Justice Kagan wrote this blog post for me; I just copied all the puns and quips from yesterday's Supreme Court decision refusing to enforce royalties after patent expiration.

Kimble met with the president of Marvel's corporate predecessor to discuss his idea for web-slinging fun . . . . The parties set no end date for royalties, apparently contemplating that they would continue for as long as kids want to imitate Spider-Man (by doing whatever a spider can). . . . The Court of Appeals for the Ninth Circuit affirmed, though making clear that it was none too happy about doing so.

Patents endow their holders with certain superpowers, but only for a limited time. . . . Brulotte was brewed in the same barrel. (Brulotte v. Thys Co., 379 U. S. 29 (1964)). . . .

Overruling precedent is never a small matter. . . . Absent special justification, they are balls tossed into Congress's court, for acceptance or not as that branch elects. . . . As against this superpowered form of stare decisis, we would need a superspecial justification to warrant reversing Brulotte. . . . Brulotte, then, is not the kind of doctrinal dinosaur or legal last-man-standing for which we sometimes depart from stare decisis.

The decision is simplicity itself to apply. A court need only ask whether a licensing agreement provides royalties for post-expiration use of a patent. If not, no problem; if so, no dice.

What we can decide, we can undecide. But stare decisis teaches that we should exercise that authority sparingly. "[I]n this world, with great power there must also come—great responsibility."

#JusticeKagan

All quotes, I swear (maybe not the hashtag).

So, what does this mean for patent licensing?

How can you extend a patent license royalty term beyond the term of the patent?

  • Structure the deal as a joint venture (for example, put the patents in a special purpose entity and share ownership of the entity)
  • Include copyrights or trade secrets in the license to support the royalty after patent expiration (consider a lower royalty after patent expiration to emphasize the royalty is not tied to the patent)
  • Tie payments to something else in the agreement (services, copyright, trade secret, etc.)
  • State in the license that all royalties are for sales prior to patent expiration (couldn't hurt to mean it too)
  • Continue improving the invention and filing additional applications on the improvements to keep the term going

How can you be sure the royalty does not extend past the term of the patent?

  • State that the agreement ends when the patents expire or are invalidated
  • Be sure the royalty stream in the agreement only pertains to patents
  • Build in a right to terminate the license at your option

Here is the part of the post where I would ordinarily try to come up with a witty closing. I'll instead just refer you to a few other articles and catch up with you later:

With great patent cases, come great Supreme Court puns.

Justice Kagan's Nerd Credibility Soars.

Look out RBG: Elena Kagan might be pop culture's new favorite justice.

Elena Kagan Fills Kimble v. Marvel Opinion With Spider-Man Easter Eggs.

Elena Kagan brings her Spidey sensibility to Supreme Court ruling.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.