US SUPREME COURT DECISIONS

A patent licensing agreement provided that the licensee should sell the licensed products at prices fixed by the licensor and should be estopped from denying the validity of the patent. The products were sold widely in interstate commerce. A controversy having arisen as to the coverage of certain products by the patent, the licensing agreement was terminated, the licensee sued for a declaratory judgment declaring the patent invalid, and the licensor counterclaimed for unpaid royalties or damages for infringement. The patent was held invalid.

Held:

1. In these circumstances, the licensee is not estopped to challenge the validity of the patent. Sola Electric Co. v. Jefferson Electric Co., 317 U. S. 173; Scott Paper Co. v. Marcalus Mfg. Co., 326 U. S. 249. Pp. 329 U. S. 398-401.

2. The licensee's obligations to pay royalties and to sell at prices fixed by the licensor are not severable. P. 329 U. S. 401.

3. Since the royalties here claimed accrued, if they accrued at all, prior to the time the licensing agreement terminated, the fact of subsequent termination does not free the promise to pay royalties from the taint of the price-fixing provision. P. 329 U. S. 401.

4. The alleged fact that the licensee suggested the price-fixing provision in the licensing agreement does not estop him from challenging its validity as being in violation of the antitrust laws. P. 329 U. S. 401.

5. The specific contract not to challenge the validity of the patent cannot override congressional policy against contracts in restraint of interstate trade any more than can an implied estoppel. P. 329 U. S. 402.

153 F.2d 149 affirmed.

In a suit by a licensee for a declaratory judgment declaring a patent invalid, the licensor counterclaimed for unpaid royalties or damages for infringement. The District chanrobles.com-red

Page 329 U. S. 395

Court held that the licensee was estopped to challenge the validity of the patent. The Circuit Court of Appeals reversed and remanded to the District Court to pass on the validity of the patent. 139 F.2d 291. The District Court held the patent invalid. The Circuit Court of Appeals affirmed. 153 F.2d 149. This Court granted certiorari. 328 U.S. 826. Affirmed, p. 329 U. S. 402.