The U.S. Supreme Court granted a writ of certiorari in Kimble et al. v. Marvel Enterprises, Inc., No. 13-720 on December 12, 2014, aka the Spiderman case. The plaintiffs are Tucson attorneys Steve Kimble and Bob Grabb; their involvement aside, however, the case offers a look inside the world of patent law.
Steve Kimble developed an add-on device for spraying Silly String, a la Spiderman. While he was obtaining a patent, he pitched his idea to Marvel. Its people passed, but said they would pay if they used the idea. Later, Marvel marketed what amounted to the same toy. Litigation ensued, and there was a settlement, which included cash and royalty payments. (Bob Grabb acquired an interest in the deal before the settlement.)
Alas, the royalty payment plan extended beyond the life of the patent. Enter, Brulotte et al. v. Thys Co., No. 20, a 1964 Supreme Court opinion. Brulotte dealt with hop-picking machines. Thys Co. sold the machines, along with a license to use them. Purchaser-users had to pay $500 per year for the license, and the licenses extended beyond the end of the earliest patent associated with the machine.
The state courts ruled in favor of Thys Co., using a basic contract analysis. You agreed to pay. You haven’t paid. You lose. The Supreme Court bought the notion that allowing payments after all patents have expired interferes with innovation, effectively extending patents beyond their life. The Court banned post-term payments.
Brulotte has been criticized often, as it limits economic activity by forcing on parties a limitation on payment terms. Major critics include Judges Frank Easterbrook and Richard Posner, both from the 7th Circuit and the University of Chicago, where the economics department and the business and law schools promote free market thinking. (The law school at U of C also happens to be the place where Justice Antonin Scalia taught for several years.)
Marvel won in the U.S. District Court. The 9th Circuit “reluctantly” ruled in favor of Marvel. Here’s the opinion.
Certiorari writs are substantial legal briefs. Here are the papers from Kimble/Grabb, Marvel, the Justice Department (asked to weigh in by the Court), and Kimble/Grabb, for the last time. The material is dense, for sure, and I did not read everything completely, but it’s mostly partly comprehensible. Noteworthy for me was the simplistic arrangement which Justice William O. Douglas described in Brulotte and the nature of business and contractual arrangements we see in 2014.
Attorneys often observe that courts which control their dockets don’t accept cases to affirm lower court decisions. That’s true … except when it isn’t! Still, much about this matter suggests a likelihood that Kimble and Grabb will be happy by early June. And in the meantime, oral argument does not appear to have been scheduled. I’ll report on the argument when it happens.
Disclosure: Bob Grabb is a friend since early childhood. Steve Kimble is a friend of more recent vintage.