1. A bill of complaint by a patent owner against licensees,
seeking an adjudication of unconstitutionality of the Royalty
Adjustment Act and an injunction against the licensees from
complying with the Act and orders issued pursuant thereto, but
seeking no recovery of royalties alleged to be due from the
to state no cause of action in equity and
to present no case or controversy within the judicial power of the
United States as defined by § 2 of Article III of the Constitution.
P. 323 U. S.
2. In the circumstances disclosed by the record and for purposes
of the present suit, the constitutionality of the Act is without
legal significance, and can involve no justiciable question unless
and until the complainant seeks recovery of the royalties, and then
only if the Act is relied on as a defense. P. 323 U. S.
3. The declaratory judgment procedure is available in the
federal courts only when an actual case or controversy is involved,
and may not be used to secure merely an advisory opinion. P.
323 U. S.
4. The Court will not pass upon the constitutionality of
legislation in a suit which is not adversary, or upon the complaint
of one who fails to show that he is injured by its operation, or
until it is necessary to do so to preserve the rights of the
parties. P. 323 U. S.
55 F. Supp. 501 affirmed.
Appeal from the dismissal by a District Court of three judges of
the complaint in a suit by a patent owner against his licensees
challenging the constitutionality of the Royalty Adjustment Act.
The United States had been permitted to intervene.
Page 323 U. S. 317
MR. CHIEF JUSTICE STONE delivered the opinion of the Court.
The question is whether this suit, brought in the District Court
by appellant, a patent owner, to enjoin his licensees from paying
accrued royalties to the Government under the Royalty Adjustment
Act of October 31, 1942, 56 Stat. 1013, 35 U.S.C.Supp. III, §§
89-96, and attacking the constitutionality of the Act was rightly
dismissed for want of equity jurisdiction and for want of a
justiciable case or controversy.
Appellant brought the present suit in the District Court for New
Jersey, joining as defendants Federal Laboratories, Inc., a
Delaware corporation, and appellee Breeze Corporations, Inc., a New
Jersey corporation. Federal was not served with process and did not
appear, and the cause has proceeded against appellee Breeze alone.
The case being one in which the constitutionality of an Act of
Congress is challenged and in which a preliminary and final
injunction is asked restraining "the enforcement, operation, or
execution of, or setting aside in whole or in part" of an Act of
Congress on the ground of its unconstitutionality, a court of three
judges was convened to hear the cause pursuant to § 3 of the Act of
August 24, 1937, 50 Stat. 752, 28 U.S.C. § 380a. *
Page 323 U. S. 318
Appellee Breeze answered. Upon appropriate proceedings had under
50 Stat. 751, 28 U.S.C. § 401, the United States was permitted to
intervene as a party. Thereupon, the District Court granted the
Government's motion to dismiss the suit for want of equity
jurisdiction and of a justiciable case or controversy. 55 F. Supp.
501. The case comes here on appeal under § 3 of the Act of August
24, 1937, c. 754, 50 Stat. 752, 28 U.S.C. § 380a, authorizing
direct appeals to this Court in a case where a district court of
three judges convened pursuant to the section has
Page 323 U. S. 319
entered "judgment granting or denying, after notice and hearing,
an interlocutory or permanent injunction in such case."
The facts appear from the pleadings and by stipulation, and are
admitted for the purposes of the motion. Appellant, the owner of a
United States patent covering an improvement upon a device for use
in starting a combustion motor, and shells for use with the device,
entered into an agreement licensing Federal to manufacture and sell
the patented device at a royalty of 6% of the licensee's selling
price of the device and its parts. At some time before July, 1937,
appellee Breeze acquired all of Federal's outstanding shares of
capital stock, and has since controlled its business and policies.
In 1937, it entered into a contract, since renewed and continued
with Federal, whereby the latter engaged Breeze as its exclusive
"sales agent and distributor" to manufacture and sell the patented
device. Breeze began the manufacture and sale of the patented
device, and from the allegations of the bill of complaint it
appears, inferentially at least, that it has been engaged to some
extent, not disclosed, in supplying the War and Navy Departments
with the patented device under government contracts.
The Royalty Adjustment Act provides that, whenever a patented
device is "manufactured, used, [or] sold . . . for the United
States" under a license stipulating for payment of royalties
"believed to be unreasonable or excessive" by the head of the
government agency concerned, he "shall give written notice of such
fact to the licensor and to the licensee." It provides that, within
a reasonable time thereafter, the head of the agency
"shall by order fix and specify such rates or amounts of
royalties, if any, as he shall determine are fair and just, taking
into account the conditions of wartime production."
The Act directs the licensee, after the effective date of the
notice, not to
Page 323 U. S. 320
the licensor, nor charge directly or indirectly to the United
States, a royalty, if any, in excess of that specified in said
order on account of such manufacture, use, sale, or other
The Act deprives the licensor of "any remedy . . . against the
licensee for the payment of any additional royalty remaining
unpaid." It provides that his "sole and exclusive remedy, except as
to the recovery of royalties fixed in said order" is a suit against
the United States
"to recover such sum, if any, as, when added to the royalties
fixed and specified in such order, shall constitute fair and just
compensation to the licensor for the manufacture, use, sale, or
other disposition of the licensed invention for the United States,
taking into account the conditions of wartime production."
By § 7, the Act is made applicable "to all royalties directly or
indirectly charged or chargeable to the United States" which "have
not been paid to the licensor prior to the effective date of the
notice," as well as to royalties accruing upon all articles
delivered after the effective date. By § 4, any reduction in
royalties authorized by the Act is to
"inure to the benefit of the Government by way of a
corresponding reduction in the contract price to be paid . . . or
by way of refund if already paid to the licensee."
Pursuant to § 1 of the Act, the Navy Department, on February 24,
1943, gave notice to appellant, appellee Breeze, and Federal that
the royalties provided for by the license contract "now being paid
directly or indirectly" under contracts in which Federal or Breeze
"is either a prime contractor or a subcontractor are believed to be
unreasonable or excessive." The notice directed that, until a
royalty adjustment order should be issued under the Act, "no
royalties should be paid on account of the manufacture, use, [or]
sale . . . for the United States" of the patented device. A similar
notice was given by the War Department
Page 323 U. S. 321
to the same parties on March 3, 1943. In December, 1943, the War
and Navy Departments issued royalty adjustment orders under § 1 of
the Act, purporting to reduce to specified amounts, declared to be
"fair and just," the royalties accruing on the manufacture and sale
of the patented device for the War and Navy Departments, with
maximum royalties of $50,000 per year commencing January 1, 1943.
The orders further directed Federal and Breeze to pay to the
Treasurer of the United States "the balance in excess" of the
royalty payments authorized by the orders "which were due to
Licensor and were unpaid on the effective date" of the notice, or
which might thereafter become due to the licensor.
According to the bill of complaint, there are large amounts due
and owing to appellant as royalties under its license contract with
Federal and the contract between Federal and Breeze. It also
appears that appellant has brought a separate suit in the United
States District Court for New Jersey against Breeze and Federal for
an accounting for the royalties said to be due to appellant, in
which Breeze alone was served by process and has appeared and
answered. The cause is at issue, and the court has ruled that
appellant recover all royalties which have accrued or may accrue to
the date of trial.
The answer of appellee Breeze in the present suit denies that it
owes any royalties to appellant. It alleges that whether the
Royalty Adjustment Act is valid or invalid is a matter which is
immaterial to appellee for the reason that it owes appellant no
money as royalties or otherwise. In the present suit, appellant
asks no judgment for the recovery of the royalties alleged to be
due from Federal and appellee Breeze. It seeks only an adjudication
that the Royalty Adjustment Act and the orders purporting to be
made in conformity to it are unconstitutional as applied to
appellant, and asks an injunction restraining Breeze and
Page 323 U. S. 322
Federal from complying with the Act and the orders by paying any
part of the royalties into the Treasury or to any person other than
We agree with the conclusion of the District Court below that
appellant's bill of complaint states no cause of action in equity
and presents no case or controversy within the judicial power of
the United States as defined by § 2 of Article III of the
The only rights asserted as the basis for the relief sought by
appellant are derived from the license agreements. Those
agreements, so far as now appears and as we assume for present
purposes, are contractual obligations to pay the stipulated
royalties. As they accrue, the royalties become simple debts
recoverable in an action at law, or possibly, where the accounts
are complicated, in a proceeding for an accounting such as
appellant has already begun in its separate suit pending in the
District Court of New Jersey. Kirby v. Lake Shore & M.S. R.
Co., 120 U. S. 130
United States v. Old Settlers, 148 U.
, 148 U. S.
Appellant does not, in the present suit, bring to our attention
any facts showing or tending to show that a suit to recover a money
judgment for the royalties would not afford complete and adequate
relief without resort to an equitable remedy . In such a suit, if
appellee Breeze is obligated by the contracts in question to pay
the royalties to appellant, it can discharge that obligation only
by payment of the amount due or by setting up the Royalty
Adjustment Act as a defense. Compliance with the duty under the Act
to pay into the Treasury the royalties withheld from appellant
would operate by the terms of the Act as a discharge of the
obligation to pay appellant. If that defense were offered, the
constitutional validity of these provisions of the Act would be a
justiciable issue in the case, since upon its adjudication would
depend appellant's right of recovery.
Page 323 U. S. 323
But, whether the provisions of the Act be valid or invalid,
appellants show no ground for equitable relief. If valid, they
would be a defense, and appellant would be entitled to no relief
other than that afforded by the suit against the Government
authorized by § 2 of the Act. If invalid, appellant's right to
recover remains unimpaired. The sufficiency of the defense may be
as readily tested in a suit at law to recover the royalties as by
the present suit in equity to enjoin payment of the royalties into
the Treasury. In either case, appellant would receive all the
relief to which it shows itself entitled.
The obligation to pay royalties, as we have said, appears to be
no more than a debt. There is no contention that it is a fiduciary
obligation to turn an earmarked fund over to appellant. The
complaint does not indicate that, if appellee is not enjoined, it
will pay the royalties into the Treasury, or, if it does, that
appellee will be unable to respond to a judgment in appellant's
favor. Appellant thus fails to assert any right of recovery at law
in the present suit or to show that its remedy available at law is
so inadequate as to entitle it to ask an equitable remedy. Section
267 of the Judicial Code, 28 U.S.C. § 384; Boise Artesian Water
Co. v. Boise City, 213 U. S. 276
213 U. S. 283
Pusey & Jones Co. v. Hanessen, 261 U.
, 261 U. S. 497
Hurley v. Kincaid, 285 U. S. 95
285 U. S. 105
Schoenthal v. Irving Trust Co., 287 U. S.
, 287 U. S.
So far as the present suit seeks a declaratory judgment or an
injunction restraining payment of the royalties into the Treasury,
it raises no justiciable issue. Appellant asserts in the present
suit no right to recover the royalties. It asks only a
determination that the Royalty Adjustment Act is unconstitutional,
and, if so found, that compliance with the Act be enjoined -- an
issue which appellee by its answer declines to contest. If
contested, the validity of the Act would be an issue which, so far
as it could ever
Page 323 U. S. 324
become material, would properly arise only in a suit to recover
the royalties, where it could be appropriately decided.
In the circumstances disclosed by the record and for purposes of
the present suit, the constitutionality of the Act is without legal
significance, and can involve no justiciable question unless and
until appellant seeks recovery of the royalties, and then only if
appellee relies on the Act as a defense. The prayer of the bill of
complaint that the Act be declared unconstitutional is thus but a
request for an advisory opinion as to the validity of a defense to
a suit for recovery of the royalties. Appellee could have made such
a defense, but does not appear to have done so in the pending
accounting suit, and does not assert its validity here. The bill of
complaint thus fails to disclose any ground for the determination
of any question of law or fact which could be the basis of a
judgment adjudicating the rights of the parties.
The declaratory judgment procedure is available in the federal
courts only in cases involving an actual case or controversy,
Nashville, C. & St. L. R. Co. v. Wallace, 288 U.
, 288 U. S.
-264; Aetna Life Ins. Co. v. Haworth,
300 U. S. 227
300 U. S.
-240, where the issue is actual and adversary,
Chicago & Grand Trunk R. Co. v. Wellman, 143 U.
; South Spring Gold Co. v. Amador Gold
Co., 145 U. S. 300
145 U. S. 301
and it may not be made the medium for securing an advisory opinion
in a controversy which has not arisen. New Jersey v.
Sargent, 269 U. S. 328
United States v. West Virginia, 295 U.
; Ashwander v. Tennessee Valley
Authority, 297 U. S. 288
297 U. S. 324
Anniston Manufacturing Co. v. Davis, 301 U.
, 301 U. S. 355
Electric Bond Co. v. Commission, 303 U.
, 303 U. S.
In any case, the Court will not pass upon the constitutionality
of legislation in a suit which is not adversary, Chicago &
Grand Trunk Railway v. Wellman, supra; 85 U.
18 Wall. 129, 85 U. S.
-135; Atherton Mills
Page 323 U. S. 325
Johnston, 259 U. S. 13
259 U. S. 15
upon the complaint of one who fails to show that he is injured by
its operation, Tyler v. The Judges, 179 U.
; Hendrick v. Maryland, 235 U.
, 235 U. S. 621
or until it is necessary to do so to preserve the rights of the
parties. Liverpool, N.Y. & P. S.S. Co. v.
Commissioners, 113 U. S. 33
113 U. S. 39
Burton v. United States, 196 U. S. 283
196 U. S. 295
Abrams v. Van Schaick, 293 U. S. 188
Wilshire Oil Co. v. United States, 295 U.
* The District Court of three judges was rightly convened,
although the suit was brought against private parties, not public
officers. Unlike § 266 of the Judicial Code, 28 U.S.C. § 380, the
Act of August 24, 1937, does not restrict its requirement for the
assembly of a District Court of three judges to suits against
public officers. See Oklahoma Gas & Electric Co. v.
Oklahoma Packing Co., 292 U. S. 386
Section 3 of the Act of 1937 directs that a court of three judges
is to be convened whenever an interlocutory or permanent injunction
is sought "suspending or restraining the enforcement, operation, or
execution of, or setting aside, in whole or in part, any Act of
Congress" upon the ground that it is repugnant to the Constitution.
This language appears to have been taken from the Urgent
Deficiencies Act of 1913, 28 U.S.C. § 47. Its choice of language,
differing from that of § 266 of the Judicial Code, must be taken to
be deliberate. See Jameson & Co. v. Morgenthau,
307 U. S. 171
307 U. S.
Here, the injunction sought would restrain appellee from payment
of the royalties into the Treasury as required by the Act of
Congress, and would thus restrain the "operation" or "execution" of
the statute. Like interpretation has been given to the like
language of the Urgent Deficiencies Act of 1913. See Lambert
Run Coal Co. v. B. & O. R. Co., 258 U.
; Venner v. Michigan Central R. Co.,
271 U. S. 127
Garment Workers' Union v. Donnelly Garment Co.,
304 U. S. 243
to be distinguished from the present case. There, an injunction was
sought against a labor union for violation of the antitrust laws,
the plaintiff appellee contending that the Norris-LaGuardia Act, 47
Stat. 70, 29 U.S.C. § 101 et seq.,
was inapplicable or, if
applicable, unconstitutional. This Court held that a district court
of three judges was unauthorized by § 3 of the 1937 Act, since the
contention with respect to the Norris-LaGuardia Act was not an
application for an injunction within the meaning of § 3, but merely
an anticipation of a defense going to the jurisdiction of the
court. Even though the Norris-LaGuardia Act were applicable, it
could not, if unconstitutional, operate as a defense, and no case
was made for an injunction.