The biggest question raised by this case is: Why did the U.S. Supreme Court grant review?
The case involves a patented web-shooting mechanism that had been transferred to a Spiderman toy-maker in exchange for a 3% royalty payment. Like all patents, this one was for a twenty-year term. The contract was silent about how long royalties were to be paid under the contract, though. The recipient claimed royalty payments should continue in perpetuity. The toy-maker claimed patents become public domain after twenty years, so royalty payments should end at that time.
In a previous case, Brulotte v. Thys Co.1 the Court had held that a patent holder is not entitled to any royalties for the use of his invention after the patent term has expired even if he has a contract that provides for a longer period of royalty payments. The reasoning was fairly straightforward:
Patent law preempts state laws that conflict with federal patent policy. Agreements for the payment of royalties on public domain inventions conflict with patent law policy. Ergo, it would be unlawful for states to interpret or enforce contracts to the extent they provide for payment of royalties on patented inventions after they have entered the public domain.
Today’s decision in Kimble v. Marvel Entertainment, LLC basically says this case falls squarely within established precedent, i.e., Brulotte, and there’s no good reason for overruling it, so yeah, the same rule still goes.
It wasn’t a complete waste, though. It gave Justice Kagan, who delivered the opinion of the Court, the opportunity to weave numerous Spiderman references into a Supreme Court opinion — mentioning “webs” of ideas and “doing whatever a spider can;” referring to the Court’s decision in this case as “a superpowered form of stare decisis;” and including a quotation from a Spiderman comic in the concluding paragraph: “[I]n this world, with great power there must also come—great responsibility.”
Apart from endearing the Court to Spiderman fans, I suppose the case serves as a useful reminder to patent-owners that royalties may only be collected for the life of the patent, i.e., twenty years. If you think your patent has the potential to earn large profits well beyond that period, then seek a higher percentage royalty for the first twenty years of use.
- 379 U. S. 29 (1964) ↩