In the case of Duryea Power Company v. Sternbergh (1910), the U.S Supreme Court dealt with a dispute over patent rights and royalties. The Duryea Power Company, which had gone bankrupt, was trying to avoid paying royalties to Mr. Sternbergh for his patented invention used by the company in its operations. The court ruled that even though the company had declared bankruptcy, it still owed royalty payments to Mr. Sternbergh as per their agreement prior to bankruptcy declaration because such obligations were not discharged by bankruptcy proceedings under existing law at that time.

In the dissenting opinion for Duryea Power Company v. Sternbergh, it was argued that the bankruptcy court had no jurisdiction over a suit brought by a trustee in bankruptcy to set aside fraudulent conveyances and recover assets of the bankrupt estate. The dissenting justices believed that such suits should be heard in state courts rather than federal courts unless there is clear congressional intent to grant jurisdiction to federal courts. They contended that Congress did not intend for bankruptcy trustees to have broad powers to bring suits in federal court when they enacted the Bankruptcy Act of 1898, which only granted limited powers to trustees. Therefore, they concluded that this case should have been dismissed for lack of jurisdiction.