In the Aronson v. Quick Point Pencil Co. case of 1978, the U.S Supreme Court ruled in favor of Quick Point Pencil Co., stating that a contract for royalty payments could still be enforced even if the patent application was denied. The dispute began when inventor Paul Aronson entered into an agreement with Quick Point to manufacture and sell his invention - a new type of keyholder - in exchange for royalties on each unit sold. However, while his patent application was pending, similar products came onto market making it impossible to secure a patent due to lack of novelty. Despite this setback, Quick Point continued selling the product and paying royalties as per their agreement until they unilaterally decided to stop payments arguing that since no valid patent existed there was no obligation for them to continue paying royalties under federal law governing patents licensing agreements. The court held that although federal law governs patents rights and obligations arising from them including licensing agreements; state laws govern contracts generally including those involving intellectual property rights not protected by patents or copyrights hence such contractual obligations can still be enforceable despite failure securing protection under federal law.

In the dissenting opinion for Aronson v. Quick Point Pencil Co., Justice William Rehnquist argued that the majority's decision to enforce a contract, despite its conflict with federal patent law, undermined Congress' authority over patents and copyrights. He contended that by allowing parties to create their own private system of patent-like rights through contracts, it would disrupt the balance between public interest and inventors' rights established by Congress in federal patent laws. Furthermore, he expressed concern about potential monopolistic practices if such contracts were allowed without any time limit or review process like those present in actual patents. In his view, this could lead to an indefinite extension of monopoly privileges which is contrary to public policy goals aimed at promoting competition and innovation.