Kimble v Marvel gets caught up in SCOTUS's web

United States Supreme Court Justice Elena Kagan is a fan of comics. If you had not already read that in her bio at SCOTUS-tracking blog Supreme Court Review, you might have inferred it from the Spiderman references she included in her Kimble v. Marvel (“Kimble“) decision. She even supported her final decision, declining to overturn the limits on patent licensing established in Brulotte v. Thys (“Brulotte“), with a quote from the original appearance of Spiderman: “With great power there must also come – great responsibility”. Despite its light-hearted framing, the majority decision in Kimble rests on the bedrock of judicial decision-making: stare decisis.

In 1990, Kimble patented a device that would allow the user to sling webs of aerosol string from their wrists and tried to sell the idea to Marvel. They demurred, but soon came out with their own, suspiciously similar products: Web Blasters. In 1997, Kimble sued Marvel and eventually the two sides settled on a licensing agreement that would give Kimble a lump sum plus ongoing royalties based on sales. Later disputes about what precisely constituted sales of the Web Blaster brought the two sides back to court and in that litigation, Marvel brought Brulotte to the table.

Marvel argued that according to Brulotte, while there was no end date for the royalty payments in the original settlement, no royalties could possibly be owed past the expiry of the original patent. The District Court agreed with Marvel’s application of Brulotte. The Ninth Circuit Court of Appeals reluctantly affirmed. Stare decisis and the need for national uniformity in patent law forced them to apply the much-criticized Brulotte decision, even though they found it “counterintuitive” and “unconvincing”. Kimble appealed, and the question before SCOTUS was whether to retcon away the Brulotte interpretation of 35 U. S. C. §§154(a)(1) and (2)?

In applying stare decisis to Brulotte, the majority gave added deference to the existing decision because it was an exercise in statutory interpretation, and more particularly because those statutes have been revisited repeatedly since the Brulotte decision. Despite changes to the surrounding statutes, Congress has not chosen to disturb the details interpreted in Brulotte.

The court did not draw any firm conclusions on whether there are existing royalty agreements that rely on Brulotte, but also gave deference to the decision on the grounds that there might be and disturbing the decision could cause dead agreements to return to life. They also rejected Kimble’s proposed alternative — considering each example of post-expiration royalty clauses separately to determine their impact on competitiveness — as more complicated and expensive than the bright line rule established in Brulotte.

Kimble also offered arguments regarding the economic underpinnings of Brulotte, claiming that decision was wrong about the effect of post-expiration royalties on competition and on technological innovation. The majority accepted Kimble’s economic analysis, but did not conclude that it must inevitably lead to overturning Brulotte. First, they note that the bar for overturning a decision is more than simple wrongness, but instead requires “a special justification over and above the belief that the case was wrongly decided.” Further, they point out that the original decision in Brulotte was not predicated on the economic principles that Kimble took issue with. The court in Brulotte was not as concerned with protecting competition as with interpreting what they felt was clear Congressional intent.

While they chose not to overturn Brulotte, the majority could not muster an enthusiastic defense, repeatedly acknowledging that it may have been wrongly decided. Embedded within the decision are no fewer than two dozen references to Congress, including at least four places where they specifically mention that Kimble’s arguments would best be addressed to the legislative branch. Much like the Ninth Circuit, SCOTUS does not seem like Brulotte’s biggest fan. Also much like the Ninth Circuit, they seem to be stuck with it.

Jacquilynne Schlesier is an IPilogue Editor and JD Candidate at Osgoode Hall.

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