Summary
The Sixth Circuit affirmed the district court's grant of summary judgment for defendant Pursuant Health, holding that a royalty provision tied to the sale of kiosks incorporating plaintiff Lavery's patented vision screening device became unenforceable upon the patent's expiration. The court addressed its own appellate jurisdiction, concluding that the plaintiff's state-law contract claims did not arise under federal patent law despite an affirmative defense based on patent expiration. Applying Supreme Court precedent from Brulotte and Kimble, the court found the contract improperly attempted to extend patent monopoly rights beyond the statutory twenty-year term without identifying compensable non-patent intellectual property.
Topics
Practice areas
Questions Presented
- Does the state‑law contract claim arise under federal patent law for jurisdictional purposes?
- Is a royalty provision that extends beyond the patent’s expiration enforceable under contract law?
Holdings
- The claim does not arise under federal patent law; it is a state‑law contract claim and therefore the Sixth Circuit has jurisdiction.
- A royalty provision that obligates payment for post‑expiration use of a patented invention is unenforceable; the contract’s perpetual royalty violates the Brulotte/Kimble prohibition.
Key quotations
“The Contribution Agreement calls this a “perpetual royalty,” and the parties on appeal do not identify any language in this contract or any other between the parties that contains an end date for this royalty payment. By its terms, the key contract thus extends well beyond the 20‑year expiration date of Lavery’s patent.” (at 6)
“Lavery’s contract claim does not arise under federal patent law. The claim turns on state law and requires the courts to decide only whether the relevant contracts create a royalty that extends beyond the 20‑year expiration date.” (at 4)
Factual background
Kevin Lavery invented a vision‑screening device, obtained a patent, and transferred the patent to Pursuant Health in exchange for a royalty on kiosk sales. The patent expired in May 2021 and Pursuant Health stopped paying the royalty, prompting Lavery to sue for breach of the Contribution Agreement and unjust enrichment.
Procedural history
The district court held that the expiration of Lavery's patent made the royalty provision unenforceable and entered summary judgment for Pursuant Health. Lavery appealed the grant of summary judgment on his breach‑of‑contract claim.