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by matt4077 4081 days ago
It's only tangentially related, but it's a good story:

Apparently at some point an American producer licensed the patent for a mouthwash for a percentage of sale – I think it was Listerine, but can't find this story on Wikipedia right now. A decade or two later, the patent ran out. Anybody could now copy the formula without royalties. Except: the original licensor sued his american licensee for continued royalty payments. They won, because the initial contract never specified an end to the arrangement when the patent expired.
2 comments
chc 4081 days ago
That case, Warner-Lambert Pharmaceutical v. John J. Reynolds, actually hinged on the fact that there was no patent license involved. Listerine's formula was a secret, and Jordan Lambert offered its creator royalties if he would share it with him. Later, the formula became widely known and Warner-Lambert wanted out of the deal since they were no longer getting any advantage from it. They sued to get out of their contract and recover past payments, citing patent cases as support for the idea that they should be set free of their obligations. The judge ruled that with patents, there is an understanding from the outset that they are paying for access to a time-limited monopoly, while the contract in this case was pretty clear about not having a termination date other than "whenever they stop making Listerine".

Source: http://law.justia.com/cases/federal/district-courts/FSupp/17...

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matt4077 4081 days ago
Thank you – had trade secrets and patents mixed up in memory.
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ubernostrum 4081 days ago
The current precedent in the United States is that a patent holder cannot collect royalties past the expiration of the patent, and license agreements requiring payments beyond expiration are unenforceable.

This doctrine is being challenged at the Supreme Court currently, in Kimble v. Marvel:

http://www.scotusblog.com/case-files/cases/kimble-v-marvel-e...

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danray 4081 days ago
One wrinkle -- even under current case law, payments can still validly be collected for non-patent IP (most often trade secrets). Thus, the best practice from the licensor's is to delineate what portion of the royalty rate is attributable to the patent, the trade secret, the trademark, etc., and stop collecting each portion once the corresponding IP expires or is (finally, unappealably) held invalid.
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