Alma Motor Co. v. Timken-Detroit Axle Co., 329 U.S. 129 (1946)
Alma Motor Co. v. Timken-Detroit Axle Co.
No. 11
Argued April 25, 26, 1945
Reargued October 24, 25, 1946
Decided December 9, 1946
329 U.S. 129
CERTIORARI TO THE CIRCUIT COURT OF APPEALS
FOR THE THIRD CIRCUIT
Syllabus
1. This Court granted certiorari on a petition raising a question as to the constitutionality of the Royalty Adjustment Act of October 31, 1942, 56 Stat. 1013, and an order of the War Department issued thereunder. After hearing arguments and setting the case for reargument, it found that, in addition to the constitutional question, the Circuit Court of Appeals had before it, but did not pass upon, a question as to the applicability of the Act.
Held: the judgment of the Circuit Court of Appeals is vacated, and the case is remanded to it for decision of any nonconstitutional issues material to the appeal. Pp. 132, 136, 142.
(a) Neither this Court nor the lower courts should pass on the constitutionality of an act of Congress unless such adjudication is unavoidable, even though the question is properly presented by the record. P. 136.
(b) The Circuit Court of Appeals should have passed on the applicability of the Act and the order before considering their constitutionality, since a decision on their applicability might have made unnecessary any consideration of their constitutionality. P. 137.
(c) That much time has been wasted by the earlier failure of the parties to indicate, or the Circuit Court of Appeals or this Court to see, the course which should have been followed is no reason to continue on the wrong course or to disregard the traditional policy of avoiding constitutional questions. P. 142.
2. The primary purpose of the Royalty Adjustment Act was to reduce royalties for which the United States was ultimately liable on inventions manufactured for it by a licensee, from pre-war rates to rates appropriate to the volume of production in wartime. P. 134.
3. The applicability of the Royalty Adjustment Act and the jurisdiction of the Court of Claims thereunder turn not on a claim of coverage, but on actual coverage by a patent and license of an invention manufactured for the United States, and upon a condition subsequent -- the issuance of notice that the department head believes the stipulated royalties to be unreasonable. Smithers v. Smith, 204 U.S. 632, and Bell v. Hood, 327 U.S. 678, distinguished. Pp. 137-139.
4. The fact that a suit in a District Court involving the question whether certain products manufactured for the United States in wartime were covered by a patent and license might have been dismissed and the owner of the patent relegated to the Court of Claims under the Act of June 25, 1910, as amended, 35 U.S.C. § 68, if the Royalty Adjustment Act were inapplicable because the products were not covered by the license was no reason for the Circuit Court of Appeals to fail to pass on the question of coverage; since the constitutionality of 35 U.S.C. § 68 already has been sustained by this Court, and a dismissal under that section would not have required a decision on any constitutional question . Pp. 139-140.
5. Section 2 of the Royalty Adjustment Act, providing that, if the licensor sues in the Court of Claims, the United States may avail itself of all defenses that might be pleaded by a defendant in an infringement suit, does not require that all suits involving licenses under the Act and presenting questions of coverage or validity be tried in the Court of Claims. Pp. 140-141.
6. Neither party having appealed from the part of the judgment of the District Court holding that some of the products were covered by the patent and license, the Circuit Court of Appeals was not properly concerned with their coverage or with the applicability of the Royalty Adjustment Act to them; the part of its order affecting those products was unwarranted, and it should not now be made the basis for approving a constitutional decision which was otherwise unnecessary. P. 141.
144 F.2d 714, judgment vacated and case remanded.
In a suit to determine the validity of a patent and the rights of a licensor and licensee thereunder, the District Court held that the licensee was estopped to contest the validity of the patent, that some of its products were not covered, that others were covered, and that the licensee was indebted for royalties. 47 F.Supp. 582. Only the licensor appealed. While the appeal was pending, the War Department, pursuant to the Royalty Adjustment Act of October 31, 1942, 56 Stat. 1013, 35 U.S.C. Supp. V, §§ 89-96, issued notice stopping payment of royalties by the licensee on products manufactured for the United States and an order fixing a "fair and just" royalty at zero, on the theory that the patent was invalid. Thereupon, the licensee moved to dismiss the appeal and remand to the District Court with directions to vacate its judgment on the ground that the products were manufactured for the United States alone, and that the operation of the Royalty Adjustment Act and the order thereunder transferred jurisdiction of the subject matter of the entire case to the Court of Claims. The licensor challenged the constitutionality of the Act, and the Government intervened to defend it. The Circuit Court of Appeals, without passing on the applicability of the Act, sustained its constitutionality, vacated the judgment of the District Court, and remanded the cause with instructions to proceed no further until a justiciable controversy exists between the parties. 144 F.2d 714. This Court granted certiorari, 324 U.S. 832, heard arguments, and set the case for reargument. Then the Government suggested for the first time that the Circuit Court of Appeals should have avoided the question of constitutionality by first considering the question of coverage. The judgment of the Circuit Court of Appeals is vacated, and the case remanded for decision of any nonconstitutional issues material to the appeal. P. 142.