PATENTS - ESTOPPEL OF LICENSEE TO DENY VALIDITY - RESTRICTIONS ON LICENSEE\u27S SALE PRICES

Plaintiff sued to recover royalties alleged to be due under a contract licensing defendant to manufacture articles covered by a patent owned by the plaintiff. The agreement provided that defendant licensee should not sell embodiments of the invention manufactured under the license at prices or under conditions more favorable to its customers than those prescribed by the licensor for its own customers. The defendant set up the defense that plaintiff by reason of the price control provisions of the licensing contract and the invalidity of [the patent] was not entitled to recover the royalties. The district court and the circuit court of appeals ruled that the defendant, having accepted a license under the patent, was estopped to deny its validity. The Supreme Court held that because of the possible illegality of the price fixing limitation in the license agreement, the defendant should have been permitted at least to litigate the validity of the agreement. Sola Electric Co v. Jefferson Electric Co., (U.S. 1942) 63 S. Ct. 172