Intellectual Property News and Reports

Dyax Corporation performed research for Ares Trading S.A. It also licensed patents to Ares, including some held by Cambridge Antibody Technology (the “CAT Patents”). Ares used the fruits of Dyax’s research to commercialize a cancer drug. In exchange, Ares agreed to pay royalties to Dyax based on the drug’s sales. Under the parties’ agreement, Ares’ royalty obligation to Dyax has outlasted the lifespan of the CAT Patents.

The District Court held that Ares’ royalty obligation is not unenforceable under Brulotte v. Thys Co., in which the Supreme Court declared unenforceable a royalty obligation because it conflicted with federal policy favoring limited patent duration. 379 U.S. 29, 30 (1964). We will affirm. Under Brulotte, a patent licensee’s royalty obligation is unenforceable only if it is calculated based on activity requiring use of inventions after their patents expire. Ares’ obligation is not calculated based on activity requiring use of inventions covered by the CAT Patents after their expiration, so it does not improperly prolong the CAT Patents’ duration and thus does not implicate Brulotte.

Download Ares Trading SA v. Dyax Corp