Patent Royalties Extending Beyond Expiration: An Illogical Ban From Brulotte to Scheiber

By: Michael Koenig

A recent decision by the Seventh Circuit Court of Appeals, Scheiber v. Dolby Laboratories, Inc., called into question, yet dutifully applied, the somewhat disfavored Supreme Court patent case of Brulotte v. Thys Co. For thirty-eight years, Brulotte has served as an absolute prohibition on the collection of any patent royalties extending beyond the expiration date of the patent. As Justice Douglas stated in writing for the eight-Justice majority, “a patentee’s use of a royalty agreement that projects beyond the expiration date of the patent is unlawful per se.” Ostensibly, this concise and easily-applied exposition of the law seems sensible enough. But, the devil is in the details. This iBrief highlights the flawed reasoning underlying Brulotte as evidenced by its application in Scheiber, but ultimately concludes that overruling the case may be of little help to Mr. Scheiber in his suit against Dolby.

Cite: 2003 Duke L. & Tech. Rev. 0005

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