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where the Court had said: "In reviewing the judgment of a state court, this Court will not pass upon any federal question not shown by the record to have been raised in the state court or considered there, whether it be one arising under a different or the same clause in the Constitution with respect to which other questions are properly presented.”

The result is the same when a party has attempted to raise an issue in the state court but has not done so in proper or timely fashion. “Questions first presented to the highest State court on a petition for rehearing come too late for consideration here .

Radio Station WOW v. Johnson, 326 U. S. 120, 128 (1945). "Since the State Supreme Court did not pass on the question now urged, and since it does not appear to have been properly presented to that court for decision, we are without jurisdiction to consider it in the first instance here." CIO v. McAdory, 325 U. S. 472, 477 (1945). And no different conclusion obtains when the federal question, although not yet presented to or decided by the state court, will probably or even certainly arise during further proceedings held in that court. See, e. 9., NAACP v. Alabama, 357 U. S. 449, 466 467 (1958); Hudson Distributors, Inc. v. Eli Lilly & Co., 377 U. S. 386, 394–395 (1964).

Wholly aside from jurisdictional considerations or those relating to our relationships with state courts, there is the matter of our own Rule 23 (1)(c), which states that "[o]nly the questions set forth in the petition or fairly comprised therein will be considered by the court.” See Flournoy v. Wiener, 321 U. S. 253, 259 (1944). None of the questions presented by Lear's petition for certiorari comes even close to the issue to which the Court now addresses itself-an issue which will arise only if Lear can and does challenge the patent, if the patent is declared invalid, if Adkins nevertheless seeks to enforce the agreement, and if Lear interposes a defense based on federal law.

This seems a poor case for waiving our Rules. In the first place, the question of validity has not been reached by the California Supreme Court, and when it is the patent may withstand attack. In that event there will be no necessity to consider the impact of patent law on the enforceability of a contract grounded in state law. Second, even if the patent is declared invalid, the state court, after the parties have addressed themselves to the issues, may accommodate federal and state law in a matter which would not prompt review here. Third, the parties themselves have neither briefed nor seriously argued the question in this Court, and we do not have the benefit of their views on what is surely a difficult question. The Court itself has flushed the issue, which it now deals with on a piecemeal basis.' Like the question of patent validity, I would leave the consequences of invalidity to the state court in the first instance.

• The Court's opinion Alatly proscribes recovery by Adkins of "all royalties accruing after Adkins' 1960 patent issued if Lear can prove patent invalidity.” Ante, at 674. But recovery of pro-1960 royalties is left open by the Court, apparently because pre-issuance and post-issuance royalties do not stand on the same footing under federal law. Such a distinction may be valid, and pre-1960 royalties recoverable; but if so, what of post-1960 royalties which are attributable to the headstart Lear obtained over the rest of the industry as & result of pre-issuance disclosure of Adkins' idea? Today's bar to collection of post-1960 royalties would seem to be inflexible, and yet those royalties arguably are recoverable to the extent they represent payment for the pre-1960 disclosure of Adkins' idea; to that extent, they seem indistinguishable from pre-1960 royalties, at least for purposes of federal patent law. Cf. Brulotte v. Thys Co., 379 U. S. 29, 31 (1964). See also id., at 34–39 (dissenting opinion). This possibility and others serve to indicate the wisdom of refraining from any pronouncement now, and particularly from any rigid line drawing, in advance of consideration by the courts below and by the parties.

District Court, D. Minnesota ting it to withhold payments of royalties un

der the license during the pendency of the Telectronics Pty Lid.

action while restraining Cordis from termiv. Cordis Corporation

nating the license in the event the patent is

sound to be valid. The motion will be denied. No. 4-82-62

Decided Mar. 5, 1982 PATENTS

Facts 1. Injunction - Preliminary injunction

On June 1, 1979, Cordis and TPL execut(40.5)

ed a license agreement. At that time, TPL

was unable to afford the expense of challengTitle Licenses Royalty provisions ing the patent owned by Cordis. I knew, - In general (866.4231)

however, that another company, Cardiac

Pacemakers, Inc., was challenging the validLicensor has right to terminate license if

ity of the patent. Article VII(B) of the license licensee breaches agreement by failure to pay

agreement provides: royalties, even though patent was held invalid in action between licensor and dillerent party,

Cordis is now involved in litigation with and liccosce is not entitled to preliminary

Cardiac Pacemakers Inc. of Minnesota, injunction permitting it to withhold royalty over the patent rights herein licensed. Roy. payments under license during pendency of ally obligalion hereunder shall lerminale its suit for declaration of patent invalidity,

immediately as lo any patent rights found while restraining licensor from terminating

invalid in any final unappealable judicial license if patent is found valid.

decision including that litigation. Furthermore, until that litigation is concluded, the

TPL royalıy obligation as to U.S. Patent 2. Title Licenses — Royalty provisions

Rights shall not exceed four hundred thouIn general (866.4231)

sand ($400,000.00) ir TPL is in operation Onlion of requiring rovaly payments to be in Group I or Group II and $500,000.00 if paid into escrow during pendency of licensee's in Group III.

cuon for dechration o palcni invalidity is inawpropriate, absent evidence licensor would (Emphasis added). On August 31, 1981, the be unable to repay if so ordered.

trial court in the referenced litigation ruled that the Cordis patent is invalid. Cardiac

Pacemakers, Inc. v. Cordis Corp., CIVIL 4. Action by Telectronics Pty Lid., against

77-427, 215 USPQ 604 (D. Minn. Aug. 31, Cordis Corporation, for declaration of patent

1981), appealed docketed, No. 81-2048, 216

LISPQ 288 (1981). As of the date of this invalidity. On plaintill's motion for prelimi

Nemorandum and Order, the briefs for the nary injunction. Motion denied.

appeal have been liled, but it has not yet been

sct on the calendar sor argument. Henry 11. Fcikema, and Smith, Juster, Feikema, Malmon & Haskvitz, both of Min

The license agreement also contains other neapolis, Minn., for plainull.

Terms regarding termination of the license.
Article VII(A) grants Cordis an option 10

terminate the agrecment if TPL defaults on Hendy D. Pahl, Jr., and Kenway & Jenney, its obligations. Article VII(A) provides:

both of Boston, Mass., and Douglas B. Farrow, and Williamson, Bains, Moore &

II TPL fails to make any statement or Ilansen, both of Minneapolis, Minn., for

report required herein, fails to make any dctendant

payment of royalties as herein provided for, or fails to perform any other obligation herein provided for, Cordis may notify

TPL in writing of its intention to cancel Maclaughlin, District Judge.

This Agreement specifying the default comThe complaint in this action socks a judici

plained of, and this Agreement shall then al declaration of invalidity of a patent owned

terminate sixty (60) days after such notice by the defendant, Cordis Corporation. The

unless TPL makes good and cures the

default complained of before the end of said plantill, Telectronics Pry Lid. (TPL), holds a license under the challenged patent. The

sixty (60) days. matter is now before the Court on TPL's Article VII(D) grants TPL an option to termotion for a preliminary injunction permit- minate without any cause. Il provides:

At any time, TPL may, at its option, 162 USPQ 1 (1969) in which the Supreme terminate the license herein granted, upon Court overturned the doctrine of licensce essixty (60) days written notice to Cordis lo

loppel which theretofore had prohibited a that ellect.

licensee from contesting the validity of the Several months prior to the decision by the

patent. In Lear, the Supreme Court enuncitrial court in Cardiac Pacemakers, Inc. v.

ated the public policy of fostering “full and Cordis Corp., TPL started withholding the

free competition in the use of ideas which are royally payments due under the agreement.

in reality a part of the public domain.” 395 Cordis has demanded payment and has given policy, the Supreme Court determined that

U.S. at 670, 162 USPQ at 8. To foster this the notice required by Article VII(A). In this lawsuit, TPL now challenges the validity of

licensces must be permitted to challenge the the Cordis patent, relying on the trial court

validity of patents, and must be given an

economic incentive to test the validity at the adjudication of invalidity in Cardiac Pacemakers, Inc. v. Cordis Corp. TPL seeks to

earliest opportunity. Therefore the Lear restrain Cordis from exercising its option to

Court held that a licensee cannot be comterminate pursuant to Article VII(A) of the

pelled to continue paying royalties due under license agreement, while being relieved of its

a license agreement during the pendency of a

lawsuit challenging the validity of a patent. obligations to pay royalties pending the appeal in Cardiac Pacemakers, Inc. v. Cordis

395 U.S. at 673, 162 USPQ at 8-9. The Corp.

Supreme Court did not address the issue of whether the licensor could terminale the license agreement for nonpayment of royalties

rather than compelling payment of the Discussion

royalties. On a motion for a preliminary injunction, li appears from the language of the license the Court must consider the following factors:

agreement that the parties had in mind the [W]hether a preliminary injunction should possibility that this issue would arise. The issue involves consideration of (1) the

license agreement expressly provides that threat of irreparable harm to the movant;

Cordis may terminate the agreement if TPL (2) the state of balance between this harm fails 10 make payments of royalties. It also and the injury that granting the injunction expressly provides, “Royalıy obligation herewill inllici on other parties litigant; (3) the

under shail terminate immediately as to any probability that movant will succeed on the patent rights found invalid in any final unapmerits; and (4) the public interest.

palable judicial decision, including (the Car

diac Pacemakers, Inc. v. Cordis Corp.) litigaDataphase Systems, Inc. v. C L Systems, Inc., tion." TPL has given no reason why the trial 640 F.2d 109, 114 (8th Cir. 1981). The court's ruling in ihe Cardiac Pacemakers, Inc. movant's likelihood of success on the merits v. Cordis Corp. litigation should permit it to and the threat of irreparable harm are the rewrite this contract by eliminating Cordis' primary factors.

option to terminate for nonpayment of royalThe plaintill contends that it has estab

ties. T'PL certainly contemplated the possibillished a strong likelihood of success on the

iry that the trial court in that litigation would merits by citing Cardiac Pacemakers, Inc. v.

hold the palent to be invalid, yet Article Cordis Corp. and arguing that if the decision

VII(B) only applies to a "final unappcalable"

decision. Because the matter is currently on is upheld on appeal, then Cordis will be collaterally estopped from contesting the mer

appeal, Article VII(B) has no application to

this case. its of the challenge to the validity of the patent in this action. See Blonder-Tongue

Moreover, the Eighth Circuit Court of ApLaboratories, Inc. v. University of Illinois

peals has held that Lear does not prevent a Foundation, 402 U.S. 313, 169 USPQ 513 (1970). The plaintill contends that it will

licensor from exercising a clause permiting

termination of a license for nonpayment of susler irreparable harm if it must continue making royally payments in order to preserve

royalties. In Nebraska Engineering Corp. v. its rights under the licensing agreement. The

Shivvers, 557 F.2d 1257, 195 USPO 227 (8th

Cir. 1977), a licensec filed an action challengplantill contends that it is unclear how much, if any, of the royally payments it may be able

ing the underlying patent, and simultaneously

liled a motion to enjoin the licensor from to recover if the patent is found invalid by the

terminating the license agreement. The disEighth Circuit.

Trici court ordered that the royalty payments The motion before the Court involves an be deposited with an escrow agent pending issuc left open by the United States Supreme the decision on the merits of the challenge to Court in Lear, Inc. v. Adkins, 395 U.S. 653, the patent's validity. The court of appeals

reversed, holding that the licensor had the right to terminate the license agreement is the licensee breached its obligation to pay the royalties. The court declined to rule on the issue of whether the licensee would be entitled to recover the royalties is it succeeded in having the patent declared invalid.

[1] The Shivvers holding directly controls this motion. The fact that the underlying patent was held invalid in a different lawsuit does not distinguish the facts of this action from Shivvers. The adjudication of invalidity of the patent is currently on appeal, and the Court will not speculate as to the outcome of the appeal.

As in Shivvers, this Court need not rule at this time on how much, if any, of the royalty payments made by TPL 10 Cordis may be recoverable should the patent ultimately be invalidated. It is sufficient to note that while the Eighth Circuit has not yet addressed this issue, a number of other circuits have. See,

e.g., Precision Shooting Equipment Co. v. Allen, 646 F.2d 313, 210 USPQ 184 (7th Cir. 1981); Warner-Jenkinson Co. v. Allied Chemical Corp., 567 F.2d 184, 193 USPQ 753 (2d Cir. 1977); St. Regis Paper Co. i Royal Industries, 552 F.2d 309, 194 USPQ 52 (9th Cir.), cert. denied, 434 U.S. 996 (1977); Atlas Chemical Industries, Inc. v. Moraine Products, 509 F.2d I, 184 USPQ 281 (6th Cir. 1974).

[2] Finally, the Court finds that there is no cvidence before it that Cordis would be unable to repay the royalties in the event that it was ordered to do so. Therefore, the option of requiring royalty payments to be paid into an escrow account is inappropriate in this action Shivvers, 557 F.2d at 1260; see Precision Shooting Equipment, 646 F.2d at 321.

Accordingly, It Is llereby Ordered that the plaintill's motion for a preliminary injunction is dcnicd.

Entry of this Order is hereby stayed for ten days.


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