The US Supreme Court has backed a decision that lets Marvel Enterprises out of a deal to pay royalties to Stephen Kimble, the inventor of the Spider-Man Web Blaster toy.
The Hollywood Reporter states that Kimble patented his idea in 1990 for the toy letting users mimic Spider-Man’s web-shooting abilities.
Marvel then began manufacturing a similar toy, which led Kimble to sue for patent infringement. The two sides came to a settlement in 2001, which provided him with three percent of net sales.
The firm then licensed the rights to Hasbro in 2006 and a dispute began over royalties.
Marvel pointed to a 1964 Supreme Court decision which forbids patent holders from collecting royalties after the expiration date of the patent. The defendant prevailed in seeking a declaratory ruling that it owed nothing to Kimble past 2010.
The case then went to the high court to see if it was time to create new precedent, but Justice Elena Kagan has now stated old precedent must stand untouched.
“Attorneys drafting patent licenses (which includes nearly all patent litigations which settle) need to draft carefully, paying special attention to the term of the patent and the term of the royalties," said Case Collard, partner at international law firm Dorsey & Whitney.
"There are many creative and legal ways to extend payments past the expiration of the patent, but they cannot be based on patent royalties. Hopefully attorneys were carefully drafting these licenses before. This is a strong reminder that these details have huge implications for their clients."