Monday, June 29, 2015

Kimble v. Marvel: Now With Spider-Man Jokes

I didn't get a chance to read any of the Supreme Court decisions last week so I'm behind. I did find out something about Justice Kagan that might make her my favorite justice. "She is a comic book fan and an avid fan of comic-book based action films, claiming that she has seen them all and that her favorite film is The Avengers."

She let this fandom leak out a little in her opinion in Kimble v Marvel Enterprises Inc.. It's a patent and contract case. Stephen Kimble invented a toy web shooter and several years later Marvel sold their own version violating the patent. They came to agreement that Marvel would buy the patent for about $500,000 plus 3% royalties on future sales. There was no time limit on this and the case comes about because what happens after the patent expires?

It turns out there's an existing 1964 case, Brulotte that found that "The royalty provisions of a patent-licensing agreement which provides for royalties for the use of machines incorporating certain patents are not enforceable for the period beyond the expiration of the last patent incorporated in the machine."

Kimble's patent expired, Marvel found out about Brulotte (neither knew about the case when drafting the contract) and wanted to stop payments, Kimble sued. The court found in Marvel's favor 6-3 citing Brulotte and stare decisis (a caution in overturning previous decisions unless really necessary). History hasn't been kind to Brulotte. Economists find it anti-completive, the opposite of its intent. The argument was that allowing contracts with royalties paid after the patent basically extends the monopoly. The argument against is that it isn't because others can enter the market without royalities and sometimes it's financially useful to extend the payment period longer (allowing smaller payments).

The court found that even if Brulotte was wrong, this case doesn't rise above the stare decisis burden to overturn it and really Congress should be the one to change the statutes. Justice Alito wrote a dissent (which was joined by Roberts and Thomas) saying that it should be overturned. I kinda agree with the dissent.

Still Kagan's opinion is fun for a different reason. She included various Spider-Man references in her writing. Vox describes them but here are my excerpts:

  • The parties set no end date for royalties, apparently contemplating that they would continue for as long as kids want to imitate Spider-Man (by doing whatever a spider can).
  • Patents endow their holders with certain superpowers, but only for a limited time.
  • As against this superpowered form of stare decisis, we would need a superspecial justification to warrant reversing Brulotte.
  • To the contrary, the decision's close relation to a whole web of precedents means that reversing it could threaten others.
  • But stare decisis teaches that we should exercise that authority sparingly. Cf. S. Lee and S. Ditko, Amazing Fantasy No. 15: “Spider-Man,” p. 13 (1962) (“[I]n this world, with great power there must also come—great responsibility”).

I want to point out Alito's second to last paragraph in which I think he basically admits that Congress is broken:

Passing legislation is no easy task. A federal statute must withstand the “finely wrought” procedure of bicameralism and presentment. ... Within that onerous process, there are additional practical hurdles. A law must be taken up for discussion and not passed over in favor of more pressing matters, and Senate rules require 60 votes to end debate on most legislation. And even if the House and Senate agree on a general policy, the details of the measure usually must be hammered out in a conference committee and repassed by both Houses.

I wonder if that sentiment, that's it's difficult for Congress to fix things, comes into bearing in his view of the typo in Obamacare that comes up in King v. Burwell. I'm guessing not.

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