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Scheiber v. Dolby Laboratories, Inc.
United States Court of Appeals for the Seventh Circuit
293 F.3d 1014 (7th Cir. 2002)
Scheiber (plaintiff) owned both United States and Canadian patents on the “surround sound” audio system. Scheiber sued Dolby Laboratories, Inc. (Dolby) (defendant) for infringement of the patents. As part of the settlement, Scheiber agreed to license the patents to Dolby pursuant to a royalty agreement. The United States patents for the system were set to expire in May 1993, while the remaining Canadian patents had expiration dates of September 1995. Dolby agreed to pay royalties on all of the patents, including the United States patents, through the Canadian expiration date in exchange for lower royalty fees, which Dolby felt would be easier to pass on to Dolby’s sub-licensees without pushback. Dolby later withheld royalty payments. Scheiber sued Dolby to enforce the licensing agreement. Dolby contended that, based on Brulotte v. Thys, Co. 379 U.S. 29 (1964), the agreement to pay post-expiration royalty payments was unenforceable.
Rule of Law
Holding and Reasoning (Posner, J.)
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