The U.S. Supreme Court case General Talking Pictures Corp. v. Western Electric Co., et al., 1937, revolved around patent rights and their infringement in the manufacturing of amplifiers used for sound reproduction in movie theaters. The plaintiff, Western Electric Company, held patents for these amplifiers but had licensed them to other manufacturers with a restriction that they could only be produced for non-commercial use (i.e., not for use in movie theaters). However, General Talking Pictures Corporation knowingly purchased these patented amplifiers from one of the licensees and sold them commercially to movie theaters - an act which was against the terms set by Western Electric Company's licensing agreement. In this case, the court ruled in favor of Western Electric Company stating that even though it did not directly sell its product to General Talking Pictures Corporation or any commercial entity itself; its licensing restrictions were valid and enforceable under patent law as long as they are clearly stated within the contract between licensor and licensee. Therefore, when General Talking Picture Corporation violated those terms by selling those products commercially despite knowing about such restrictions; it constituted direct infringement on patent rights.

In the dissenting opinion for General Talking Pictures Corp. v. Western Electric Co., Justice Black disagreed with the majority's ruling that a patent licensee could not sell patented amplifiers to non-licensed radio manufacturers without violating its licensing agreement. He argued that such restrictions on sales were contrary to public policy and should be considered illegal restraints of trade, as they limited competition in the marketplace by preventing unlicensed manufacturers from obtaining necessary components for their products. Furthermore, he contended that allowing these types of restrictive agreements would effectively extend a patentee’s monopoly beyond what was intended by Congress when it enacted patent laws.