Patent Expiration Isn’t Always the End: Strategic Licensing Matters

The Brulotte doctrine, established by the U.S. Supreme Court in 1964, holds that it is per se unlawful to require royalty payments for the use of a U.S. patent after its expiration. This rule has long shaped how patent license agreements are structured. However, a recent Ninth Circuit decision in C.R. Bard v. Atrium Medical has determined that license agreements that tie royalties to multiple rights—such as foreign patents or non-patent assets—with post-expiration payments may still be enforceable, provided the agreement is carefully drafted. The Supreme Court declined to review the case, making the drafting of royalty provisions more consequential than ever.

For technology entrepreneurs licensing out patents, this development has two key implications. First, when licensing patent portfolios, it may be helpful to link payments to bundled rights—without specifying (or even hinting at) which specific rights these are tied to—especially where minimum annual royalties are involved. Second, patent prosecution strategies should be aligned with licensing objectives. For example, securing patents in jurisdictions with longer terms or staggered expiration dates may be even more powerful in extending the commercial value of a technology. Additionally, incorporating know-how or trade secrets into licensing packages may not only multiply licensing value, but may support royalty structures that remain enforceable even after U.S. patent expiration.

To build an IP strategy that supports long-term value creation, contact a member of Synchrony IP’s network at Synchrony IP.

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