Supreme Court of the United States

Sola Electric Co. v. Jefferson Electric Co.

December 7, 1942317 U.S. 173

Summary

Chief Justice Stone delivered the Court’s opinion reversing the judgment that upheld dismissal of the patent licensee’s counterclaim. The Court held that a licensee may challenge a license agreement’s price-fixing provision by proving that the patent claims asserted to protect it are invalid. Federal antitrust policy governs the consequences of agreements prohibited by the Sherman Act, and conflicting state estoppel rules cannot prevent a licensee from establishing their illegality. The Court did not decide whether licensee estoppel applies when the license contains no price-fixing provision. No separate opinions were included.

Holding

  • Whether licensee estoppel prevents proof of patent invalidity to establish the illegality of a price-fixing agreement.. A patent licensee may assert that the price-fixing agreement is unlawful and offer competent evidence of patent invalidity to establish that the restriction lacks protection under a lawful patent monopoly.
  • Whether state estoppel law controls the consequences of an agreement prohibited by the Sherman Act.. Conflicting state estoppel rules must yield to federal law and the Sherman Act’s policy against enforcement of unlawful agreements.

Docket 45

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