## Facts

- Thys Company owned multiple patents relating to hop-picking machinery and sold hop-picking machines to Walter Brulotte and other Washington hop growers.
- At the time of sale, Thys also granted each grower a license to use the machine in exchange for royalties of at least $500 per season or $3.33⅓ per 200 pounds of dried hops harvested, whichever was greater.
- The licenses restricted assignment and prohibited removing the machines from Yakima County, Washington.
- The licenses listed 12 patents, but only seven were embodied in the machines; all relevant patents expired on or before 1957.
- The licenses contained no termination date and, by their terms, required royalty payments to continue after the last relevant patent expired.
- The growers stopped paying royalties due both before and after the patent expirations, and Thys sued to recover the unpaid amounts.
- The growers argued that requiring royalties after expiration constituted patent misuse and was unenforceable.

## Issues

1. Whether a patent licensing agreement requiring royalties for use of a patented machine after expiration of the patents is unenforceable as patent misuse.
2. Whether state contract law can enforce post-expiration royalty obligations that conflict with federal patent policy.

## Decision

- The Supreme Court reversed the state-court judgment insofar as it allowed collection of royalties accruing after expiration of the last patent embodied in the machines.
- The Court held that royalty provisions are unenforceable to the extent they require payments for post-expiration use of the patented invention.
- The Court rejected the characterization of the arrangement as merely deferred payment for pre-expiration use because the royalty formula was tied to use during each post-expiration season.
- The Court distinguished precedent upholding certain royalty formulas because those cases did not involve extending royalty obligations beyond patent expiration.
- The Court concluded that federal patent policy controls and preempts contrary state contract enforcement.

## Legal Principles

- Patent exclusivity is limited to the statutory patent term; after expiration, the invention enters the public domain.
- Contract terms that require royalties for post-expiration use of a patented invention are unenforceable because they impermissibly extend the patent monopoly.
- A patentee may not, through private agreement, secure monopoly returns for the post-expiration period when the public is entitled to free use.
- Federal patent policy overrides state contract rules that would otherwise validate post-expiration, use-based royalty provisions.
- A distinction exists between (a) permissible time-based payment schedules for a fixed obligation and (b) impermissible royalties that continue to accrue based on post-expiration use.

## Conclusion

The Supreme Court held that requiring use-based royalty payments after the last applicable patent expires constitutes patent misuse, and courts may not enforce such post-expiration royalty obligations even if they would be valid under state contract law.


Brulotte v. Thys Co., 379 U.S. 29 (1964)