Intellectual Property Magazine
Royalty licensing insurrection in life sciences
Orrickās DavidE Schulman and Alyssa Barnard-Yanni lookat the recent fallout from the Supreme Court Kimble v Marvel Entertainment decision
DavidE Schulman and Alyssa Barnard-Yanni, Orrick
Six years have passed since the Supreme Court of the US in Kimblev Marvel
1 reaffirmed the rule, first stated in Brulotte vThys Co,
2 that obligations to pay US patent-based royaltiesafter US patent expiration are generally unenforceable. Many observers believed,as did the six justice majority of the Supreme Court, that confirming the Brulotterule as a matter of stare decisis would reduce patent-based royaltylitigation.
3 In practice, however, Kimble continues to spawndisputes. The Brulotte rule poses particular problems in the lifescience industry. It’s not always clear how Brulotte’s rule about USpatent rights applies to the “hybrid” licence agreements, common in globalpharmaceutical development, that are
based on a combination of US patents,foreign patents, and know-how. Moreover, the time from drug development tocommercial
approval often spans 10 or more years,
4 meaning thatroyalties may not become payable under a licensing agreement until near the endof a patent’s term.