Stephen Kimble v. Marvel Enterprises Inc.
727 F.3d 856
9th Cir.2013Background
- Kimble invented the Web Blaster toy; patent 5,072,856 expired about May 25, 2010.
- Kimble alleges Marvel verbally promised compensation for Kimble’s ideas; Marvel later produced a Web Blaster similar product.
- In 2001, settlement: lump sum plus a 3% royalty on net product sales, including Web Blaster, with no expiration on the royalty obligation.
- Marvel later licensed Hasbro in 2006; disputes arose over royalty calculations for newer iterations and sublicensing; Brulotte was not raised at that time.
- District court granted summary judgment applying Brulotte to bar post-expiration royalties; Kimble appealed.
- Ninth Circuit reviews de novo and ultimately affirms Brulotte’s applicability, holding the Settlement Agreement was a hybrid license lacking a discount or other indication of no patent leverage.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Brulotte applies to a hybrid patent/non-patent license | Kimble argues no Brulotte bar if non-patent rights are distinct | Marvel contends Brulotte applies to any hybrid with patent leverage | Brulotte applies; post-expiration royalties unenforceable absent discount or clear non-patent leverage |
| Whether the Settlement Agreement divided patent and non-patent royalties | There were separate rates for patent and Web Blaster rights | There was a single royalty for all rights; Web Blaster included in net sales | No separate royalty; all rights tied to one rate; intertwined rights imply patent leverage |
| Whether absence of a discount defeats Brulotte in this case | Discount not required if non-patent rights exist | Discount or other clear indication of no patent leverage is needed | Absence of discount supports applying Brulotte; no clear non-patent leverage shown |
Key Cases Cited
- Brulotte v. Thys Co., 379 U.S. 29 (Supreme Court (1964)) (holding post-expiration royalties violate patent law)
- Aronson v. Quick Point Pencil Co., 440 U.S. 257 (Supreme Court (1979)) (royalty payments indefinitely may be enforceable when no patent issued; distinction from Brulotte)
- Meehan v. PPG Indus., Inc., 802 F.2d 881 (7th Cir. 1986) (applies Brulotte to hybrid with no discount; requires distinguishing provisions)
- Boggild v. Kenner Prods., 776 F.2d 1315 (6th Cir. 1985) (discusses Brulotte application to hybrid rights)
- Pitney Bowes, Inc. v. Mestre, 701 F.2d 1365 (11th Cir. 1983) (Brulotte discussion on patent leverage in royalties)
- Zila, Inc. v. Tinnell, 502 F.3d 1014 (9th Cir. 2007) (applies Brulotte where patent rights are relinquished in exchange for perpetuity royalties; discusses discount concept)
- Scheiber v. Dolby Labs., Inc., 293 F.3d 1014 (7th Cir. 2002) (discusses patent leverage and post-expiration payments)