Revisiting the Patent Misuse Doctrine - Le Concurrentialiste · PDF filehad filed for his...

Electronic copy available at: http://ssrn.com/abstract=2667094

LIM, PATENT MISUSE [EIPIN. 2015]

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REVISITING THE PATENT MISUSE DOCTRINE

DARYL LIM P0F

†P

TABLE OF CONTENTS

65TI.65T 65TINTRODUCTION65T .............................................................................................................................. 2

65TII.65T 65TKIMBLE V. MARVEL 65T ....................................................................................................................... 4 65TA. 65T 65TFACTS AND PROCEDURAL HISTORY 65T ............................................................................................................ 4 65TB. 65T 65THOLDING AND ANALYSIS65T .............................................................................................................................. 5

65T1.65T 65TMisuse as Patent Policy 65T............................................................................................................................. 6 65T2.65T 65T“Simplicity Itself” 65T ....................................................................................................................................... 11 65T3.65T 65TStare Decisis: Patent v. Antitrust Cases 65T ........................................................................................... 14 65T4.65T 65TMaintaining Incentives for Innovation 65T ........................................................................................... 16

65TIII.65T 65TCONCLUSION 65T ................................................................................................................................. 19

†Associate Professor, The John Marshall Law School, Chicago, U.S.A. I am grateful to Professor Manuel Desantes,

Professor Josef Drexl, Filipe Fischmann, Professor Peter Picht, as well as the participants of the 16th European IP Network

(EIPIN) Congress “The Innovation Society and Intellectual Property” in Munich, Germany for their helpful comments

and suggestions. Many thanks also to Associate Dean Julie Spanbauer for the summer research grant that supported the

writing of this book chapter, as well as to Amy Taylor for her editorial assistance. This chapter features thoughts from

my earlier article, Patent Misuse and Antitrust: Rebirth or False Dawn?, 20 MICH. TELECOMM. & TECH. L. REV. 299

(2014). All errors and omissions are my own.

Electronic copy available at: http://ssrn.com/abstract=2667094


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I. INTRODUCTION Patent misuse is an affirmative defense in U.S. patent law and finds its roots in the equitable doctrine of ‘unclean hands.’ P1F

1P Courts will not enforce a patent if the patentee had acted

inequitably, and the patent remains unenforceable until the baleful effects of the patentee’s conduct has been purged.P2F

2P Patent misuse thus acts as a public injunction against abuses of the

privileges granted under patent law. P3F

3 The classic example of misuse is tying, where the patentee forces its licensees to buy patented and non-patented goods together. P4F

4P For instance in Morton Salt Co. v. G. S. Suppiger Co., a

business having a patent over a salt depositing machines required licensees to also buy salt tablets from it, even though those tablets would otherwise have been available elsewhere. P5F

5P The

lower courts had decided the case as a matter of antitrust law, designed to combat two innate proclivities in human nature – bullying and ganging up, in order to preserve a competitive market economy. P6F

6P

The Supreme Court, however, held that there was no need to look to antitrust law. Misuse drew its principles from equity and patent policy. P7F

7P Patent policy guides patent law in keeping

owners within the boundaries of what they offer to society. It is the same policy found in the threshold requirements for patentability such as novelty, P8F

8P nonobviousness, P9F

9P and disclosure. P10F

10P

It is what also allows patentees to sue for infringement beyond the literal scope of their claims under the doctrine of equivalents. P11F

11P In the realm of remedies, that policy guides courts in

requiring a patentee seeking injunctive relief to show that its patented part drove sales in an end product with other component parts. P12F

12P

1 U.S. Gypsum Co. v Nat'l Gypsum Co., 352 US 457, 465-66 (1957). For a detailed study of patent misuse, see Daryl Lim, Patent Misuse and Antitrust: Empirical, Doctrinal and Policy Perspectives (Edward Elgar 2013) (Patent Misuse). 2 Gypsum, ibid. 3 See Syndicate Sales, Inc. v Floral Innovations, Inc., No. 1:11-CV-00465-SEB-DK, 2012 WL 4477691, at *2 (S.D. Ind. Sept. 28, 2012). 4 Lim, Patent Misuse (n 1) 363 (‘Tying is by far the most common basis for a patent misuse allegation’.). 5 314 US 488 (1942). 6 Bullying encompasses conduct such as monopolization, attempted monopolization, unfair practices, or abuse of dominance. Ganging up encompasses combination, conspiracy, cartelization, or boycotts. See Richard M. Steuer, ‘The Simplicity of Antitrust Law’ (2012) 14 U. Pa. J. Bus. L. 543, 543. 7 Morton Salt (n 5) 490. 8 See eg Egbert v Lippmann, 104 US 333, 337 (1881). 9 See eg KSR Int'l Co. v Teleflex Inc., 550 US 398, 416 (2007). 10 See eg Sitrick v Dreamworks, LLC, 516 F.3d 993, 999 (Fed. Cir. 2008). 11 See eg Festo Corp. v Shoketsu Kinzoku Kogyo Kabushiki Co., 535 US 722 (2002). 12 See eg Apple Inc. v Samsung Electronics Co., 735 F.3d 1352 (Fed. Cir. 2013).


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Since then, misuse and antitrust law have become intertwined. Judge Richard Posner writing for a Seventh Circuit panel in 1982 cabined misuse within the strictures of antitrust law. P13F

13P

Judge Posner is a pioneering member of the Chicago School of antitrust law. P14F

14P While the

Chicago School is by no means monolithic, its core tenants of faith are that ‘markets work very well, business actors are profit maximizers, business actors are virtually always efficient and government enforcement is virtually always inefficient except in hard core cartel cases’. P15F

15 Judge Posner opined that patent misuse should be tested by antitrust law principles, and was concerned about predictability and administrability, writing that ‘it is rather late in the day to try to develop one without in the process subjecting the rights of patent holders to debilitating uncertainty’. P16F

16P As Professor Robert Merges explained, ‘[t]he thinking [was] that antitrust has

evolved a “precise” methodology for ascertaining when improper market leverage is being used by a patentee . . . and that the relatively imprecise “equitable” doctrine of misuse only adds confusion and uncertainty to the scene’. P17F

17 That same year, the Court of Appeals for the Federal Circuit was established as the nation’s patent court. Judge Posner’s view of misuse aligned with its own mission to strengthen patent rights and it adopted that formulation as its own, distinguishing between three categories of misuse. P

18F

18P In the first category were cases that the Supreme Court had previously held were

per se illegal. P19F

19P In the second category were types of conduct falling within the patent’s scope.

These were immune to scrutiny. P20F

20P The remaining third category of cases were subject to the

antitrust rule of reason. P21F

21P The antitrust rule of reason requires courts to evaluate a practice’s

effect on competition by ‘taking into account a variety of factors, including specific information about the relevant business, its condition before and after the [practice] was imposed, and the [practice’s] history, nature, and effect.’ P22F

22P Even recently, the Federal Circuit

has observed that finding misuse ‘expansively’ will diminish the value of patent rights and discourage investment in innovation. P23F

23 A recent empirical study shows that the Federal Circuit has been wildly successful in cabining

13 USM Corp. v SPS Techs., Inc., 694 F.2d 505 (7th Cir. 1982). 14 Max Huffman, ‘Marrying Neo-Chicago with Behavioral Antitrust’ (2012) 78 Antitrust L.J. 105, 109. 15 Eleanor Fox, Cases and Materials on United States Antitrust in Global Context (3rd edn, West 2012) 56. 16 ibid 512. 17 Robert Patrick Merges, Patent Law and Policy (Lexis 1992) 913. 18 1 Herbert Hovenkamp and others, IP and Antitrust: An Analysis of Antitrust Principles Applied to Intellectual Property Law, s 1.3a (2nd edn 2013). 19 Virginia Panel Corp. v MAC Panel Co., 133 F.3d 860, 869 (Fed. Cir. 1997). 20 ibid. 21 ibid. 22 State Oil Co. v Khan, 522 US 3, 10 (1997). 23 Princo Corp. v Int'l Trade Comm'n, 616 F.3d 1318, 1321 (Fed. Cir. 2010).


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misuse. The Federal Circuit’s ‘antitrust-lite’ form of misuse dominated 81 percent of case since 1993, with Morton Salt falling from 41 percent of cases in 1953 to 21 percent from the 1990s.P24F

24P Together with this change, the success rate of defendants plummeted from 40 percent

between 1953 and 1962 to 2 percent between 2003 and 2013.P25F

25 Like the mythological Roman god Janus, misuse now had two faces, one looking to the past and the other to the future. P26F

26P The past incarnation articulated by the Supreme Court looks to

abuses of the patent system, while the one facing the future would only be concerned with conduct harmful to market competition. Throughout the Federal Circuit’s existence, the Supreme Court had remained silent about misuse. P27F

27P Then after thirty-five years, the Court

broke its silence, reinvigorating a fierce debate over the future of the misuse doctrine with the famous quip by a web-slinging superhero that ‘in this world, with great power there must also come—great responsibility’. P28F

28P

II. KIMBLE V. MARVEL

A. Facts and Procedural History

Kimble concerned a Spider-Man toy that allows children to shoot foam ‘webs’.P29F

29P The patentee

had filed for his patent in 1990 and licensed it to comic book giant Marvel Enterprises’ predecessor for half a million dollars and 3 percent royalty on products sold. P30F

30P The license

agreement identified no end date to the payments, but Marvel stopped making payments after patent expired. P31F

31P Marvel had been advised that under the Supreme Court’s decision in Brulotte,

patentees were not entitled to royalty payments accruing post-expiration.P32F

32P Marvel sought

declaratory judgment from the federal district court confirming that its obligations ended with the patent’s expiration.P33F

33P By then the patentee had earned six million dollars. P34F

34P

24 Daryl Lim, ‘Patent Misuse and Antitrust: Rebirth or False Dawn?’ (2014) 20 Mich. Telecomm. & Tech. L. Rev. 299, 326 (Rebirth). 25 ibid 329. 26 ‘Janus’ (Wikipedia) <https://en.wikipedia.org/wiki/Janus> accessed 17 September 2015. 27 Lim, Patent Misuse (n 1) 34. 28 Kimble v Marvel Entm't, LLC, 135 S. Ct. 2401, 2415 (2015) (Kimble II) quoting S. Lee and S. Ditko, Amazing Fantasy No. 15: Spider–Man (Marvel 1962) 13. 29 ibid 2405. 30 ibid. 31 ibid. 32 Brulotte v Thys Co., 379 US 29 (1964) (holding that a patentee cannot charge royalties for using the invention after the patent term has expired). 33 Kimble II (n 28) 2405. 34 Kimble v Marvel Enters. Inc., 727 F.3d 856, 859 (9th Cir. 2013) (Kimble I).


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The district court and Court of Appeals for the Ninth Circuit both found that the license providing for post-expiration royalties was unenforceable under Brulotte. P35F

35P Not content with

simply applying Brulotte to the facts, however, the Ninth Circuit described Brulotte as a ‘frequently-criticized decision’, and wrote that it was ‘counterintuitive and its rationale is arguably unconvincing’.P36F

36P In a statement that seemed laden with resignation, Judge Callahan

‘reluctantly’ applied Brulotte because the Ninth Circuit was ‘bound by Supreme Court authority and the strong interest in maintaining national uniformity on patent law issues’. P37F

37P Determined

not to allow Marvel to wriggle its way out of the deal, the patentee sought certiorari. The key question the Court faced was whether to leave intact the per se rule it had laid down half a century ago in Brulotte, or whether it should overturn the per se rule. P38F

38P Numerous amicus

briefs that were filed featured economic arguments, supporting the overturning of Brulotte. P39F

39P

They pointed to how modern antitrust law favors the rule of reason analysis as per se rules presume market harm, and condemn conduct outright without regard for precision. P40F

40P Other

amicus briefs cautioned against overruling Brulotte, saying that it is based on patent policy and that there are good reasons to uphold rule. P41F

41P It was clear that at stake was nothing less than

the battle for the soul of misuse.

B. Holding and Analysis The patentee argued that Brulotte’s per se prohibition should be abandoned in favor of the Federal Circuits reformulation of misuse as an antitrust-lite doctrine. P42F

42P This would be in

following with earlier instances where the Court overruled its old antitrust precedents based on the per se rule in favor of the rule of reason approach. P43F

43P According to the patentee, Brulotte

was based on faulty reasoning that assumed time extensions were invariably anticompetitive. P44F

44P

The patentee argued that Brulotte rested on the now debunked presumption that the patentee

35 Kimble v Marvel Enterprises, Inc., 692 F. Supp. 2d 1156 (D. Ariz. 2010), affd 727 F.3d 856 (9th Cir. 2013), affd sub nom Kimble v Marvel Entm't, LLC, 135 S. Ct. 2401 (2015). 36 Kimble I (n 34) 857. 37 ibid. 38 Kimble II (n 28) 2403. 39 See eg Brief of the University of Massachusetts Biologic Laboratories as Amicus Curiae in Support of Petitioners at 3, Kimble v Marvel Enterprises, Inc., 135 S. Ct. 2401 (2015) (No. 13-720), 2015 WL 468872. 40 ibid. 41 See eg Brief of Washington Legal Foundation as Amicus Curiae in Support of Respondent, Kimble v. Marvel Enterprises, Inc., 135 S. Ct. 2401 (2015) (No. 13-720), 2015 WL 1048415. 42 Kimble II (n 28) 2404 (‘Kimble asks this Court to abandon Brulotte’s bright-line rule in favor of a case-by-case approach based on antitrust law's “rule of reason”’.). 43 ibid 2412. 44 ibid (‘According to Kimble, we should overrule Brulotte because it hinged on an error about economics: It assumed that post-patent royalty “arrangements are invariably anticompetitive’.).


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possessed market power, a prerequisite of antitrust liability. P45F

45P This presumption had been

undermined by the Patent Misuse Reform Act that required a showing of market power and anticompetitive effects in tying cases, and more recently by the Court’s ruling in Illinois Tool Works Inc. v. Independent Ink, Inc., where it held that market power had to be proven in antitrust cases involving patents. P46F

46P The patentee argued that it may not have power in the relevant

market required to curtail competition under the rule of reason analysis, and that a proper analysis required ‘a full-fledged economic inquiry into the definition of the market, barriers to entry, and the like’. P47F

47P Brulotte collapsed the duration of the patent right which terminated after

twenty years with the royalty base which could go on indefinitely if the parties wished. P48F

48P Since

post-expiration royalties could be procompetitive, P49F

49P Brulotte’s paternalistic prohibition on the

freedom of parties to contract prevents socially beneficial deals from occurring and harm innovation. P50F

50P For instance, startups benefit from deferred royalties in order to give them time

to build up their product markets. P51F

51P Worse, it allows licensees to opportunistically wriggle out

of a deal after benefiting from lower royalty rate. P52F

52P

1. Misuse as Patent Policy As in Morton Salt, the Court in Kimble declined to frame the issue as one based on antitrust principles. The Court explained that a patent was a public bargain that the patentee made in exchange for disclosure of the technology. P53F

53P Congress had decided that twenty years was an

45 ibid (‘He claims first that Brulotte rests on a mistaken view of the competitive effects of post-expiration royalties’.). 46 547 US 28 (2006). 47 Kimble II (n 28) 2408. 48 See eg Reply Brief for Petitioners, Kimble v. Marvel Enterprises, Inc., 135 S. Ct. 2401 (2015) (No. 13-720), 2015 WL 1299735. 49 Kimble II (n 28) 2412 (‘That is not true, Kimble notes; indeed, such agreements more often increase than inhibit competition, both before and after the patent expires’.). 50 ibid (‘He contends next that Brulotte suppresses technological innovation and so harms the nation's economy’.). 51 Reply Brief for Petitioners (n 48) 7. 52 Transcript of Oral Argument at 28, Kimble v. Marvel Enterprises, Inc., 135 S. Ct. 2401 (2015) (No. 13-720), 2015 WL 1440440. 53 Kimble II (n 28) 2406-07.

Patents endow their holders with certain superpowers, but only for a limited time. In crafting the patent laws, Congress struck a balance between fostering innovation and ensuring public access to discoveries…. This Court has carefully guarded that cut-off date, just as it has the patent laws' subject-matter limits: In case after case, the Court has construed those laws to preclude measures that restrict free access to formerly patented, as well as unpatentable, inventions. In one line of cases, we have struck down state statutes with that consequence.


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appropriate time that balanced the patentee’s interests in controlling access to the technology. P54F

54P

After that time, the ‘the unrestricted right to make or use the article passes to the public’. P55F

55P

The Court stated that ‘[a]llowing even a single company to restrict its use of an expired or invalid patent, we explained, “would deprive ... the consuming public of the advantage to be derived” from free exploitation of the discovery’. P56F

56P ‘[T]o permit such a result, whether or not

authorized “by express contract,” would impermissibly undermine the patent laws’. P57F

57 The Court observed that Brulotte was ‘brewed in the same barrel’.P58F

58P It noted that Brulotte sought

to guard the significance of the patent expiration date, declining to enforce laws and contracts that restrict free public access. P59F

59P Significantly, the Court observed that although Brulotte invoked

economic concepts, ‘[i]t did not rely on the notion that post-patent royalties harm competition’. P60F

60 PIndeed, competition was incidental rather than central to the analysis. P61F

61P In

particular, ‘in deciding whether post-expiration royalties comport with patent law, Brulotte did not undertake to assess that practice’s likely competitive effects. Instead, it applied a categorical principle that all patents, and all benefits from them, must end when their terms expire’. P62F

62P

Thus, ‘patent (not antitrust) policy gave rise to the Court's conclusion that post-patent royalty contracts are unenforceable—utterly “regardless of a demonstrable effect on competition”’.P63F

63 The Court was clearly concerned that allowing private parties to make an end-run around statutory expiration was problematic. For instance, during oral arguments Justice Breyer had expressed concern over a patentee who could lock up every conceivable licensee to pay royalties for ten or more years after the patent expired. P64F

64P Licensees will have less incentive to

develop product because products will trigger more royalties down road. These higher costs would affect both licensees and those who purchase from the licensee. The arrangement served the patentee well, to the tune of six million dollars in royalties, and became a detail only when he sought to claim royalties over an end-product where his invention formed an

ibid. 54 35 USC § 154(a)(2) (2012). 55 Kimble II (n 28) 2407. 56 ibid 2407. 57 ibid. 58 ibid. 59 ibid at 2407-8 (‘[T]hose agreements conflict with patent law's policy of establishing a “post-expiration ... public domain” in which every person can make free use of a formerly patented product’.). 60 ibid 2413. 61 ibid (‘The patent laws—unlike the Sherman Act—do not aim to maximize competition (to a large extent, the opposite). And the patent term—unlike the “restraint of trade” standard—provides an all-encompassing bright-line rule, rather than calling for practice-specific analysis’.). 62 ibid. 63 ibid. 64 Transcript of Oral Argument (n 52) 12.


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increasingly small component. P65F

65 At stake was not merely the private right of the defendant, but more importantly, the public interest. The Court had forged patent misuse as a tool to prevent abuses of the patent system, regardless of a demonstrable effect on competition. P66F

66P It begins with the premise that the

patent grant is not a property right as such, but a privilege conferred by the patent office to promote technological progress. P67F

67P In this regard, misuse may be analogized to the fair use

defense in copyright law. Like patent misuse, fair use is “an open-ended and context-sensitive inquiry”P68F

68P Both fair use and patent misuse are rooted in IP policy despite its inquiry into

aspects of market competition. P69F

69P

From its earliest days, the Supreme Court favored the promotion of the public interest over the private fortunes of those involved on both sides of the infringement suit. P70F

70P The lure of

exclusive rights also attracts others into the inventive enterprise. It feeds into a virtuous cycle of innovation where each successive generation “stand[s] upon the shoulders of Giants” P71F

71P as

new entrants, licensees, and competitors are enabled to build upon the patentee's technology,

65 Lim, ‘Rebirth’ (n 24) 356. 66 1 Hovenkamp (n 18) s 3.2.

[S]ince the inception of the misuse doctrine, courts have treated extension of a patent grant--by lengthening its duration, by bundling it with some other unpatented product, or by some other means--as an evil to be avoided regardless of a demonstrable effect on competition. While concerns about competition clearly animated the Court's first statement of misuse doctrine in the Motion Picture Patents case, the Court has also been concerned about what might be termed the integrity of the patent system. Patent policy permits the grant of exclusive rights only under certain conditions and only within a limited scope, and the expansion of that scope through coercive use of a government-granted legal right has been thought to undermine the limitations built into patent law.

ibid. 67 See United States v Paramount Pictures, Inc., 334 US 131, 158 (1948) (‘The copyright law, like the patent statutes, makes reward to the owner a secondary consideration’.). 68 Campbell v Acuff-Rose Music, Inc., 510 US 569, 576-77 (1994). 69 17 USC § 107(4) (2012). 70 See Mazer v Stein, 347 US 201, 219 (1954) (‘The economic philosophy behind the clause empowering Congress to grant patents and copyrights is the conviction that encouragement of individual effort by personal gain is the best way to advance public welfare through the talents of the authors and inventors in “Science and useful Arts.” Sacrificial days devoted to such creative activities deserve rewards commensurate with the services rendered’.); see also Motion Picture Patents Co. v Universal Film Mfg. Co., 243 US 502, 519 (1917) (refusing to enforce the patent against contributory infringers because ‘it would be gravely injurious to [the] public interest,’ which it deemed ‘more a favorite of the law than is the promotion of private fortunes’.). 71 Letter from Isaac Newton to Robert Hooke (1676) (on file with author).


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which is disclosed in return for the monopoly protection. P72F

72P When patentees are

overcompensated for their contributions, it disrupts the incentive system and results in inefficiency and reduced technological output. According to Thomas Jefferson, overreaching patent owners become ‘more embarrassment than advantage to society’. P73F

73P In policing patent

misconduct, judges applying patent misuse attempt to delineate this metaphysical boundary. P74F

74 Both Morton Salt and Kimble illustrate the influence of competition policy on patent misuse, even though the Court consciously avoided relying on antitrust law in formulating the defense. P75F

75P Patent law is concerned about competition, but an intellectual property doctrine

does not become encrusted by antitrust analysis merely because it bears a shade of competition policy. As the Court had earlier noted, ‘the Patent Clause itself reflects a balance between the need to encourage innovation and the avoidance of monopolies which stifle competition without any concomitant advance in the “Progress of Science and useful Arts”’.P76F

76P

It is unsurprising then that allegations of misuse, such as the tying found in Morton Salt or post-expiration royalty payments like that found in Kimble, involve some competition concerns. Unlike an antitrust plaintiff, a defendant alleging misuse need not show the patentee possessed market power or caused anticompetitive effect in most cases. P77F

77P Unlike antitrust law, the effect

on the patentee’s conduct on market competition is incidental rather than a necessary part of liability. Similar defenses include patent exhaustion, P

78P and the defense of fair use in copyright

72 See 35 USC § 112(a) (2012) (requiring the patent applicant be fully in possession of the invention claimed and to disclose his invention in a manner which enables a person ordinarily skilled in the art to make and use the invention). 73 Letter from Thomas Jefferson to Isaac McPherson (13 August 1813) <http://press-pubs.uchicago.edu/founders/documents/a1_8_8s12.html> accessed 21 September 2015. 74 Lim, ‘Rebirth’ (n 24) 318. 75 Morton Salt (n 5) 494 (finding it ‘unnecessary to decide whether [the patentee] had violated the Clayton act, for [it] concluded that in any event the maintenance of the present suit... [was] against public policy’.). 76 Bonito Boats, Inc. v Thunder Craft Boats, Inc., 489 US 141, 146 (1989). 77 Ironically, the one exception is tying, which the fact pattern of Morton Salt falls under. Section 271(d)(5) provides that:

No patent owner otherwise entitled to relief for infringement or contributory infringement of a patent shall be denied relief or deemed guilty of misuse or illegal extension of the patent right by reason of his having… conditioned the license of any rights to the patent or the sale of the patented product on the acquisition of a license to rights in another patent or purchase of a separate product, unless, in view of the circumstances, the patent owner has market power in the relevant market for the patent or patented product on which the license or sale is conditioned.

35 USC § 271(d)(5) (2012). 78 Bowman v Monsanto Co., 133 S. Ct. 1761(2013). See also Daryl Lim, ‘Self-Replicating Technologies and the Challenge for the Patent and Antitrust Laws’ (2013) 32 Cardozo Arts & Ent. L.J. 131.


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mentioned earlier, and functionality in trademark law. P

79P

One reason for the intermingling of patent misuse and antitrust is procedural. Patent misuse and antitrust issues are routinely tried together, separate from patent validity and infringement. P

80P Misuse cases also tend to arise out of patent licensing agreements. Such

agreements affect market competition, and courts have expanded misuse to include antitrust standards to address market distortions. P

81P The overlap has led some courts to view misuse as

a similar albeit broader wrong than antitrust, so that an offense that does not warrant attention under the antitrust laws due to market power may still give rise to misuse. P

82P However one

would be mistaken to treat misuse as a form of “antitrust-lite,” as the patentee in Kimble did. Brulotte had analogized patent term extension to tying and pointed out license was an attempt to ‘leverage’ the patent. That analogy, though illustrative, had the unintended consequence of leaving the door open for muddying patent misuse with antitrust law principles. No antitrust violation had been alleged. Those words were not only a distraction, but they provided a convenient latch for later courts and commentators preferring to bottle patent misuse within the antitrust decanter. P

83 Antitrust policy, however, is not appropriate to regulate follow-on innovation. Antitrust law is concerned about economic monopoly power and of patentees using that power to raise prices

79 See eg Cambridge Univ. Press v Patton, 769 F.3d 1232 (11th Cir. 2014); In re Morton-Norwich Prods., Inc., 671 F.2d 1332 (C.C.P.A. 1982). 80 Hunter Douglas, Inc. v Comfortex Corp., 44 F. Supp. 2d 145 (N.D.N.Y. 1999) (holding that antitrust and patent misuse would be heard separately from the infringement claims). 81 Thomas F. Maffei, ‘The Patent Misuse Doctrine: A Balance of Patent Rights and the Public Interest’ (1969) 11 B.C. L. Rev. 46, 52 (‘Because the subject matter of the licensing agreement and the manner in which it is obtained effect directly the maintenance of a competitive economy, the existence of licensing abuses has necessitated the application of antitrust principles to patent law’.). 82 See Zenith Radio Corp. v Hazeltine Research, Inc., 395 US 100, 140-41 (1969) (‘[I]f there was such patent misuse, it does not necessarily follow that the misuse embodies the ingredients of a violation of either § 1 or § 2 of the Sherman Act, or that Zenith was threatened by a violation so as to entitle it to an injunction under § 16 of the Clayton Act’.). But see Raychem Corp. v PSI Telecomms., No. C-93-20920 RPA, 1995 WL 108193, at *3 (N.D. Cal. March 6, 1995) (‘Although the contours of this doctrine are vague, patent misuse claims are generally tested by conventional antitrust principles’.). 83 See eg Brief of Memorial Sloan-Kettering Cancer Center and others as Amici Curiae in Support of Petitioners, Kimble v. Marvel Enterprises, Inc., 135 S. Ct. 2401 (2015) (No. 13-720), 2014 WL 768320, at *13 (‘The demise of Brulotte would leave the task of policing anti-competitive licensing agreements where it belongs: with the federal antitrust laws’.); see also Brief of the Intellectual Property Law Association of Chicago as Amicus Curiae in Support of neither party, Kimble v. Marvel Enterprises, Inc., 135 S. Ct. 2401 (2015) (No. 13-720), 2015 WL 510933, at *3-5 (arguing that Brulotte should be reconsidered in light of changes to economic analysis of antitrust law.).


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and stifle output. P

84P It works ex post facto to create a competitive environment taking into

account the need to incentivize innovation. Although the antitrust laws purport to take into account dynamic efficiencies that include innovation concerns, commentators like Marshall Leaffer are concerned that it does not do so ‘adequately’ P

85P because antitrust policy has a

‘natural bias’ toward static analysis, which is more measurable. P

86P Moreover, the Court in Kimble

was wary of introducing the antitrust rule of reason, which was difficult to apply.

2. “Simplicity Itself ” Over the last four decades, antitrust law has moved in years from a per se to a rule of reason analysis. P

87P Per se rules have the benefit of being clear and easy to administer, but they may fail

to take into account procompetitive benefits of practices that restrict competition. At the same time, the rule of reason has proven to be difficult to administer. Chief Justice Roberts writing a vigorous dissent in an earlier case, warned that the rule of reason was “amorphous,” and sarcastically bade ‘[g]ood luck to the district courts that must, when faced with a patent settlement, weigh the ‘likely anticompetitive effects, redeeming virtues, market power, and potentially offsetting legal considerations present in the circumstances’. P

88P Curiously in Kimble,

he chose to side with the dissent’s opinion instituting the very approach that he had denounced. P

89 The majority in Kimble found that the patentee offered no empirical evidence that Brulotte had decreased innovation, and chided it for ‘essentially ask[ing] [the Court] to take their word for the problem’. P

90P The Court admitted that it could not judge the veracity of the argument. P

91P The

Court instead fell back to its initial conclusion that Brulotte allowed parties to use alternative arrangements ‘to accomplish parties’ payment deferral and risk-spreading goals,’ and directed

84 See Phillip E. Areeda and Herbert Hovenkamp, Antitrust Law (3rd edn 2008) 1781. 85 Marshall Leaffer, Patent Misuse and Innovation (2010) 10 J. High Tech. L. 142, 153. 86 See Joshua S. Gans, ‘When is Static Analysis a Sufficient Proxy for Dynamic Considerations? Reconsidering Antitrust and Innovation’ 2 (NBER Innovation Policy and the Economy Conference, Washington, D.C., April 2010) <http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1603955> accessed 21 September 2015 (describing static analysis as “largely based on price,” compared to dynamic analysis where “innovation plays a significant role”). 87 Brief of the United States as Amicus Curiae, Kimble v. Marvel Enterprises, Inc., 135 S. Ct. 2401 (2015) (No. 13-720), 2014 WL 5489470, at *13-14 citing 88 F.T.C. v Actavis, Inc., 133 S. Ct. 2223, 2245 (2013). 89 Kimble II (n 28) 2417 (‘Our traditional approach to stare decisis does not require us to retain Brulotte’s per se rule’.). 90 ibid 2414. 91 ibid (‘While we recognize that post-patent royalties are sometimes not anticompetitive, we just cannot say whether barring them imposes any meaningful drag on innovation’.). Kimble II (n 28) 2414 (‘Truth be told, if forced to decide that issue, we would not know where or how to start’.).


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claims about Brulotte’s consequences for innovation to Congress. P

92P To overrule Brulotte was like

a cure in search of a disease. Far from decreasing innovation, commercialization of scientific research has progressed unimpeded. A brief by Memorial Sloan-Kettering Cancer Center noted that running royalties have ‘increased by 30%’, P

93P and that research institutions and companies have been able to

structure payments using a combination of payment terms to ‘accommodate[ ] the licensee's desire both to conserve its current financial resources and shift some of the risk of failure to the licensor, which may be especially desirable if the licensee seeks continuing assistance of the licensor's scientific staff to overcome technical hurdles during development’. P

94P

The Court also noted that Brulotte was ‘simplicity itself to apply’. P

95

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. Brulotte’s ease of use appears in still sharper relief when compared to Kimble’s proposed alternative. Recall that he wants courts to employ antitrust law’s rule of reason to identify and invalidate those post-expiration royalty clauses with anti-competitive consequences. But whatever its merits may be for deciding antitrust claims, that ‘elaborate inquiry’ produces notoriously high litigation costs and unpredictable results. P

96 The Court acknowledged that Brulotte could prevent some parties from entering into desired, but parties can often find ways to achieve similar outcomes. P

97P It agreed with the patentee that

a ‘more extended payment period, coupled (as it presumably would be) with a lower rate, may bring the price the patent holder seeks within the range of a cash-strapped licensee’. P

98P Similarly,

the extended term could ‘better allocate the risks and rewards associated with commercializing inventions—most notably, when years of development work stand between licensing a patent and bringing a product to market’. P

99P

At the same time, the Court usefully identified a number of alternative arrangements, including deferring payments for pre-expiration use of a patent, tying royalties to non-patent rights, and

92 ibid. 93 Brief of Memorial Sloan-Kettering Cancer Center (n 83) *8. 94 ibid *6. 95 Kimble II (n 28) 2411. 96 ibid. 97 ibid 2408. 98 ibid. 99 ibid.


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making non-royalty-based business arrangements. P

100P In addition, patentees can also ask for a

higher premium for pre-expiration use, post-expiration payment as long as it is for pre-expiration use, step down the royalty amount post-expiration, or use trade secrets or know-how royalties in a license extending beyond term of actual secrecy. P

101P The agreement could

have been preserved simply by distinguishing between royalties for patent and non-patent rights. The patentee could also sue for breach of contract, as the Ninth Circuit itself noted. P

102P

Practitioners have pragmatically noted that, ‘[t]he continuing vitality of Brulotte highlights the need for licensors and licensees to attune themselves to the contours of Brulotte during license negotiations and to evaluate their rights under preexisting license agreements’.P

103P

Despite these contractual flexibilities, the dissent chose to interpret Brulotte as misperceiving the purpose and effect of postexpiration royalties because it rested on the view that such royalties extend the patent term by means of an anticompetitive tying arrangement. The dissent argued that the patentee leverages its market power during the patent term to require payments after the term ends, when the invention would otherwise be available for free public

100 ibid. 101 Tonya Gisselberg, ‘Hybrid Licensing Agreement Unenforceable Beyond the Patent Expiration Date’ (Seattle Copyright Watch, 19 July 2013) <http://www.seattlecopyrightwatch.com/licensing/hybrid-licensing-agreement-unforceable-beyond-the-patent-expiration-date/> accessed 18 September 2015 (noting that the result in Kimble could have been avoided by ‘separating license grants by the type of intellectual property right granted and clearly identifying the royalty rates and rights associated with a particular type of IP.’); see also Craig J. Madson, ‘Patent Misuse in Franchise Agreements” A Ripple on the Waters of Franchise Law’ (2000) 20 Franchise L.J. 107, 109 (‘[B]ecause courts have consistently found that single royalty payments constitute misuse, franchisors should clearly demarcate the value of the trademark, know-how, and trade secret rights from the patent rights’.). 102 Kimble I (n 34) 867, fn 8. 103 Donald R. Ware and Marco Quina, ‘How Not to Get Snared in Brulotte’s Web’ (Mondaq 3 July 2015) <http://www.mondaq.com/unitedstates/x/409518/Patent/How+Not+to+Get+Snared+in+Brulottes+Web> accessed 21 September 2015. See also Steven H. Goldberg, ‘Kimble v. Marvel Changes How Patent Licenses Should Be Drafted and also Diligenced in Transactions’ (Mondaq 18 August 2015) <http://www.mondaq.com/unitedstates/x/420806/Patent/Kimble+v+Marvel+Changes+How+Patent+Licenses+Should+Be+Drafted+and+Also+Diligenced+in+Transactions> accessed 21 September 2015.

[C]are should be taken to follow the Kimble decision and to either structure the agreement to include multiple patent or other divisible trade secret, knowhow, technology, or other intellectual property rights or structure an alternative business arrangement among the parties, such as a joint venture. Also, transactional attorneys must carefully review patent licensing arrangements during diligence for M&A transactions through the Kimble/Brulotte lens. In light of Kimble, to the extent that a contract's subject matter is just the patent, and the parties have negotiated an end date for royalties after the patent's expiration, this should be flagged and discussed. If left unaddressed, expected cash flows from royalties that may not be enforceable could impact deal modeling and underlying valuations.

Goldberg, ibid.


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use. It reasoned that agreements to pay licensing fees after a patent expires do not extend the patent monopoly. Rather, once a patent expires, all that is left ‘is a problem about optimal contract design’.P

104P

It would fly in the face of justice for courts to rewrite contracts simply because parties were unaware of a rule against perpetual royalties and one party later found it an inconvenient truth in its quest for greater financial gain. Therefore the Court was correct in refusing to conjecture what the parties’ bargaining position would have been and what agreement might have resulted had post-expiration royalties been separated from the patent. In facilitating the transaction, the patent right did its job. To leverage on patent remedies rather than rely on applicable remedies for breach of contract would be precisely the sort of overreaching that patent policy should be concerned about. If there the patentee could show that it had conducted itself equitably, the post-expiration royalties would be upheld. Thus, the district court in Cordance Corp. v. Amazon.com, Inc. did not read Brulotte as dictating that post-expiration royalties automatically rendered the patent unenforceable, as long there was no coercive patent leverage. P

105

3. Stare Decisis: Patent v. Antitrust Cases The Court in Kimble began by acknowledging that stare decisis was ‘not an inexorable command’ but that overruling a case requires a ‘special justification’—over and above the belief ‘that the precedent was wrongly decided’. P

106P Since Brulotte interpreted the provision in

the Patent Act on patent duration, stare decisis carried ‘enhanced force’, since critics are free to take their objections to Congress.P

107P This, the Court wrote was wrote ‘regardless whether

our decision focused only on statutory text or also relied, as Brulotte did, on the policies and purposes animating the law’. P

108 Critically, the Court observed that had Brulotte been an antitrust case, it would view ‘stare decisis as having less-than-usual force’. P

109P This stemmed from the common law nature of

antitrust and Congress’ decision to delegate broad rulemaking powers to the Supreme Court. P

110P

104 Kimble II (n 28) 2416. 105 Cordance Corp. v Amazon.com, Inc., 727 F. Supp. 2d 310, 336-37 (D. Del. 2010) (‘[E]ven assuming that Cordance's contractual agreements did constitute patent misuse per se under Brulotte, it does not follow that the court need render the '710 patent unenforceable in its entirety. The court might invalidate only the post-expiration passive royalties. And here, any final extension that would put the GSP Agreement beyond the term of the '710 patent has not yet been and might never be exercised’.). 106 Kimble II (n 28) 2409. 107 ibid. 108 ibid. 109 ibid 2412. 110 ibid (‘Congress, we have explained, intended that law's reference to “restraint of trade” to have “changing


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With this mandate, the Court ‘felt relatively free to revise our legal analysis as economic understanding evolves and *** to reverse antitrust precedents that misperceived a practice's competitive consequences’.P

111P Further, ‘because the question in those cases was whether the

challenged activity restrained trade, the Court's rulings necessarily turned on its understanding of economics’. P

112P In contrast, ‘the patent laws do not turn over exceptional law-shaping

authority to the courts. Accordingly, statutory stare decisis—in which this Court interprets and Congress decides whether to amend—retains its usual strong force’.P

113 The Court the fact that Congress had no less than 33 opportunities to reverse Brulotte but chose not to do so probative. P

114P Congress also ‘rebuffed’ bills that would have straightjacketed

patent misuse within the Federal Circuit’s rule of reason formulation. P

115P The Court thus found

that ‘Congress's continual reworking of the patent laws—but never of the Brulotte rule—further supports leaving the decision in place’. P

116 Finally, the Court was hesitant to overrule Brulotte because it implicated property and contract law, ‘two contexts in which considerations favoring stare decisis are “at their acme” because parties are especially likely to rely on such precedents when ordering their affairs’.P

117P To the

Court, the absence of actual evidence was irrelevant. P

118P The reasonable possibility that ‘long-

dormant licenses for long-expired patents spring back to life’ was sufficient.P

119P

The Court listed three criteria that would persuade it to overrule Brulotte and found that none of them applied in Kimble. First, Brulotte’s doctrinal underpinnings had not eroded over time. Both the Patent Act and the cases circumscribing the patentee’s rights to the statutory period were good law. Moreover, the patentee’s argument was ‘based not on evolving economic theory but rather on a claim that the Brulotte Court simply made the wrong call’.P

120P That failed

to clear stare decisis’ ‘high bar’. P

121P Given ‘Brulotte’s close relation to a whole web of precedents

content,” and authorized courts to oversee the term's “dynamic potential”’.). 111 ibid 2412-13. 112 ibid 2413. 113 ibid. See also Transcript of Oral Argument (n 52) 25. 114 ibid 2410. 115 ibid. 116 ibid. 117 ibid. 118 ibid (‘To be honest, we do not know (nor, we suspect, do Marvel and Kimble). But even uncertainty on this score cuts in Marvel's direction. So long as we see a reasonable possibility that parties have structured their business transactions in light of Brulotte, we have one more reason to let it stand’.). 119 ibid. 120 ibid 2413. 121 ibid.


Page 16 of 19

means that overruling it could threaten others’. P

122P Second, the decision was simple to apply

‘particularly as compared to [the patentee’s] proposed alternative, which can produce high litigation costs and unpredictable results’. Third, Kimble was a patent case, not an antitrust case. According to the Court, antitrust law ‘gives courts exceptional authority to shape the law and reconsider precedent based on better economic analysis’. P

123P

4. Maintaining Incentives for Innovation Kimble is the latest in a string of cases illustrating the Court’s skepticism of broad patent rights as the catalyst for innovation. P

124P With only a few exceptions, it has consistently reversed the

Federal Circuit’s earlier pro-patentee jurisprudence. P

125P Notably, in FTC v. Actavis the Court

decisively rejected the ‘scope of the patent’ approach which immunized patentee conduct from antitrust scrutiny. P

126P Post-Actavis, antitrust law challenges will feature with greater prominence

in future patent cases. The Court held that ‘patent and antitrust policies are both relevant in determining the “scope of the patent monopoly”’, P

127P and that ‘whether a particular restraint

lies “beyond the limits of the patent monopoly” is a conclusion that flows from that analysis and not . . . its starting point’. P

128

122 ibid 2411 (‘If Brulotte is outdated, then (for example) is Scott Paper too? We would prefer not to unsettle stable law’.). 123 ibid 2412. 124 See eg Mayo Collaborative Servs. v Prometheus Laboratories, Inc., 132 S. Ct. 1289, 1301 (2012) (‘a danger that the grant of patents . . . will inhibit future innovation . . . or otherwise forecloses more future invention than the underlying discovery could reasonably justify’.) 125 See Limelight Networks, Inc. v Akamai Techs., Inc., 134 S. Ct. 895 (2014); Nautilus, Inc. v Biosig Instruments, Inc., 134 S. Ct. 896 (2014) (on the proper standard for indefiniteness). Ass'n for Molecular Pathology v Myriad Genetics, Inc., 133 S. Ct. 2107 (2013) (reversing the Federal Circuit's decision on gene patents, holding that isolated DNA sequences did not qualify as patentable subject matter); see also KSR Int'l Co. (n 9) (raising the threshold required by patent applicants or owners to show that their inventions were nonobvious); eBay Inc. v MercExchange, L.L.C., 547 US 388 (2006) (reversing Federal Circuit precedent automatically granting injunctions upon a finding of infringement, requiring courts instead to weigh the equities as in non-patent injunction requests). 126 Thomas Frongillo and others, ‘Reverse Payment Settlements in Jeopardy Following Supreme Court Ruling in FTC v. Actavis’ (Fish & Richardson, 19 June 2013) <http://www.fr.com/FTC-Actavis-Reverse-Payment-Settlement/> accessed 21 September 2015.

[W]hen viewed in conjunction with the Court's recent decisions in Association for Molecular Pathology v. Myriad Genetics, Inc., and Mayo Collaborative Services v. Prometheus Laboratories, Inc., [Actavis] may signal the beginning of a trend in which the Court is narrowing both the reach and scope of the patent laws.

ibid (footnotes omitted). In 2014, the Court accepted more patent cases. 127 F.T.C. (n 88) 2225. 128 ibid 2231-32.


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Like a ‘one-two’ punch, Actavis and Kimble spells the death knell for the Federal Circuit’s formulation of misuse. The Federal Circuit had immunized the patentee from scrutiny under patent misuse if the offending conduct or restraint fell within the scope of the patent. P

129P If

the offending conduct or restraint fell outside the scope of the patent, then according to the Federal Circuit, courts had to apply a rule of reason analysis. P

130P

The first blow comes from Actavis. The Supreme Court had earlier recognized that patentee conduct which constituted misuse would constitute an antitrust violation as well. P

131P Since the

threshold for liability is lower under patent misuse, it must follow that the immunity from patent misuse conferred under the Federal Circuit’s formulation has now been debunked by Actavis. P

132P The second blow comes from Kimble, which rejected the rule of reason formulation

that the patentee in that case had attributed to Federal Circuit jurisprudence. It follows that the approach based on patent policy as laid down in Morton Salt has been implicitly reinstated as the correct approach to patent misuse analysis. Patent misuse allows courts to use the defendant’s grievance as a proxy of the public interest. The equitable defense was designed to have a deterrent effect, and it is less concerned with reversing an improperly accrued market benefit. P

133P At the same time, judges tailor the penalty

129 Virginia Panel Corp. (n 19) 869 (‘[A] court must determine if that practice is “reasonably within the patent grant, i.e., that it relates to subject matter within the scope of the patent claims”. If so, the practice does not have the effect of broadening the scope of the patent claims and thus cannot constitute patent misuse’.) 130 ibid 869.

If, on the other hand, the practice has the effect of extending the patentee's statutory rights and does so with an anti-competitive effect, that practice must then be analyzed in accordance with the “rule of reason”. Under the rule of reason, “the finder of fact must decide whether the questioned practice imposes an unreasonable restraint on competition, taking into account a variety of factors, including specific information about the relevant business, its condition before and after the restraint was imposed, and the restraint's history, nature, and effect”.

ibid (footnotes omitted). 131 Illinois Tool Works (n 46) 42 (‘It would be absurd to assume that Congress intended to provide that the use of a patent that merited punishment as a felony would not constitute “misuse.”’). 132 Princo Corp. (n 23) 1341 (Dyk J).

The critical question is whether the existence of an antitrust violation… constitutes misuse of the protected patents … the Supreme Court's view of patent misuse in its recent Illinois Tool Works decision, … [is] .., that “[i]t would be absurd to assume that Congress intended to provide that the use of a patent that merited punishment as a felony [under the Sherman Act] would not constitute “misuse”.

ibid citing Illinois Tool Works (n 46) 42. 133 Syndicate Sales (n 3) *5-6 (noting that there is no need for patentees to ‘actually obtain an improper market


Page 18 of 19

for misuse according to the justice required by the individual case. P

134P Another court attributed

this judicial calibration to the fact that a court applying the misuse defense ‘sits in equity and is vested with considerable discretion in evaluating the actions of the patentee’. P

135P Antitrust

law is aimed at fostering competition in a free market society by preventing abuse of market power. Had Kimble endorsed the Federal Circuit’s version of misuse predicated on antitrust policy, its potential as patent policy lever would have been diminished. If the patentee’s conduct did not involve improper use, courts will take that into account in determining whether the patent should be rendered unenforceable. P

136P In addition, courts are

sensitive to common-sense arguments for restrictions alleged to be misuse. In Marks v. Polaroid Corp., the First Circuit found the license restrictions justified because ‘reuse by the public generally might spread eye infection for which perhaps it might be held liable, and in the case of the temporary viewers, that after one use they were likely to become bent or dirty and hence lose some it not all of their effectiveness’.P

137 Courts have exercised their discretion – even upon finding misuse – not to impose the remedy of unenforceability where the impact would be ‘too drastic’.P

138P One court recently regarded

unenforceability as too harsh in close cases and factored misuse into the balancing test in determining whether to grant an injunction instead. P

139P Another was willing to sever the

offending clause from the rest of the patent. P

140P Patent misuse is an affirmative defense. This

prevents it from becoming a tool of unscrupulous third parties masquerading as roving avengers of the public interest. While misuse may be invoked by declaratory judgments, it featured in only about seven percent of misuse cases between 1953 and 2012, compared to eight percent in litigated patent cases generally. P

141P

benefit for there to be actionable patent misuse claim’.). Giles S. Rich, ‘Infringement under Section 271 of the Patent Act of 1952’ (2005) 14 Fed. Cir. B.J. 117, 133 (‘The misuse doctrine was a special form of punishment devised for over-reaching patentees who were using their patents to monopolize something other than the invention’.). 134 Kolene Corp. v Motor City Metal Treating, Inc., 307 F. Supp. 1251, 1270 (E.D. Mich. 1969) affd, 440 F.2d 77 (6th Cir. 1971) (noting that the misuse defense ‘is not to be taken as dogmatic and its application automatic’, since denying the successful patentee its remedies ‘is a harsh remedy, a species of forfeiture’.). 135 Koratron Co. v Lion Unif., Inc., 409 F. Supp. 1019, 1022 (N.D. Cal. 1976). 136 Princo Corp. (n 23) 1331 (‘What that requires, at minimum, is that the patent in suit must “itself significantly contribute[ ] to the practice under attack”’.). See also Daryl Lim, ‘Living with Monsanto’ (2015) Mich. St. L. Rev. (forthcoming). 137 Marks v Polaroid Corp., 237 F.2d 428, 436 (1st Cir. 1956). 138 Ethyl Corp. v Hercules Powder Co., 232 F. Supp. 453, 458 (D. Del. 1963). 139 Mallinckrodt Inc. v Masimo Corp., No. 00-6506 MRP (AJWx), 2004 U.S. Dist. LEXIS 28518, at *106, n 34 (C.D. Cal. July 12, 2004). 140 Cordance Corp. v Amazon.com, Inc., 727 F. Supp. 2d 310, 336-37 (D. Del. 2010). 141 Lim, ‘Rebirth’ (n 24) 313.


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III. CONCLUSION Expiration of a patent terminates the patentee’s right to collect post-accrual royalties on that patent, even if the license says otherwise. The ultimate goal of the patent system is to provide incentives to innovate as a means to facilitate the disclose of inventions and dissemination of technology. Kimble’s affirmation of the rule against post-expiration royalties helps ensure unrestricted access to inventions by prohibiting the patentee from leveraging on its patent to charge royalties indefinitely. The opinion also clarified that harm to competition was a relevant but not a necessary condition to the analysis. Patent policy is a rich vein in patent misuse that largely remains untapped. The ultimate goal of the patent system is to promote the public good by providing a proper incentive to innovate and disclose their inventions. The antitrust laws, in contrast, are aimed at fostering competition in a free market society by preventing monopolies and unreasonable restraints of trade. If patent misuse is seen as being predicated on a finding of antitrust policy alone, its potential as a policy lever would be much diminished and there would never be a role for patent misuse. Once antitrust fails, so too would a misuse doctrine that is coupled with antitrust. Like every tool, patent misuse may itself be misused. Its flexibility can devolve into debilitating uncertainty. Its overlap with antitrust law can become a flimsy cantilever, and as its distinct mission to safeguard patent policy vanishes, so will it. Punitively applied, it will realize its detractors’ worst fears. Prudently applied, it may yet prove itself to be a keen and incisive scalpel capable of complimenting the rougher cuts of the antitrust laws. The vitality of patent misuse ultimately depends on those it was created by and for – the judges themselves. Through debate, experimentation, and refinement innate in the common law, future cases can craft pieces that will form a coherent analytical framework for the interface between the patent and antitrust laws. The effort must be supported by clear-headed constituents who look beyond the rhetoric and translate economic insights into workable legal rules. If the reinvigoration of patent misuse takes place, it will likely be a compromise: balancing innovation and fairness in dealing with competitors and consumers with commercial certainty and robust exclusionary rights and, thus, encourage the continued production and exploitation of inventions that enrich our daily lives.

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