Block on Trump's Asylum Ban Upheld by Supreme Court
Steven Kimble must've been quite the Spider-Man fan. In 1990, he invented a toy that mimicked the superhero's ability to shoot spider-webs from his wrists, by attaching a can of foam string to a string, which could be pulled by the user's hand. (See below). He first patented the idea, then presented it to Marvel, which promised to provide royalties if they decided to go through with the idea.
They did, and they didn't. Marvel has been producing variants of the toy since the 1990s, yet refused to pay Kimble his due. After years of litigation, a patent defeat for Kimble in summary judgment, and a jury verdict on breach of contract claims in the inventor's favor, the parties finally settled matters in 2001. All appeals would be dropped, court decisions vacated, and Marvel would purchase the patent -- No. 5,072,856 -- for a lump sum plus annual royalties in perpetuity.
Altogether, Marvel ended up paying more than $6 million in royalties. Meanwhile, the patent expired. In 2006, Marvel licensed the right to produce certain toys, including the web blaster, to Hasbro, leading to arguments over what royalties, if any, were due -- especially on new variants of the toy.
The case presents an interesting question -- what controls: patent or contract? Unfortunately for Kimble, the Supreme Court has already answered that question in a controlling and oft-criticized opinion.
In Brulotte v. Thys Co., the parties had an agreement that provided royalties past the patent expiration date. The Supreme Court held "that a patentee's use of a royalty agreement that projects beyond the expiration date of the patent is unlawful per se."
They justified this ruling on congressional intent. Congress granted inventors, through the patent system, the right to exploit inventions for "limited times." Any attempt to exploit these rights past the expiration date violates that policy, and "the free market visualized for the post-expiration period would be subject to monopoly influences that have no proper place there."
Conversely, in Aronson v. Quick Point Pencil, the Court held that indefinite royalty payments were allowable where no patent issues.
Later circuit court cases, outside of the Ninth, have developed a dual rule, requiring a distinction in the contract between royalties for patent rights and those for non-patent rights. Despite the Ninth Circuit's misgivings with the Brulotte case and its progeny, it has followed the trend without expressing hard-line rules, mostly out of respect for the need of universal rules in nationwide patent law.
Here, we have a hybrid agreement. There was a contract dispute, which prevailed in court, and a patent dispute, which didn't. The language of the agreement, however, provided for the purchase of the patent. There was no distinction made between these "inseparable" rights, nor were there lesser royalties provided for after patent expiration. Brulotte therefore controls.
On the bright side, in an accompanying unpublished opinion, the Ninth Circuit also held that Kimble's oral contract claims from the early 90s meeting should have survived summary judgment. So he may get paid after all.