Scheiber v. Dolby Laboratories, Inc.

Scheiber (plaintiff) held both U.S. and Canadian patents on a surround-sound system and sued Dolby Laboratories (Dolby) (defendant) for infringement; as part of settling that suit, Dolby agreed to pay royalties on all the patents, including the U.S. patents, through the later Canadian expiration date in exchange for lower rates it found easier to pass on to sub-licensees. Dolby later stopped paying royalties, and when Scheiber sued to enforce the agreement, Dolby argued the deal was unenforceable under Brulotte v. Thys Co., which bars charging royalties on an expired patent.