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Brulotte v. Thys Co. and its affect on royalty payments

When most Americans think of the entertainment industry they typically think of the celebrities and businesses that work in the industry and the projects they do to keep it running. In most people's minds, there are no other parts. But if you're one of our more frequent readers, you know that there is another -- perhaps more important -- piece to the industry: the laws that govern how the industry will function.

From intellectual property rights to contractual agreements, the entertainment industry is heavily dependent upon all parties understanding the complex plethora of laws that are applicable in each situation. If one party does not understand the expectations of the other party, a violation of the law can occur. This, as you can imagine, can lead to litigation that may be just as complex as the laws that govern the industry.

To highlight this point, we wanted to look at the 1964 U.S. Supreme Court case of Brulotte v. Thys Co., which considered a difficult question: could a licensing agreement extend the rights of a patent owner even if the patent had expired? Even though the court reached a decision on the matter roughly 50 years ago, it's still a question that gets raised from time to time. Even now, the question is before the U.S. Supreme Court once more in the case of Kimble v. Marvel Enterprises, Inc.

When the Supreme Court ruled in Brulotte v. Thys Co., it pointed out that the law gives patent owners exclusive rights to their discoveries for a period of 17 years, after which point the right becomes public property. In the case, the end date of several licensing agreements was well past the expiration of the patents, which begged the question: did the licensees owe royalty payments after the expiration date?

As the court pointed out, the right to the patents was extended by virtue of the licensing agreements, a practice the court believed should not be allowed.

For our readers, the case of Brulotte v. Thys Co. shows the complex relationship between contractual obligations and the subtle nuances of the law -- a fact that leads many to seek legal help to avoid equally complex litigation.

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