Kimble v. Marvel Enterprises, Inc. (13-720)

argument 13-720

Kimble v. Marvel Enterprises, Inc.

Supreme Court of the United States 55 min 4 speakers 8 chapters transcribed 4 days ago official recording ↗

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What is the central dispute over the Burlot per‑se ban on post‑expiration patent royalties?

John G. Roberts 0:00

We'll hear an argument next this morning in case thirteen seven

Daniel J. Melck 0:03

twenty, Kimball versus Marvell Enterprises. Mr. Melvick. Thank you, Mr. Chief Justice, and may it please the court. Burlotte's per se ban on patent royalties on post expiration use should be discarded because it is a rule without a reason. Brulat is widely recognised as an outdated and misguided decision that prohibits royalty arrangements that are frequently socially beneficial. Burlot suppresses innovation. And interferes with the goals of the patent system, increasing the likelihood that potentially breakthrough discoveries by universities and research hospitals such as the Memorial Stone Kettering Center will never reach patients and consumers. Discarding

Elena Kagan 0:46

are now. So what are they doing?

Daniel J. Melck 0:50

I apologize.

Elena Kagan 0:51

I I mean it's not like the industry has fallen apart. Um I don't see any examples of of this.

Daniel J. Melck 0:59

Well, the the exa the examples that we have are the amicus briefs. In other words, the entities that are that do this licensing on a day to day basis are telling the court in their amicus briefs that the the Burlat rule is having this suppressive effect. In other words, that certain licensing arrangements that would otherwise Why why

Unknown 1:18

should that be so, given what you say in your in your brief you say License pa this is at nine and ten, bottom of nine. License payment term Consequently, reflect the anticipated value of the authorization to use the patented invention. before the patent expires. All we have to do it m is make it clear that although the payments continue after expiration, they are for the pre expiration period. Uh so it it I don't understand why this should be so troublesome if the contract says These payments will be spread out over whatever period of time. But they are for patent during the period when it was valid. And you say your next sentence is um Even if they're nominally measured by post expiration use, they nonetheless represent an amortization of the predicted value of the pre expiration authorization.

Unknown 2:27

If you say that in the contract, then I don't see where there's a problem.

Daniel J. Melck 2:33

The distinction, Justice Ginsburg, is between what you're paying for and how you're paying for it. The what that you're paying for is an estimate of the value of the use of the patent during the patent term. What Burlat currently permits is one method of how to pay for it, which is to defer payment into the post expiration period. What Burlat doesn't currently permit is to defer is to stretch the royalty base, to defer accrual into the post expiration period. And deferred accrual allows parties to do something that deferred payment does not, which is to shift the risk of commercialization failure and innovation failure from the licensee to the license or

Anthony M. Kennedy 3:16

Aren't there ways to get around that as well? I mean, why don't you just enter into a joint venture?

Daniel J. Melck 3:22

So Justice Kagan, I guess my first answer to that is that's not the right question. The right question is if you're prohibiting something that doesn't make sense, the initial question should be why are you prohibiting it?

Anthony M. Kennedy 3:36

Well possibly, except that we have statutory story decisis and to the extent that we think something's not really causing a problem in the real world. Why overrule something? against that basic backdrop principle.

Daniel J. Melck 3:50

So the the next answer to your question then is that um The the alternative arrangements are not risk redistributive in the same way that royalty uh the the deferral of accrual is risk redistributive. What do I mean by that? If you stretch the royalty base into the post expiration period in situations where you're where early stage technology is involved, where there may not be any sales until fairly late and stretching into the post expiration period, you allow the licensee to say Uh I'm going to take on this risk, but an exchange licensor you're going to bear the risk that if the product fails, I won't have to pay much because uh if there aren't any sales, I don't have to pay you. Um payment uh postponement, for example, doesn't allow the parties to do that.