WASHINGTON (CN) – An inventor seeking royalties from Marvel over a Spider-Man toy called Web Blaster lost his royalties fight in the Supreme Court on Monday.
Stephen Kimble had first sued Marvel over the idea in 1997, leading to a jury trial and a settlement that awarded Kimble 3 percent of royalties for toys that infringed his original patent for a “toy web shooting glove.”
The deal hinged on a determination that Marvel’s Web Blaster incorporated ideas disclosed under an oral agreement that the Tucson, Ariz.-based inventor-attorney reached with Marvel at a 1990 meeting in New York.
Kimble, who has collected some $6 million from the agreement, sued Marvel again in 2008 with fellow Tucson attorney Robert Grabb. They argued this time that the company had breached the settlement by failing to pay royalties after it sold its toy-making arm to Hasbro.
Marvel contended that the settlement did not require it to pay Kimble after his patent expired in 2010. A federal judge ruled for Marvel, and Kimble appealed to the 9th Circuit, arguing that the settlement had transferred both patented and “non-patented” rights, both at 3 percent, and that the latter of which did not end when the patent ran out.
A three-judge panel in San Francisco reluctantly shot Kimble down, and the ensuing Supreme Court battle hinged on whether justices should overturn Brulotte v. Thys Co., a 1964 decision prohibiting licensing agreements that require royalty payments beyond the patent’s life.
In affirming for Marvel on Monday, a six-justice majority of the Supreme Court cited the doctrine of stare decisis, which says the incorrectness of precedent is not by itself enough to overrule.
“Critics of the Brulotte rule must seek relief not from this court but from Congress,” Justice Elena Kagan wrote for the majority.
Though an unwelcome outcome for Kimble, Kagan’s ruling is dusted with a few playful comic book references.
In describing how the parties set no end date for royalties in settling the 1997 action, for example, Kagan said they must have contemplated “they would continue for as long as kids want to imitate Spider-Man (by doing whatever a spider can).” (Parentheses in original.)
“Patents endow their holders with certain superpowers, but only for a limited time,” the ruling continues.
Kagan noted that patents typically expire 20 years from the day their underlying applications were filed.
If the parties so chose, they had avenues available to them to get around the Brulotte rule.
“To start, Brulotte allows a licensee to defer payments for pre-expiration use of a patent into the post-expiration period; all the decision bars are royalties for using an invention after it has moved into the public domain,” Kagan wrote.
She added that Brulotte also “poses no bar to business arrangements other than royalties – all kinds of joint ventures, for example – that enable parties to share the risks and rewards of commercializing an invention.”
Emphasizing that the obligation to address problems with Brulotte lies with the Legislature, Kagan noted that “Congress has spurned multiple opportunities to reverse Brulotte – openings as frequent and clear as this court ever sees.”
“Congress’s continual reworking of the patent laws – but never of the Brulotte rule – further supports leaving the decision in place,” she added.
Emphasizing that Brulotte was based instead on an economic theory that has since been debunked, Alito said it “interferes with the ability of parties to negotiate licensing agreements that reflect the true value of a patent, and it disrupts contractual expectations.”
“Stare decisis does not require us to retain this baseless and damaging precedent,” the opinion continues.
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