Lear, Inc. v. Adkins/Concurrence-dissent Black

by Hugo Black

United States Supreme Court

395 U.S. 653

LEAR, INCORPORATED, Petitioner,  v.  John S. ADKINS.

 Argued: Nov. 20 and 21, 1968. --- Decided: June 16, 1969

Mr. Justice BLACK, with whom THE CHIEF JUSTICE and Mr. Justice DOUGLAS join, concurring in part and dissenting in part.

I concur in the judgment and opinion of the Court, except for what is said in Part III, C, of the Court's opinion. What the Court does in this part of its opinion is to reserve for future decision the question whether the States have power t enforce contracts under which someone claiming to have a new discovery can obtain payment for disclosing it while his patent application is pending, even though the discovery is later held to be unpatentable. His reservation is, as I see it, directly in conflict with what this Court held to be the law in Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225, 84 S.Ct. 784, 11 L.Ed.2d 661 (1964), and Compco Corp. v. Day-Brite Lighting, Inc., 376 U.S. 234, 84 S.Ct. 779, 11 L.Ed.2d 669 (1964). Brother Harlan concurred in the result in those cases, saying-contrary to what the court held-'I see no reason why the State may not impose reasonable restrictions on the future 'copying' itself.' Compco, supra, at 239, 84 S.Ct. at 783. Consequently the Court is today joining in the kind of qualification that only Mr. Justice Harlan was willing to make at the time of our Stiffel and Compco decisions.

I still entertain the belief I expressed for the Court in Stiffel and Compco that no State has a right to authorize any kind of monopoly on what is claimed to be a new invention, except when a patent has been obtained from the Patent Office under the exacting standards of the patent laws. One who makes a discovery may, of course, keep it secret if he wishes, but private arrangements under which self-styled 'inventors' do not keep their discoveries secret, but rather disclose them, in return for contractual payments, run counter to the plan of our patent laws, which tightly regulate the kind of inventions that may be protected and the manner in which they may be protected. The national policy expressed in the patent laws, favoring free competition and narrowly limiting monopoly, cannot be frustrated by private agreements among individuals, with or without the approval of the State.

Mr. Justice WHITE, concurring in part.

The applicable provision of 28 U.S.C. § 1257 empowers us to review by writ of certiorari '(f)inal judgments or decrees rendered by the highest court of a State * * * where any title, right, privilege or immunity is specially set up or claimed under the Constitution, treaties or statutes of, or commission held or authority exercised under, the United States.' Although Adkins disputes it, we have jurisdiction to consider whether a patent licensee is estopped to challenge the validity of the patent. The California Supreme Court ruled that he is and therefore he would not entertain attacks on Adkins' patent as a defense to his suit for royalties. Lear seeks review of that holding here. In my view, not only is the issue properly here but the Court has correctly decided it.

Although we have jurisdiction to review this state court judgment and to determine the licensee estoppel issue, it does not necessarily follow that we may or should deal with two other federal questions which come into focus once the licensee is free to challenge the patent. The first is whether the patent is valid. The second, which arises only if the patent is invalidated, is whether federal law forbids the collection of royalties which might otherwise be collectible under a contract rooted in state law. Although the Court does not deal with the first issue, it does purport to decide the second, at least in part. However, as either a jurisdictional or a policy matter, neither of these issues is properly before us in this case.

In the first place, we have no decision of the California Supreme Court affirming or denying, as a matter of federal law, that Adkins may not enforce his contract if his patent is held invalid. The California court held that the license agreement had not been terminated in accordance with its terms, that the doctrine of licensee estoppel prevented Lear from challenging the patent and that Lear was utilizing the teaching of Adkins' patent. There was thus no necessity or reason to consider whether the patent was invalid, or, if it was, whether either state or federal law prevented collection of the royalties reserved by the contract. Even if these issues hd been presented to the California Supreme Court, sound principles would have dictated that the court not render a decision on questions unnecessary to its disposition of the case. See, e.g., Southwestern Bell Telephone Co. v. Oklahoma, 303 U.S. 206, 212-213, 58 S.Ct. 528, 530, 82 L.Ed. 751 (1938).

There is no indication, however, that Lear, directly or by inference, urged in the California courts that if Adkins' patent were invalid, federal law overrode state contract law and precluded collection of the royalties which Lear had promised to pay. One of the defenses presented by Lear in its answer to Adkins' claim for royalties was that there had been a failure of consideration because of the absence of bargained-for patentability in Adkins' ideas. But failure of consideration is a state law question, and I find nothing in the record and nothing in this Court's opinion indicating that Lear at any time contended in the state courts that once Adkins' patent was invalidated, the royalty agreement was unenforceable as a matter of federal law. ^[1]

Given Lear's failure below to 'specially set up or claim' the federal bar to collection of royalties in the event Adkins' patent was invalidated, and without the California Supreme Court's 'final judgment' on this issue, I doubt our jurisdiction to decide the issue. But even if jurisdiction exists, the Court should follow its characteristic practice and refuse to issue pronouncements on questions not urged or decided in the state courts.

In McGoldrick v. Compagnie Generale Transatlantique, 309 U.S. 430, 60 S.Ct. 670, 84 L.Ed. 849 (1940), the Court, while recognizing it had jurisdiction to determine whether a New York tax was an unconstitutional burden on interstate commerce, refused to consider whether the tax was a prohibited impost or duty on imports and exports, saying: '(I)t is only in exceptional cases, and then only in cases coming from the federal courts, that (the Court) considers questions urged by a petitioner or appellant not pressed or passed upon in the courts below. * * * (D)ue regard for the appropriate relationship of this Court to state courts requires us to decline to consider and decide questions affecting the validity of state statutes not urged or considered there.' Id., at 434, 60 S.Ct., at 672.

Wilson v. Cook, 327 U.S. 474, 66 S.Ct. 663, 90 L.Ed. 793 (1946), reached a similar conclusion. There the Court denied a government contractor the benefit of the implied constitutional immunity of the Federal Government from taxation by the State, but at the same time declined to consider whether the state tax at issue placed a forbidden tax directly on the United States. This was because the Courtw as 'not free to consider' a ground of attack 'not presented to the Supreme Court of Arkansas or considered or decided by it,' even though the issue was in some measure related to one actually decided by the state courts and arose under the same implied constitutional immunity argument. Id., at 483, 66 S.Ct. at 668. Cf. Dewey v. Des Moines, 173 U.S. 193, 197-198, 19 S.Ct. 379, 380, 43 L.Ed. 665 (1899). The Court relied on McGoldrick and a long line of prior cases, including People of State of New York ex rel. Cohn v. Graves, 300 U.S. 308, 317, 57 S.Ct. 466, 469, 81 L.Ed. 666 (1937), where the Court had said: 'In reviewing the judgment of a state court, this Court will not pass upon any federal question not shown by the record to have been raised in the state court or considered there, whether it be one arising under a different or the same clause in the constitution with respect to which other questions are properly presented.'

The result is the same when a party has attempted to raise an issue in the state court but has not done so in proper or timely fashion. 'Questions first presented to the highest State court on a petition for rehearing come too late for consideration here * * *.' Radio Station WOW v. Johnson, 326 U.S. 120, 128, 65 S.Ct. 1475, 1480, 89 L.Ed. 2092 (1945). 'Since the State Supreme Court did not pass on the question now urged, and since it does not appear to have been properly presented to that court for decision, we are without jurisdiction to consider it in the first instance here.' CIO v. McAdory, 325 U.S. 472, 477, 65 S.Ct. 1395, 1398, 89 L.Ed. 1741 (1945). And no different conclusion obtains when the federal question, although not yet presented to or decided by the state court, will probably or even certainly arise during further proceedings held in that court. See, e.g., NAACP v. Alabama, 357 U.S. 449, 466-467, 78 S.Ct. 1163, 1173-1174, 2 L.Ed.2d 1488 (1958); Hudson Distributors, Inc. v. Eli Lilly & Co., 377 U.S. 386, 394-395, 84 S.Ct. 1273, 1279, 12 L.Ed.2d 394 (1964).

Wholly aside from jurisdictional considerations or those relating to our relationships with state courts, there is the matter of our own Rule 23(1)(c), which states that '(o)nly the questions set forth in the petition or fairly comprised therein will be considered by the court.' See Flournoy v. Wiener, 321 U.S. 253, 259, 64 S.Ct. 548, 551, 88 L.Ed. 708 (1944). None of the questions presented by Lear's petition for certiorari comes even close to the issue to which the Court now addresses itself-an issue which will arise only if Lear can and does challenge the patent, if the patent is declared invalid, if Adkins nevertheless seeks to enforce the agreement, and if Lear interposes a defense based on federal law.

This seems a poor case for waiving our Rules. In the first place the question of validity has not been reached by the California Supreme Court, and when it is the patent may withstand attack. In that event there will be no necessity to consider the impact of patent law on the enforceability of a contract grounded in state law. Second, even if the patent is declared invalid, the state court, after the parties have addressed themselves to the issues, may accommodate federal and state law in a matter which would not prompt review here. Third, the parties themselves have neither briefed nor seriously argued the question in this Court, and we do not have the benefit of their views on what is surely a difficult question. The Court itself has flushed the issue, which it now deals with on a piecemeal basis. ^[2] Like the question of patent validity, I would leave the consequences of invalidity to the state court in the first instance.

Notes

1  The Court brushes aside the problem by characterizing the additional issue it decides as representing a 'more complicated estoppel problem.' But licensee estoppel, the question raised here, refers to estoppel against the licensee to challenge the patent, not to any bar or 'estoppel' interposed by federal law against collecting royalties on an invalidated patent. Whether Adkins can enforce his contract for royalties if his patent is found to be invalid cannot be shoehorned into the licensee-estoppel question, and by no stretch of the imagination can it be included within the scope of the question raised and litigated by the parties in this case. In the courts below Lear wanted to challenge Adkins' patent only for the purpose of showing that Adkins was entitled to no recovery under the terms of the contract itself, either because of a failure of consideration or because the contract had been legally terminated or could be legally terminated. Indeed, the District Court of Appeal noted: 'Lear concedes that it would be estopped to contest the validity of any patent issued to Adkins on the claims of his application described in the license agreement so long as it continued to operate under that agreement.' 52 Cal.Rptr. 795, 805. See also Lear's Opening Brief in the District Court of Appeal 109.

2  The Court's opinion flatly proscribes recovery by Adkins of 'all royalties accruing after Adkins' 1960 patent issued if Lear can prove patent invalidity.' Ante, at 674. But recovery of pre-1960 royalties is left open by the Court, apparently because pre-issuance and post-issuance royalties do not stand on the same fooi ng under federal law. Such a distinction may be valid, and pre-1960 royalties recoverable; but if so, what of post-1960 royalties which are attributable to the headstart Lear obtained over the rest of the industry as a result of preissuance disclosure of Adkins' idea? Today's bar to collection of post-1960 royalties would seem to be inflexible, and yet those royalties arguably are recoverable to the extent they represent payment for the pre-1960 disclosure of Adkins' idea; to that extent, they seem indistinguishable from pre-1960 royalties, at least for purposes of federal patent law. Cf. Brulotte v. Thys Co., 379 U.S. 29, 31, 85 S.Ct. 176, 178, 13 L.Ed.2d 99 (1964). See also, id., at 34-39, 85 S.Ct., at 180-182 (dissenting opinion). This possibility and others serve to indicate the wisdom of refraining from any pronouncement now, and particularly from any rigid line drawing, in advance of consideration by the courts below and by the parties.