The owner of intellectual property often faces concerns about maximizing licensing revenues while addressing the restrictions of federal and state laws that create those rights. Because a given IP right may involve federal law, through patents, trademarks or copyrights, and state law, through associated trade secrets or confidential information, licensing of that IP mix often presents a challenge to maximize the IP owner’s potential revenue generation. One approach to solving the problem has been the use of a hybrid license. However, hybrid licenses have had limited success; see Brulotte v. Thys, 379 U.S. 29 (1964), which held that royalties associated with a patent must stop with the patent’s enforceable life. The U.S. Supreme Court recently heard oral argument in Kimble v. Marvel Enterprises, No. 13-720, a case in which the court has been asked to overturn Brulotte.

The hybrid license attempts to address the fact that intellectual property rights differ in their enforceable terms. When two or more different rights are in a single license and one of the rights extends the revenue period beyond the enforceable term of the other licensed right, the license becomes a hybrid. If the two rights licensed are of a different nature, for example, a patent and a trade secret, it can be easier to differentiate between them. If the two rights have a common base, for example, a patent that has both article and method claims where the article claim is directed to the device and the method claim is directed to the use of the article, it is more difficult to differentiate between the rights to justify the extended revenue period.

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