previous decision and disregard stare decisis, closes with a take on the infamous Spider-man quote that “with great power comes great responsibility.”

While the rule remains in place, licensing specialists can come up with creative ways to get around the rule. For example, deferred payments for pre-patent-expiration use is one method. Another method is to have the license cover other intellectual property such as copyrights, trademarks, or trade secrets. While a patent owner may not receive royalties for use of a patent after the patent expired, various means of drafting royalty agreements remain allowing revenue streams to continue into the future.

Cole Carlson
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