Atrium Medical Corporation v. C.R. Bard, Inc.
Antitrust Patent TradeSecret JusticiabilityDoctri Jurisdiction
Whether the Ninth Circuit's approach fails to properly determine what royalties are 'for,' as Brulotte and Kimble require
In Brulotte v. Thys Co. , 379 U.S. 29, 32 (1964), this Court held that “ a patentee’s use of a royalty agreement that projects beyond the expiration date of the patent is unlawful per se .” In Kimble v. Marvel Ent ertainment, LLC , 576 U.S. 446 (2015) , the Court reaffirmed that rule and explained that it should be “simplicity itself to apply” : “A court need only ask whether a licensing agreement pro vides royalties for post-expira tion use of a patent.” Id. at 459 (emphasis added). C ourts of appeals, however, have fractured over how to administer that simple rule. The patent license agreement here required the licensee to pay quarterly “Minimum Royal ties.” Consid ering all the relevant evidence, the district court found the Minimum Royalty was “for” use of the licensor’s U.S. patent : The agreement expressly tied the Minimum Roy alty obligation to U.S. sales and regulatory approv als, and witnesses confirmed the Minimum Royalty was designed to compensate for U.S. sales. The court thus held that, because the Minimum Royalty was “for” use of the U.S. patent , it w as unenforceable once that patent expired. The Ninth Circuit reversed. Departing from other cir cuits, it held Brulotte and Kimbl e forbid courts from consid ering evidence beyond the license agreement itself. And when consid ering the agreement, it did not ask what the royalties were “for” under the best understanding of the agreement . Instead, it asked whether it was possible to identify anything else those royalties could have been for. Because no language expressly “dictat e[d] whether the minimum royalties are royalties on U.S. sales,” it held there was no problem under Brulotte and Kimbl e. The question presented is : Whether the Ninth Circuit ’s approach fails to properly determine what royalties are “for,” as Brulotte and Kim ble require.