In the 1930 case Fawcus Machine Company v. United States, the Supreme Court ruled on a dispute involving patent rights and government contracts. The Fawcus Machine Company had been granted a contract by the U.S. Navy to manufacture shell casings using a specific patented method owned by another company, E.W. Bliss Co., without obtaining their permission or paying royalties for its use. When sued for infringement by Bliss Co., Fawcus argued that it was immune from liability because it was acting under authority of the U.S government which has sovereign immunity against such suits. The Supreme Court disagreed with this argument stating that while indeed, as per law, one cannot sue the federal government for patent infringement unless they consent to be sued; however, this protection does not extend to private contractors like Fawcus who are performing work on behalf of the government but are not part of it themselves. Therefore, in conclusion: A contractor working for US Government can still be held liable if they infringe upon patents during execution of their work even though they were doing so under orders from said Government.

The dissenting opinion in the case of Fawcus Machine Company v. United States argued that the majority's decision was incorrect because it failed to properly interpret and apply relevant tax laws. The dissent believed that the company should not be taxed on its entire income, but only on its net income after deducting all necessary expenses incurred in earning said income. This includes depreciation charges which are a legitimate business expense recognized by both accounting principles and tax law. They contended that such deductions were essential for determining a corporation’s true ability to pay taxes, as they reflect actual decreases in value of assets used for production or operation purposes over time due to wear and tear or obsolescence. Therefore, ignoring these deductions would result in an unfair taxation system where companies could potentially be taxed more than their actual earnings.