Atrium Medical Corporation v. C.R. Bard, Inc.

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 Entertainment, 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 provides royalties for post-expiration use of a patent.” Id. at 459 (emphasis added). Courts of appeals, however, have fractured over how to administer that simple rule. The patent license agreement here required the licensee to pay quarterly “Minimum Royalties.” Considering 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 Royalty obligation to U.S. sales and regulatory approvals, 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 was unenforceable once that patent expired. The Ninth Circuit reversed. Departing from other circuits, it held Brulotte and Kimble forbid courts from considering evidence beyond the license agreement itself. And when considering 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 “dictate[d] whether the minimum royalties are royalties on U.S. sales,” it held there was no problem under Brulotte and Kimble. The question presented is: Whether the Ninth Circuit’s approach fails to properly determine what royalties are “for,” as Brulotte and Kimble require. (i)