Property and Contract at a Legal Acme? Stare Decisis and the Supreme Court — John Golden

Post by John M. Golden

In Kimble v. Marvel Entertainment, LLC, No. 13-720, slip op. (U.S. S. Ct. June 22, 2015), the U.S. Supreme Court kicked off a momentous week with an opinion highlighting the importance of stare decisis.  More particularly, the justices grappled with whether to overrule a half-century-old holding “that a patent holder cannot charge royalties for the use of his invention after its patent term has expired.”  Id. at 1.  A six-justice majority chose to stick with the prior holding despite what the majority conceded to be a “broad scholarly consensus” criticizing this precedent on economic grounds.  Id. at 13.  In explanation of the decision, Justice Kagan wrote, inter alia, that (1) “[r]especting stare decisis means sticking to some wrong decisions”; (2) precedent involving interpretation of a statute has “enhanced force” compared to, say, precedent involving an interpretation of the U.S. Constitution; and (3) precedent involving property or contract rights, such as the patent law precedent in question, is further “superpowered” “because parties are especially likely to rely on such precedents when ordering their affairs.”  Id. at 7-10.  Indeed, according to the Court, “considerations favoring stare decisis are ‘at their acme’” in “‘cases involving property and contract rights.’”   Id. at 9 (quoting Payne v. Tennessee, 501 U.S. 808, 811 (1991) (Rehnquist, C.J.)).

The Court’s “at their acme” language constitutes something of a tribute to the centrality of private law to the reasoned ordering of everyday life.  On the other hand, there is a flip slide of the Court’s stare decisis calculus.  Particularly given the fairly weak—in the dissenting opinion’s words, “fanciful,” id. at 5 (Alito, J., dissenting)—evidence of reliance on precedent in Kimble, this flip side suggests that Kimble represents a less than full-throated endorsement of private law preeminence.  Justice Kagan referenced the flip side by quoting Justice Brandeis for the notion “that it is usually ‘more important that the applicable rule of law be settled than that it be settled right.’”  Id. at 7 (opinion of the Court).  Of course, this notion leaves room for situations in which the Court believes it more important to get the law right than to leave it settled.  If private law rules are so critical to the ordering of individuals’ affairs, one might imagine that, under various circumstances, the importance of getting them right could equal or surpass the importance of their remaining settled.  In Kimble, however, the majority of the Court apparently found getting the relevant rule right insufficiently important to justify overruling hoary precedent. 

In part, the Court’s conclusion might have reflected overconfidence in the “simplicity” of the rule against royalties after patent expiration.  See id. at 12 (“The decision is simplicity itself to apply.”).  Lower courts and commentators have not necessarily found simple means to assess the permissibility of post-expiration royalties under a “hybrid license” that packages the licensing of a patent with that of other matter.  See 6A Donald S. Chisum, Chisum on Patents § 19.04[3][d] (2013) (stating that Aronson v. Quick Point Pencil Co., 440 U.S. 257 (1979), “does not resolve the issue of post-expiration royalties on a ‘hybrid’ patent-trade secret license”); F. Scott Kieff et al., Principles of Patent Law 1143 (6th ed. 2013) (suggesting that “a detailed [technology license] agreement may be particularly likely to be enforced if the royalty rates step down on the expiration or invalidity of each formal intellectual property right that is licensed”).  In any event, given the two-sided nature of the stare decisis analysis, Kimble ultimately provides no better than mixed evidence that the Court regards property and contract as “superspecial,” id. at 10.

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