PAM , there are many loopholes that may extend royalty patent license payments
Hope the following brief description will describe it better .
How to Get Royalties After a Patent Has Expired
Three ways out
Fortunately, three legitimate techniques can be used in various circumstances to extend
the royalty period beyond the expiration of the licensed patents:
? The per se rule does not prohibit a payment scheme when amounts due after patent
expiration are clearly attributed to pre-expiration use of the patented invention.
The classic situation would be a bona fide installment sale of a patented machine. More
creative approaches would be to provide for milestones during the patent life that create an
obligation for the licensee to make deferred payments that reach into the post-expiration period.
? The Brulotte rule is not strictly applied to each patent in a group of related patents that
are rationally licensed together for a variety of activities by the licensee.
Such a "package license" may grant the licensee rights in multiple patents in exchange for
payments at a single royalty rate. Even though the patents in the group will generally expire at
different times, the fact that the royalty rate for the package does not decrease as individual
licensed patents within the package expire does not by itself render the royalty agreement
unenforceable.
? The Brulotte rule against post-expiration patent royalties does not require that a related
license, such as for trade secrets or know-how, must terminate with the expiration of the patent.
In Aronson v. Quick Point Pencil, 440 U.S. 257 (1979), the Supreme Court held that
Brulotte does not apply to a trade secret license on subject matter that could have been patented;
federal patent law did not preempt enforcement of the contract because the licensee had not
shown that any bargaining power stemming from ownership of a patent application was used as
leverage to extract the perpetual trade secret royalty.
This technique of licensing know-how and trade secrets along with patent rights is widely
used by academic institutions and is common in the biotechnology, pharmaceutical, and
electronics industries.
To best survive a challenge from a penny-pinching licensee trying to reduce its royalty
burden, such an agreement may allocate separate royalty rates for the know-how and patent
rights. Following the logic of Aronson, such a hybrid agreement should be made for the
convenience of both parties, and preferably the license itself will contain a statement showing
that the patent owner did not extract the post-expiration know-how license payments by using the
leverage of the patent.
The license agreement should recite in some detail the types and examples of know-how
that are transferred under the agreement. If files, data, or tangible materials are given to the
licensee as part of the transfer of know-how, the licensor should also document this transfer and
make arrangements for the extended preservation of these files, since if they are ever needed, it
will likely be after many years have passed.
It goes without saying that the know-how license must be real and that meaningful knowhow
should be transferred to the licensee, lest the know-how component be attacked as a sham
that is simply intended to extend the royalty period.
from IP VALUE COMMENTATOR
