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<h2>INTRODUCTION</h2>Strong IP rights are important, but they are only part of the picture. How those rights are licensed, enforced, and documented can make the difference between having valuable protection on paper and having protection that can be effectively used in practice. The cases discussed below highlight practical lessons for drafting license agreements, structuring royalties, identifying the right parties, and preserving remedies when disputes arise.<h2>1.&nbsp;Post-Patent-Expiration Royalties: The Brulotte Rule and Its Enduring Grip&nbsp;</h2>Brulotte v. Thys Co., 379 U.S. 29 (1964); Kimble v. Marvel Entertainment, LLC, 576 U.S. 446 (2015)<h3>(i) Controlling Facts&nbsp;</h3>In Brulotte, a patent owner sold their patented hop-picking machines to farmers for a flat sum and simultaneously issued license agreements to the farmers requiring ongoing royalty payments for the use of the machines. Although the patents expired well before the end of the license terms, the agreements continued to require royalties for the use of the machine after the patents’ expiration. The farmers refused to pay post-expiration royalties, and Thys sued for breach of contract. The case reached the Supreme Court, which held “a patentee's use of a royalty agreement that projects beyond the expiration date of the patent is unlawful per se,” reasoning that “the exaction of royalties for use of a machine after the patent has expired is an assertion of monopoly power in the post-expiration period when, as we have seen, the patent has entered the public domain.” Brulotte,&nbsp;379 U.S. at 32-33.Over fifty years later, the same issue resurfaced in Kimble. Stephen Kimble obtained a patent for a Spider-Man toy. Following an infringement suit, Marvel agreed to purchase the patent for a lump sum plus a royalty on future sales, with no end date and no reduced post-expiration rate. As the patent neared expiration, Marvel’s counsel identified the Brulotte rule and sought a declaratory judgment that Marvel could stop paying royalties once the patent expired. The district court and the Ninth Circuit agreed, applying Brulotte directly. Kimble then asked the Supreme Court to overrule Brulotte outright.<h3>(ii) Controlling Issues&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</h3>Whether a patent license agreement that requires royalty payments beyond the expiration of the licensed patent is enforceable, and whether Brulotte’s per se prohibition on post-patent-expiration royalties should be abandoned in favor of a case-by-case rule-of-reason analysis.<h3>(iii) Holdings</h3>In Kimble, the Supreme Court had a direct opportunity to overrule Brulotte but declined. The Court reaffirmed Brulotte and held that stare decisis required adherence to the per se rule. Writing for the majority, Justice Kagan acknowledged that Brulotte had been “widely criticized” by courts, academics, and the patent bar, but held that overruling a statutory-interpretation precedent requires a “special justification” beyond the belief that the prior decision was wrong. The Court found no such justification: Congress had been aware of Brulotte for over fifty years and had declined multiple opportunities to overturn it. The Brulotte rule, the Court concluded, provides a bright-line rule that is easy to apply and promotes the public’s right to use formerly patented inventions. Any change to that rule was for Congress, not the Court.Critically, however, the Kimble Court softened Brulotte's practical impact by identifying permissible workarounds, including deferred payments for pre-expiration use, royalties tied to non-patent rights, and business arrangements not dependent on expired patent rights. In other words, Brulotte remains controlling, but careful drafting can preserve certain post-expiration revenue streams without tying royalties to use of an expired patent. According to the Kimble&nbsp;Court, Brulotte “is simplicity itself to apply.” Kimble,&nbsp;576 U.S. at 459. “A court need only ask whether a licensing agreement provides for royalties for post-expiration use of a patent. If not, no problem; if so, no dice.” Id.&nbsp;<h3>(iv) Takeaways for Practitioners</h3>For patent licensors, these decisions make clear that the burden of protecting post-expiration revenue falls on the drafter. Every patent license agreement should contain a clear sunset clause tied to the expiration of the last licensed patent; open-ended or silent royalty terms risk being struck down. When the licensor seeks revenue beyond patent expiration, the agreement should structure deferred-payment schedules that calculate the total royalty owed based on pre-expiration activity and amortize those payments over a longer period. If the deal involves both patent rights and non-patent intellectual property such as trade secrets, know-how, trademarks, or copyrights, then the agreement should contain separate royalty provisions for each, with an automatic step-down in the royalty rate upon patent expiration to reflect only the continuing value of the non-patent rights. Practitioners should assume that post-expiration royalty provisions will be closely scrutinized.<h2>2.&nbsp;Post-Patent-Expiration Royalties: Navigating the Brulotte Safe Harbor</h2>Ares Trading S.A. v. Dyax Corp.,&nbsp;114 F.4th 123 (3d Cir. 2024)<h3>(i) Controlling Facts</h3>Ares and Dyax entered into a Collaboration and License Agreement under which Dyax used patented phage display technology to identify antibody fragments for Ares. Ares later used those fragments to develop the cancer drug Bavencio®. Dyax also licensed Ares certain Cambridge Antibody Technology (CAT) patents covering phage display technology. Under the agreement, Ares owed Dyax royalties based on Bavencio sales, beginning with the first commercial sale and continuing until the later of ten years after that sale or expiration of the last licensed patent. The CAT patents expired in 2018, but Bavencio’s first commercial sale occurred in 2017, so the royalty term would be extended to 2027. Ares sought a declaratory judgment that the post-expiration royalties were unenforceable.<h3>(ii) Controlling Issues</h3>Whether royalty obligations under a patent license that extend beyond the expiration of the licensed patents violate the Brulotte rule, where the royalties are based on sales of a commercial product that was developed using the patented technology, but whose manufacture and sale do not require post-expiration use of the patented invention.<h3>(iii) Holding</h3>The Third Circuit affirmed the district court, holding that Ares’s post-expiration royalties did not violate Brulotte. Applying Kimble, the court explained that the inquiry depends on whether the agreement requires royalties for post-expiration activity requiring use of the expired patent. That is, acts that would have infringed the patent pre-expiration. Because Ares admitted that manufacturing and selling Bavencio did not practice the CAT patent claims, the royalties were not conditioned on post-expiration use of the patented invention. Rather, the royalties constituted deferred compensation for Dyax’s pre-expiration research contributions.<h3>(iv) Takeaways for Practitioners</h3>The drafting lesson is that the basis for the royalty must be clear. Royalties tied to use of a patented invention that would have infringed pre-expiration will be unenforceable after patent expiration under Brulotte. Royalties framed, for example, as compensation for pre-expiration research, collaboration value, or trade secrets may survive patent expiration where such activities would not have infringed the patent pre-expiration. Practitioners should ensure that license agreements clearly articulate the basis for payment and, when royalties are intended to extend beyond patent life, tie those royalties to non-patent value rather than to use of the patented invention itself.<h2>3.&nbsp;Multi-Patent License Agreements: The Apportionment Imperative</h2>Rex Medical, L.P. v. Intuitive Surgical, Inc.,&nbsp;156 F.4th 1289 (Fed. Cir. 2025)<h3>(i) Controlling Facts</h3>Rex Medical sued Intuitive Surgical for infringing a single patent. At trial, Rex Medical’s damages expert sought to rely on a $10 million license agreement between Rex Medical and Covidien as a “comparable license” to establish a reasonable royalty. However, the license agreement was a multi-patent bundle covering more than ten patents and patent applications, not just the single patent asserted in the litigation. Rex Medical’s expert failed to apportion the $10 million license value among the individual patents and applications covered by the agreement, and the district court excluded the expert’s testimony. The jury found infringement and awarded Rex Medical $10 million in damages, but the district court reduced the award to $1 in nominal damages due to the absence of admissible damages evidence.<h3>(ii) Controlling Issues</h3>Whether a damages expert may rely on a multi-patent bundled license agreement as a “comparable license” for reasonable royalty purposes without apportioning the license value among the individual patents covered by the agreement.<h3>(iii) Holding</h3>The Federal Circuit affirmed the exclusion of the damages expert’s testimony and the reduction to nominal damages. The court reiterated that when parties rely on comparable license agreements to establish reasonable royalty damages, they must account for differences in the technologies and in the economic circumstances between the comparable license and the patent-in-suit. When a comparable license bundles multiple patents, the expert must allocate the license fee among the individual patents covered by the agreement. Expert testimony that fails to make such an allocation is inadmissible.<h3>(iv) Takeaways for Practitioners</h3>This decision carries significant implications for how multi-patent license agreements are drafted. Licensors and licensees negotiating multi-patent agreements should include explicit, patent-by-patent royalty allocations, field-of-use splits, and contemporaneous valuation records. Without such documentation, a bundled license may be unusable as a damages benchmark in subsequent litigation, potentially collapsing a damages case to nominal figures.&nbsp;<h2>4.&nbsp;Trademark Licensing and Corporate Affiliates: Name the Right Defendants</h2>Dewberry Group, Inc. v. Dewberry Engineers Inc.,&nbsp;604 U.S. 321 (2025)<h3>(i) Controlling Facts</h3>Dewberry Engineers, which provided real-estate development services, owned federal trademark registrations for the DEWBERRY mark and sued Dewberry Group, a competing real estate company owned by developer John Dewberry, for trademark infringement under the Lanham Act. Dewberry Group provided management services to approximately 30 separately incorporated affiliates, also owned by John Dewberry, that held commercial properties. The affiliates collected rental income, while Dewberry Group received only below-market management fees and had operated at a loss for decades. The district court treated Dewberry Group and its affiliates as a “single corporate entity” and awarded Dewberry Engineers nearly $43 million based on the affiliates’ aggregated profits. The Fourth Circuit affirmed. Importantly, the affiliates were never named as defendants, and no veil-piercing or “just-sum” theory was advanced.<h3>(ii) Controlling Issues</h3>Whether, under 15 U.S.C. § 1117(a) of the Lanham Act, a court may include the profits of a trademark infringer’s non-party corporate affiliates in an award of “defendant’s profits,” where the affiliates were not named as defendants and no veil-piercing claim or sum-just theory was asserted.<h3>(iii) Holding</h3>The Supreme Court unanimously vacated the $43 million award and remanded. The Court held that “defendant’s profits” under § 1117(a) means the profits of the named defendant. Separately incorporated affiliates are distinct legal entities under established principles of corporate law, and their profits cannot be attributed to the defendant absent a recognized basis such as veil-piercing. The Court left open other potential paths on remand, including whether the “just-sum” provision of § 1117(a) could support an upward adjustment and whether the court could examine the defendant’s financial records to determine its true economic gain. Justice Sotomayor concurred separately, emphasizing that courts may scrutinize non-arm’s-length transactions, such as below-market management fees and owner cash infusions, to determine the defendant’s actual profits without disregarding the corporate form.<h3>(iv) Takeaways for Practitioners</h3>For trademark practitioners, this decision underscores the importance of identifying all relevant parties in trademark enforcement actions. Where an infringer operates through a network of corporate affiliates, each entity that uses the mark should be addressed, either as a named defendant or otherwise taken into account through another appropriate legal strategy in any infringement action. Where naming all affiliates is impractical, practitioners should preserve alternative remedies by addressing non-arm’s-length intercompany transactions and documenting how the named defendant benefits from affiliate use of the mark.&nbsp;<h2>CONCLUSION</h2>The cases surveyed above share a common theme.&nbsp;Taken together, these recent decisions highlight a broader and increasingly unforgiving reality: whether arising from licensing arrangements or from IP enforcement rights defined strictly by the legal and structural choices made. These cases underscore how gaps or ambiguities in license agreements and litigation strategies can undermine the enforceability of IP rights. The unifying lesson is that IP enforcement cannot be treated as an afterthought to deal structure or litigation strategy—it must be affirmatively engineered at the outset. Absent that discipline, parties risk finding that rights they believed to be enforceable are, in practice, materially constrained when it matters most.Each of these decisions should prompt us to revisit our standard drafting templates and checklists. Do royalty terms clearly articulate the basis for payment? Are multi-patent licenses documented with patent-level allocations? And are all possible defendants named and applicable damage theories pled? The answers to these questions may determine whether your IP rights are fully valued and protected.&nbsp;This post is for informational purposes only and does not constitute legal advice.

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Martin L. Stern

Drafting Under Fire: Cases Shaping IP Licensing and Enforcement Rights

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