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.
329 U. S. 132,
329 U. S. 136,
329 U. S.
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.
329 U. S.
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.
329 U. S.
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.
329 U. S.
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.
329 U. S.
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
Page 329 U. S. 130
the stipulated royalties to be unreasonable.
Smithers v.
Smith, 204 U. S. 632, and
Bell v. Hood, 327 U. S. 678,
distinguished. Pp.
329 U. S.
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.
329 U. S.
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.
329 U. S.
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.
329 U. S.
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
Page 329 U. S. 131
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.
329 U. S.
142.
Page 329 U. S. 132
MR. CHIEF JUSTICE VINSON delivered the opinion of the Court.
Certiorari was granted in this case February 5, 1945, on a
petition addressed to the question of the constitutionality of the
Royalty Adjustment Act of October 31, 1942, [
Footnote 1] and of Royalty Adjustment Order No.
W-3, issued by the War Department July 28, 1943. We find now,
however, that the Circuit Court of Appeals had before it not only
the constitutional question, which was decided, but also a
nonconstitutional question, which might properly have alone served
as an adequate ground on which to dispose of the appeal. This
nonconstitutional question was neither considered nor decided by
the court below, nor argued here. We have concluded, therefore,
that we should not pass on the constitutional question at this
time, but should vacate the judgment of the Circuit Court of
Appeals, and remand the case to it for decision of any
nonconstitutional issues material to the appeal.
Page 329 U. S. 133
To explain the reasons for this conclusion, we must state the
history of the present proceedings in some detail.
They were begun by a complaint in a District Court filed by
respondent, The Timken-Detroit Axle Company, against petitioner,
Alma Motor Company, asking a declaratory judgment as to their
respective rights under a patent held by Alma and a coextensive
license from Alma to Timken. The complaint alleged the existence of
the patent, purporting to cover certain "transfer cases," or
auxiliary automotive transmissions, and the license, by which
Timken was authorized to manufacture the patented articles and
required to pay certain specified royalties. It further alleged
that Timken was engaged in manufacturing various designs of
transfer cases, that some of these were once believed to have been
covered by Alma's patent and had been made the subject of royalty
payments, but, on the basis of later information, Timken had
concluded that none of them was covered, and that the patent was
invalid. It asked for a judgment confirming this conclusion.
Alma answered, claiming that all Timken's transfer cases were
covered, that the patent was valid, and that Timken was estopped
from challenging validity, and counterclaimed for a money judgment
for unpaid royalties.
Following a trial, the District Court filed findings and an
opinion, [
Footnote 2] and
entered judgment December 2, 1942. It held Timken estopped from
challenging the validity of Alma's patent; that certain specified
types of Timken's transfer cases (generally those denominated T-32
and T-43) were covered by the patent and license; that Timken was
indebted to Alma for royalties thereon, and that other types
(generally those denominated T-79) were outside the
Page 329 U. S. 134
patent and license. The court indicated that, unless the parties
could agree on the amount of the royalties so held to be payable, a
special master would be appointed to determine the amount.
Shortly before this judgment was entered, Congress enacted the
Royalty Adjustment Act, which Alma seeks to attack here. The
primary purpose of this 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. Whenever during the war a
government contractor manufactured under a license and the
royalties seemed excessive to the head of the department concerned,
the latter was empowered to stop payments by notice to the licensor
and licensee, and, after a hearing, to fix by order "fair and just"
royalties, "taking into account the conditions of wartime
production." [
Footnote 3]
Thereafter, the licensor could collect royalties from the licensee
only at the rate so determined. If the licensor felt that the
reduction was unfair, his remedy was by suit against the United
States in the Court of Claims, where he could recover "fair and
just compensation . . . taking into account the conditions of
wartime production." [
Footnote
4] Whatever reduction was effected by the order was to inure to
the benefit of the United States.
The notice stopping payment of royalties from Timken to Alma was
issued by the War Department December 30, 1942. Royalty Adjustment
Order No. W-3 followed on July 28, 1943, fixing a "fair and just"
royalty at zero. The basis of this determination was the alleged
invalidity of Alma's patent, which the United States claims that
the Act permits it to assert. [
Footnote 5]
Page 329 U. S. 135
In the meantime, Alma had taken an appeal from Paragraph 5 of
the judgment of the District Court, which held that the T-79
transfer cases were outside the patent. Timken did not appeal.
After the Order was promulgated, Timken moved to dismiss the appeal
and remand to the District Court with directions to vacate its
judgment. The motion was predicated on an affidavit that Timken had
manufactured transfer cases for the United States alone, together
with the argument that the operation of the Act and Order
transferred jurisdiction of the subject matter of the entire case
to the Court of Claims. Alma countered with an attack on the
constitutionality of the Act and Order, primarily as working a
deprivation of property in contravention of the Fifth
Amendment.
The United States had at this time already submitted an
amicus brief in which it argued that the Order had made
the appeal moot, and, when Alma's constitutional attack was filed,
the United States intervened in support of the Act and Order.
In its opinion, [
Footnote 6]
the Circuit Court of Appeals considered that the question of the
applicability of the Act and Order in this case was simply a
question of their constitutional validity. It proceeded to consider
this latter question, and decided that both the Act and the Order
were entirely valid. Accordingly, it entered the following
order:
". . . it is now here ordered and adjudged by this Court that
Paragraph 5 of the judgment of the said District Court in this case
be, and the same is hereby, vacated, and the cause is remanded to
the District Court with directions to proceed no further therein
unless and until it shall appear to the Court that a justiciable
controversy again [
Footnote 7]
exists between the parties arising out of the facts set forth in
the complaint,
Page 329 U. S. 136
except that the Court may, if it deems such action to be
appropriate, vacate all or any part of the remainder of the
judgment and dismiss the complaint as moot."
The War Department notice was issued after the District Court's
judgment, but before appeal was filed in the Circuit Court of
Appeals. It appears that at no time did any party urge on the
Circuit Court of Appeals, or did that court pass on, the question
whether the T-79 transfer cases were covered by Alma's patent and
license. Indeed, it was not until after we had granted certiorari
and heard argument at the October, 1944, term on the constitutional
question and set the case down for further argument this term that
the United States pointed to this omission and suggested that the
Circuit Court of Appeals should have avoided the question of
constitutionality by first considering the question of coverage. It
argued here that the prior determination of any nonconstitutional
questions which might dispose of a controversy is a practice which
is dictated by sound principles of judicial administration. It
moved to vacate the judgment of the Circuit Court of Appeals, and
to remand the case to it for such determination. Both Alma and
Timken opposed the motion. Action was withheld pending argument on
the motion and the case itself.
This Court has said repeatedly that it ought not pass on the
constitutionality of an act of Congress unless such adjudication is
unavoidable. This is true even though the question is properly
presented by the record. If two questions are raised, one of
nonconstitutional and the other of constitutional nature, and a
decision of the nonconstitutional question would make unnecessary a
decision of the constitutional question, the former will be
decided. [
Footnote 8]
Page 329 U. S. 137
This same rule should guide the lower courts, as well as this
one. We believe that the structure of the problems before the
Circuit Court of Appeals required the application of the rule to
this case.
At the outset, that court was confronted with the merits of the
appeal, which involved simply the coverage by the patent and
license of the T-79 transfer cases. Later, however, it was
confronted also with a problem of jurisdictional nature. This
involved the effect wrought by the Act and Order on its power to
proceed to an adjudication on the merits. If, for any reason, the
Act and Order had no applicability in the case, the court should
proceed to the merits. If, however, they were controlling, Alma was
relegated to its statutory remedy against the United States, and
the court would be required to dismiss the appeal and to vacate
Paragraph 5 of the judgment in the District Court.
In the determination of this jurisdictional problem, we are of
the opinion that the Circuit Court of Appeals erred. It assumed
that this problem involved only the question of the
constitutionality of the Act and Order. But the Act and Order,
whether or not constitutional, do not control the disposition of
this case unless they were intended to apply to it. The question of
their applicability is a nonconstitutional question the decision of
which might have made unnecessary any consideration of
constitutionality.
Were the Act and Order intended to apply? Their terms seem to
make that depend upon whether the subject matter of the appeal --
the T-79 transfer cases -- were covered by the patent and license.
The Act provides that it is only "whenever an invention . . . shall
be manufactured . . . for the United States,
with license from
the
Page 329 U. S. 138
owner thereof . . . " and the department head believes
the stipulated royalties to be unreasonable that the latter shall
give "written notice of such fact to the licensor and to the
licensee." It is only after such notice that the department head
may fix "fair and just" royalties, and only "such licensee" who is
forbidden to pay additional amounts as royalties, and only "such
licensor" who is relegated to the Court of Claims. [
Footnote 9] Conversely, if the putative
invention is manufactured without license, or if the putative
patentee is not actually the owner, these powers and disabilities
do not arise. Even Order No. W-3 does not refer to T-79 transfer
cases as such. It forbids the payment of royalties only on transfer
cases "under" this license, or any license pursuant to this patent
"which embody . . . the . . . alleged inventions." Again, if the
T-79s are not "under" the Alma-Timken license, or if they do not
"embody" Alma's patented claim, then the Order expressly leaves
Alma's and Timken's rights and remedies unaffected.
Consequently, coverage of the T-79s, as well as
constitutionality of the Act and Order, was a crucial issue in
deciding the jurisdiction of the Circuit Court of Appeals. If they
are covered, the Act and Order apply, and it was then necessary to
decide constitutionality in order to determine whether the court
could proceed to a judgment on the merits. If the T-79s are not
covered, the Act and Order manifestly do not apply, and the court
could proceed to a judgment on the merits, whether the Act and
Order are constitutional or not. In that event, of course, no
constitutional question would be decided.
The Circuit Court of Appeals may have thought that the
applicability of the Act and Order turn not on actual coverage, but
on a claim of coverage, and hence that applicability was
undisputed, and only constitutionality was pertinent
Page 329 U. S. 139
to jurisdiction in this case. Such construction is said to have
some support in cases like
Smithers v. Smith, 204 U.
S. 632, and
Bell v. Hood, 327 U.
S. 678, in which
bona fide claims of rights
were held to satisfy jurisdictional requirements as to the amount
in controversy and as to the existence of a certain federal
question, regardless of whether such claims would ultimately be
established.
The answer to this argument is that the statutory language
[
Footnote 10] which
controlled the cited cases expressly refers to the claim as the
test of jurisdiction, whereas, as we have shown, the instant Act
refers to the objective event. Furthermore, the test in the
Smithers and
Bell cases,
supra, is a
condition precedent to the exercise of jurisdiction. Unless such
exercise is made to turn on what the plaintiff, rather than what
the court says is at stake, the court's jurisdictional ruling will
often deny the plaintiff a forum when a full hearing might later
have shown a right to relief. The test in this case, on the other
hand, is a condition subsequent, in certain instances depriving the
court of jurisdiction, and the same danger is not present.
Timken contends that the jurisdiction of all suits with respect
to inventions manufactured for the United States in wartime is
transferred to the Court of Claims, and that the coverage question
is immaterial. It argues that, where the Royalty Adjustment Act
does not accomplish this transfer because the manufacture is not by
a licensee, the Act of June 25, 1910, as amended, [
Footnote 11] should apply, and that
Page 329 U. S. 140
it has the same effect. It is said, therefore, that the case
should have been dismissed whether there was coverage or not, and
that the Circuit Court of Appeals properly refrained from deciding
that question.
Assuming the premise is correct, we do not reach the same
conclusion. Dismissal can be ordered under the 1910 Act, if it
applies, without deciding any constitutional questions, for that
Act has already been before this Court, and been approved.
[
Footnote 12] To order
dismissal under the 1942 Act, however, or under one of the two Acts
alternatively, requires a determination of the constitutionality of
the latter. As we have already indicated, this is sufficient reason
for first deciding which Act impels the transfer.
It is true that § 2 of the Royalty Adjustment Act provides that,
if the licensor sues in the Court of Claims, the United States
"may avail itself of any and all defenses, general or special,
that might be pleaded by a defendant in an action for infringement
as set forth in title sixty of the Revised Statutes, or otherwise.
[
Footnote 13]"
We deem it clear
Page 329 U. S. 141
that such defenses would include questions of coverage, as well
as validity, of a patent. But we do not think that § 2 reflects a
decision by Congress that all suits involving licenses under the
Act and presenting questions of coverage or validity should be
tried in the Court of Claims. As respects the problem with which we
are now concerned, § 2 does no more than to make available such
defenses in the Court of Claims whenever the suits authorized by
the Act are brought there.
Both Alma and Timken maintain that the constitutional question
could not be avoided by the Circuit Court of Appeals, because the
T-32 and T-43 transfer cases were covered, if the T-79s were not,
and were therefore necessarily subject to the Order. Indeed, the
District Court decided that they were covered, and Timken did not
appeal.
This point carries its own refutation. Neither party appealed
from the adjudication as to the T-32 and T-43 transfer cases. No
claim as to them was before the Circuit Court of Appeals. There is
no claim now that a litigant may not appeal from part of a
judgment, or that an appeal from part brings up the whole.
[
Footnote 14] The Circuit
Court of Appeals was not properly concerned with their coverage, or
with the applicability to them of the Act or Order. Therefore, the
part of its order affecting T-32s and T-43s was unwarranted, and
should not now be made the basis for approving a constitutional
decision which was otherwise unnecessary.
Page 329 U. S. 142
Alma objects strenuously to the Government "mending its hold"
between the time it urged dismissal in an
amicus brief in
the Circuit Court of Appeals and argued constitutionality there and
here, and the time it filed here its motion to vacate and remand.
The Government certainly aided and abetted the Circuit Court of
Appeals in its error. But Alma is not without fault in creating the
confusion. In its "Petition to Review" the Order, Alma asked the
Circuit Court of Appeals to hold the Order unconstitutional. In its
petition to the Circuit Court of Appeals for rehearing, it argued
that the court should not have passed on constitutionality, because
Timken had not charged any royalties to the United States on T-79s,
and the Act and Order were allegedly inapplicable. Before this
Court, it has returned to its original position.
We agree 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. This,
however, is no reason to continue now on the wrong course. The
principle of avoiding constitutional questions is one which was
conceived out of considerations of sound judicial administration.
It is a traditional policy of our courts. [
Footnote 15]
The judgment is vacated, and the case remanded for further
proceedings in conformity with this opinion.
Reversed and remanded.
[
Footnote 1]
56 Stat. 1013, 35 U.S.C.Supp. V, §§ 89-96.
[
Footnote 2]
Timken-Detroit Axle Co. v. Alma Motor
Co., 47 F. Supp.
582.
[
Footnote 3]
35 U.S.C.Supp. V, § 89.
[
Footnote 4]
35 U.S.C.Supp. V, § 90.
[
Footnote 5]
35 U.S.C.Supp. V, § 90.
[
Footnote 6]
Timken-Detroit Axle Co. v. Alma Motor Co., 144 F.2d
714.
[
Footnote 7]
The word "again" was deleted by an order of October 2, 1944.
[
Footnote 8]
Siler v. Louisville & Nashville R. Co.,
213 U. S. 175,
213 U. S. 193;
Light v. United States, 220 U. S. 523,
220 U. S. 538;
Spector Motor Co. v. McLaughlin, 323 U.
S. 101,
323 U. S. 105.
See Brandeis, J., concurring in
Ashwander v. Tennessee
Valley Authority, 297 U. S. 288,
297 U. S.
347.
[
Footnote 9]
35 U.S.C.Supp. V, § 89.
[
Footnote 10]
"The district courts shall have original jurisdiction . . .
where the matter in controversy exceeds . . . the sum or value of
$3,000, and (a) arises under the Constitution or laws of the United
States. . . ."
28 U.S.C. § 41.
[
Footnote 11]
Act of June 25, 1910, as amended by the Act of July 1, 1918, 36
Stat. 851, 40 Stat. 705, 35 U.S.C. § 68, provides in part:
"Whenever an invention described in and covered by a patent of
the United States shall hereafter be used or manufactured by or for
the United States without license of the owner thereof or lawful
right to use or manufacture the same, such owner's remedy shall be
by suit against the United States in the Court of Claims for the
recovery of his reasonable and entire compensation for such use and
manufacture. . . ."
[
Footnote 12]
Crozier v. Fried Krupp, 224 U.
S. 290;
Richmond Screw Anchor Co. v. United
States, 275 U. S. 331.
[
Footnote 13]
Section 2 provides in full:
"Any licensor aggrieved by any order issued pursuant to section
1 hereof, fixing and specifying the maximum rates or amounts of
royalties under a license issued by him, may institute suit against
the United States in the Court of Claims, or in the District Courts
of the United States insofar as such courts may have concurrent
jurisdiction with the Court of Claims, 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. In any such suit the United States may avail
itself of any and all defenses, general or special, that might be
pleaded by a defendant in an action for infringement as set forth
in title sixty of the Revised Statutes, or otherwise."
[
Footnote 14]
Rule 73(b) of the Federal Rules of Civil Procedure provides that
the "notice of appeal . . . shall designate the judgment or part
thereof appealed from. . . ."
[
Footnote 15]
Charles River Bridge v. Warren
Bridge, 11 Pet. 420,
36 U. S.
553.