In the 1942 case Altvater et al. v. Freeman et al., the U.S Supreme Court ruled that a patent holder could still collect royalties from a licensee even if the patent was declared invalid in another court proceeding, as long as there was an existing license agreement between both parties. The decision came after Continental Paper Bag Co., who had licensed their patents to United Paperboard Company, sued for unpaid royalties despite one of its patents being invalidated in separate proceedings. The court held that since United Paperboard continued using the patented technology under license and did not repudiate or terminate their contract with Continental, they were obligated to pay agreed-upon royalties regardless of any subsequent judicial determination about patent validity.

In the dissenting opinion for ALTVATER et al. v. FREEMAN et al., Justice Frankfurter argued that the majority's decision was inconsistent with previous rulings of the Court and violated principles of judicial restraint. He contended that there was no actual controversy between parties, as required by Article III of the Constitution, because Freeman had not threatened to enforce his patent rights against Altwater or sought damages for past infringement. Furthermore, he believed that a declaratory judgment should only be used in cases where it would serve a useful purpose and resolve an ongoing dispute - conditions which were not met in this case according to him.