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Try as she might, the AmeriKat is no Spiderman... |
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Justice Kagan, adding the "super" to the Supreme Court |
As Justice Kagan put it: "Patents endow their holders with certain super powers, but only for a limited time". This was the balance struck by Congress to incentivze innovation but to ensure access to discoveries in a "post-expiration public domain". The balance is struck by way of the 20 year duration of a patent which runs from the day the application was filed. Once expired, then the patentee's ability to control the use of the patent expires. The US Supreme Court has carefully guarded this cut-off in a series of cases of which Brulotte was one of them. In that case by an 8-1 vote, the US Supreme Court held that a licence agreement was unenforceable in so far as it provided for the payment of royalties after the last of the patents incorporated into a hop-picking machine had expired. The court cited the decision of Scott Paper holding that any attempt to limit what a licensee can do with an invention following expiration of the patent would run "counter to the policy and purpose of the patent laws." To hold otherwise, would allow the patent monopoly to continue beyond the patent period (although it would only be the licensee who would be impacted and not the entire world).Maxim #2: If it ain't broke, don't reverse it.
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Kimble's now infamous sticky spiderweb string patent |
In a few pages of exquisite explanation, the Court held that to do so would cut across the principle of stare decisis. Although stare decisis is not an "inexorable command" it is nevertheless the desirable course as it promotes the predictable and consistent development of law (Payne v Tennessee) and avoids the expensive reopening of litigation. However, the Court noted that respecting the principle can mean "sticking to some wrong decisions". Nevertheless, when there are critics of a decision, the opponents have the opportunity to take their complain "across the street, and Congress can correct any mistake it sees". But, continued Justice Kagan, in this case Congress has refused several opportunities to revisit Brulotte namely when it has revised/re-examined the period of protection for patents (see for example, the Uruguay Round Agreements Act). Congress has also rejected proposed legislation that would have replaced the Brulotte rule with Kimble's anti-trust style analysis. Congress' reluctant to meddle with the law strengthened the application of stare decisis especially in case like this one where statutory IP law and contractual law intersected.
Reversing Brulotte had to be for a "superspecial justification" which could not be found in Kimble's argument. First, there was no justification in the statutory and doctrinal underpinnings of the Brulotte rule (i.e. a patent's duration) as neither had changed over time. Second, Brulotte is not unworkable; it is simple to apply. All that needs to be asked is whether a licence agreement provides royalties for the use of a patent post-expiry. If it does not, then Brulotte does not apply. Kimble's anti-trust rule of reason, in comparison, is far more unwieldy and would, in the Court's opinion, produce "notoriously high litigation costs and unpredictable results".Maxim #3: Complain to Congress, not the Court.
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Please file your complaints with the US Congress |
Kimble's reasoning that Brulotte rests on a mistaken view of the competitive effects of post-expiration royalties and suppresses technological innovation may give Congress a reason to legislate the Brulotte rule, but did not justify the Court doing so. Kimble argued that the Brulotte rule assumed that post-patent royalty arrangements are anti-competitive but that was not the case; more often than not they increase competition on the basis that a longer payment period is generally a lower one leading to lower consumer pries. Although the Court did not take issue with Kimble's economic reasoning, they nevertheless considered that if such economic misjudgement existed it was the job of Congress to fix it. Unlike antitrust law via the Sherman Act, patent laws "do not turn over exceptional law-shaping authority to the courts. Accordingly, statutory stare decisis...retains it's usual strong force". In any event, the Court did not consider that Brulotte was premised on a misunderstanding of the economic concepts at play. Competition considerations did not have a role to play in Brulotte as patent law does "not aim to maximize competition (to a large extent, the opposite.)" The patent term is also a "bright-line rule" that does not call for "practice-specific analysis" as demanded under the anti-trust rule of reason principle. Taken together, economic policy had no role to play in Brulotte. Kimble's real complaint likely boiled down to the merits of such a patent policy, but again the Court said that was a complaint for Congress not them.In conclusion, the Court held:
"What we can decide, we can undecide. But stare decisis teaches that we should exercise that authority sparingly. Cf. S. Lee and S. Ditko, Amazing Fantasy No. 15: “SpiderMan,” p. 13 (1962) (“[I]n this world, with great power there must also come—great responsibility”). Finding many reasons for staying the stare decisis course and no “special justification” for departing from it, we decline Kimble’s invitation to overrule Brulotte."
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Not everyone is happy in the Supreme Court following the decision in Kimble |
",..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."In a final damning conclusion, Justice Alito states
"In the end, Brulotte’s only virtue is that we decided it. But that does not render it invincible. Stare decisis is important to the rule of law, but so are correct judicial decisions."Time to walk across the street and knock on Congress' door....