UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT C.R. BARD, INC., No. 23-16020

Plaintiff-Appellant, D.C. No. 2:21-cv- 00284-DGC v. ATRIUM MEDICAL OPINION CORPORATION,

Defendant-Appellee.

Appeal from the United States District Court for the District of Arizona David G. Campbell, District Judge, Presiding

Argued and Submitted July 9, 2024 San Francisco, California

Filed August 23, 2024 Before: Michelle T. Friedland, Salvador Mendoza, Jr., and Roopali H. Desai, Circuit Judges.

Per Curiam Opinion 2 C.R. BARD, INC. V. ATRIUM MED. CORP.

SUMMARY *

Patent Law

The panel reversed the district court’s judgment following a bench trial in favor of Atrium Medical Corporation on C.R. Bard, Inc.’s claim that Atrium breached its contract with Bard by failing to make certain minimum royalty payments due under a licensing agreement. In Brulotte v. Thys Co., 379 U.S. 29 (1964), the Supreme Court held that patent holders may not contract for royalties on any use of a patented invention that occurs after the patent has expired. Clarifying the proper application of Brulotte, the panel held that a court must first use state law tools of contract interpretation to determine the parties’ contractual obligations. Then, the court must separately ask whether those contractual obligations are permissible under Brulotte. To do so, the court asks only whether the contract provides for royalties on the use of a patented invention that occurs after the expiration of the patent. Applying Brulotte to the parties’ agreement, the panel held that the district court erred in concluding that a portion of the parties’ agreement violated Brulotte in light of the subjective motivations of the parties during the course of their negotiations. The parties’ agreement provides for U.S. royalties only through the expiration of the U.S. patent, so it does not constitute patent misuse under Brulotte. Accordingly, the panel reversed the district court’s

* This summary constitutes no part of the opinion of the court. It has been prepared by court staff for the convenience of the reader. C.R. BARD, INC. V. ATRIUM MED. CORP. 3

entry of judgment for Atrium on Bard’s breach of contract claim. The panel addressed the remaining issues in a concurrently filed memorandum disposition.

COUNSEL Brian R. Matsui (argued), Seth W. Lloyd, and Deanne E. Maynard, Morrison & Foerster LLP, Washington, D.C.; Diana L. Kim, Morrison & Foerster LLP, Palo Alto, California; Andrew Federhar and Jessica Gale, Spencer Fane LLP, Phoenix, Arizona; Steven C. Cherny, Quinn Emanuel Urquhart & Sullivan LLP, Boston, Massachusetts; Matthew A. Traupman, Quinn Emanuel Urquhart & Sullivan LLP, New York, New York; for Plaintiff-Appellant. Christopher McArdle (argued), Wade G. Perrin, and Paul Tanck, Alston & Bird LLP, New York, New York; Charles W. Cox II, Alston & Bird LLP, Los Angeles, California; for Defendant-Appellee.

OPINION PER CURIAM:

Under the Supreme Court’s decision in Brulotte v. Thys Co., 379 U.S. 29 (1964), patent holders may not contract for royalties on any use of a patented invention that occurs after the patent has expired. The Court has declined to overrule Brulotte, explaining that the “decision is simplicity itself to apply” and that parties may “find ways around” its 4 C.R. BARD, INC. V. ATRIUM MED. CORP.

prohibition. Kimble v. Marvel Ent., LLC, 576 U.S. 446, 453, 459 (2015). We now clarify the proper application of Brulotte. A court must first use the familiar state law tools of contract interpretation to determine the parties’ contractual obligations.