Document: 440 U.S. 257 99 S.Ct. 1096 59 L.Ed.2d 296 Jane ARONSON, Petitioner,v.QUICK POINT PENCIL COMPANY. No. 77-1413. Argued Dec. 6, 1978. Decided Feb. 28, 1979. Syllabus Petitioner entered into a contract with respondent whereby, in return for the exclusive right to make and sell keyholder designed by petitioner which patent application was pending, agreed pay royalty of 5% selling price. If not allowed within five years, be reduced 21/2% sales. The whereupon accordingly 21/2%. Subsequently rejected. After had paid royalties number years following rejection application, it brought an action District Court seeking declaratory judgment that agreement unenforceable on ground state law otherwise made enforceable pre-empted federal law. upheld contract, but Appeals reversed, holding became once failed obtain stipulated 5-year period continuing obligation would contrary "the strong policy favor full free use ideas public domain," Lear, Inc. v. Adkins, 395 653, 674, 89 1902, 1913, 23 610. Held : Federal does pre-empt so as preclude enforcement contract. Cf. Kewanee Oil Co. Bicron Corp., 416 470, 94 1879, 40 315. Pp. 261-266. (a) Enforcement is inconsistent purposes system (1) foster reward invention; (2) promote disclosure inventions, stimulate further innovation, permit practice invention expires; (3) assure domain remain there public. 262-264. (b) prevent anyone from copying merely requires consideration promised novel device enabled market. P. 264. (c) When, here, no has issued, have been withdrawn use, case controlled supra, licensee who establishes invalidity need accrued after issuance patent, nor rationale desirable encourage licensees challenge validity patents order only inventions meeting rigorous requirements patentability shall domain. (d) comports principle monopoly granted under cannot lawfully used "to negotiate leverage monopoly." Brulotte Thys Co., 379 29, 33, 85 176, 179, 13 99, since challenged royalty, rather than being negotiated, rested contingency issue years. 264-265. 8 Cir., 567 F.2d 757, reversed. C. Lee Cook, Jr., Chicago, Ill., petitioner. B. Barry Grossman, Washington, D. C., United States, amicus curiae, special leave Court. Erwin N. Griswold, respondent. Mr. Chief Justice BURGER delivered opinion 1 We certiorari, 436 943, 98 2843, 56 784, consider whether pre-empts pre clude applicant, sales articles embodying putative invention, long contracting party sells them, if granted. 2 3 In October 1955 petitioner, Mrs. Aronson, filed Serial 542677, new form keyholder. Although ingenious, design simple readily could copied unless protected patent. June 1956, while Aronson negotiated respondent, Quick Point Pencil manufacture sale 4 embodied two documents. first, letter price keyholders type shown your 542677." provided parties consult one another concerning steps taken "[i]n event any infringement." 5 did require received $750 advance entitled rescind license million end 1957. retained cancel whenever volume meet our expectations." duration prescribed. 6 A contemporaneous document Aronson's "not (5) [would] . half percent (21/2%) you [Quick Point] continue same."** ** April 1961, her husband sought different plans company it. Point's attorney wrote couple proposed violate 1956 agreement. He observed 7 "your respect said [Aronson's] (not its claims) even ever [Aronson] Company obligated manufactured accordance application." (Emphasis added.) when specified agreement, asserted contractual reduce payments September year Board Patent issued final patentable, appeal. continued 14 thereafter. market more receptive keyholder's novelty utility Office. By 1975 excess $7 totaling $203,963.84; were rise. However, able earlier manufacturer keyholder, copies began appear late 1960's. competitors, course, required their design. share declined during past decade. 9 10 November commenced States judgment, pursuant 28 U.S.C. § 2201, unenforceable. might preempted This presented us decision. 11 Both moved summary affidavits, exhibits, stipulations fact. concluded "language plain, clear unequivocal relation or granted." Accordingly, held valid, obliged 12 judge dissenting. 757. It contracted reference pending estopped denying principles governed Point. acknowledging this never decided precise issue, prior decisions regarding licenses compelled conclusion she court favoring 610 (1969). also actually obtained escaped obligations either invalid, see ibid., upon expiration 17 (1964). should relieved licensor's efforts contemplated prove unsuccessful. On record awareness both pendency possibility issue. clause de-escalating makes crystal clear. apparently placed significant value exploiting basic device, issued; success demonstrates well founded. Assuming, arguendo, initial commitment subject law, provision relating explicitly independent cases relied do bear rely particularly where, expressly alternative 15 Commercial agreements traditionally are State displaced because relates intellectual property may patentable; states regulate such manner 479, 1885, 315 (1974); Goldstein California, 412 546, 93 2303, 37 163 (1973). other fields, question "involves 'stands obstacle accomplishment execution objectives Congress.' Hines Davidowitz, 312 52, 67 [61 399, 404, L.Ed. 581] (1941)." supra., U.S., at S.Ct., 1885. not, governs. 16 480-481, 1885-1886, we reviewed system. First, seeks second, promotes innovation third, stringent protection seek these aims. Permitting inventors licensing provides additional incentive invention. Similarly, encouraging arrangements furthers inventions; devices display idea they embody wherever seen. 18 argues contracts conflicts against withdrawing discourages recourse allowing extend "perpetual too lacking merit all constitutional standards," Sears, Roebuck & Stiffel 376 225, 232, 84 789, 661 19 find contention. withdraw before See 484, 1887. negotiating disclosed confidence. Had tried exploit breach confidence, risked legal liability. equally result 20 Requiring burden costs involved first introduce product market, outlays research development, marketing promotional expenses. For reasons experience demonstrate, innovative entrepreneurs usually found worth paying. 21 Finally, discourage attempted over quite true succeeded, sold 17-year life Offsetting limited terms payments, twice much per dollar sales, licensed others produced same Which course greater yield matter speculation; resolved uncertainties bargain. 22 (4) No decision justifies relieving obligations. forbid protection. Compco Corp. Day-Brite Lighting, Inc., 234, 779, 669 (1964); supra. however, 24 (1969), person invalid subsequent holdings desirability patents, Id., 670-671, 673-674, 1911, 1912-1913. neither Lear controls use. 25 here consistent treated There, patented beyond underlying simply "negotiate emphasized "use project those analogous effort enlarge ." 179. Here challenged, far "with leverage" 26 doubt gives applicant some bargaining power allows inventor hold out hope idea, threat will prevented using amount arising depends how likely valid Here, where entirely assigned substantial likelihood contingency, specifically 27 draw line between what constitutes abuse not. whatever role played negotiation part indefinitely. Our puts rest contention renders parties. There forbidding misappropriation trade secrets observed: 29 "Certainly disturbed existence systems [patent secret law] conflict." 30 less offensive policies protecting secrets. most commonly accepted definition restricted confidential information normal process exploitation. Restatement Torts Comment b, p. (1939). exploitation satisfy disclosure, whereas inescapable like 31 obligations, freely undertaken arm's-length fixed reliance probable grant, 32 "encourage areas reach, prompt innovator proceed discovery his Competition fostered deprived valuable, invention." (Footnote omitted.) 485, 1888. 33 ceased secrecy soon marketed, yet inventiveness sufficiently apparent induce experienced agree opportunity barrier 34 Reversed. 35 BLACKMUN, concurring result. 36 me, hard can meaningfully distinguished licensor extended patent's term. continues binding though ago denied. Court, ante, 265, asserts "no part" contingent Yet rights depended application. apportion neat fashion adopts. 38 my view, reflects hostility toward extension whose term statute, 154. Such place here. later denied temporarily unlicensed imitators. Its benefits hazards magnitude prohibits competition Nothing estopping patent-application entering fails. points out, 263, conflict laws. maintains sort encourages applications, early structure bargains efficiently. 39 basis, I concur Court's

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