Legal Question in Intellectual Property in New York
Licencing breach...?
I licenced a product line to a manufacturer who stopped paying me royalities after 17 years although he continues to manufacture the products that I designed. Our letter of agreement does not stipulate any end date.
Should I persue this?
2 Answers from Attorneys
Re: Licencing breach...?
No reason not to, but whether you prevail or not will depend on the nature of your agreement and whatever protection (such as a patent) your design had when you entered the license.
Re: Licencing breach...?
To dilate upon the subject beyond Mr. Burstyn's accurate observation, I would wonder if the license in question was based on a U.S. patent. If so, then under the Supreme Court case of Brulotte v. Thys Co., 379 U.S. 29 (1964), royalties must stop when the patent expires. The typical life of a U.S. patent is 17 years, although recent patents have had their lives calculated as 20 years from the filing date rather than the classical term of 17 years from issuance.
It is also true that the principle of the Brulotte v. Thys case has been questioned by economists as being illogical, and last year the federal appellate court in Chicago applied the principle but grudgingly, in Scheiber v. Dolby Laboratories, Inc., 293 F.3d 1014 (7th Cir. 2002). Many lawyers held their breath as the Supreme Court was invited to revisit the issue, but about a year ago, they exercised their discretion NOT to accept an appeal in the Dolby case. So although questionable on logical and policy grounds, the principle that patent royalties stop when the patent expires remains the law of the land.