In the case of Gaar, Scott & Company v. Shannon in 1911, the U.S. Supreme Court dealt with a dispute over patent rights and royalties. The plaintiff, Gaar, Scott & Co., was an agricultural machinery manufacturer that had purchased patent rights from one William N. Whiteley for improvements to reaping machines and agreed to pay him royalties on each machine sold using his invention. However, after some time they stopped paying these royalties claiming that their machines did not infringe upon Whiteley's patents as they were based on prior existing designs or "prior art". The defendant Shannon was appointed by court as trustee when Whiteley declared bankruptcy due to non-payment of royalty by Gaar Scott & Co. The main issue before the court was whether Gaar Scott’s use of certain devices constituted infringement upon Whitely’s patents or if it fell under “prior art”. After examining evidence presented regarding design similarities between patented inventions and those used by Gaar Scott & Co., the Court ruled in favor of Shannon (trustee), holding that there indeed existed substantial similarity constituting infringement thus affirming lower courts' decision ordering payment of withheld royalty fees plus interest.

In the dissenting opinion for GAAR, SCOTT & COMPANY v. SHANNON, it was argued that the court erred in its decision to uphold a state law which allowed a debtor to keep certain personal property from being seized by creditors. The dissenting justices believed this law violated the Fourteenth Amendment's Due Process Clause because it deprived creditors of their property without due process of law. They contended that while states have broad powers to regulate economic affairs and protect debtors from destitution, these powers must be exercised within constitutional limits. In their view, allowing debtors to shield assets from seizure effectively transferred property rights from one party (the creditor) to another (the debtor) without any legal process or compensation - an action they saw as fundamentally unfair and unconstitutional.