In the case of Reading Steel Casting Company v. United States, 1924, the U.S Supreme Court ruled on a dispute regarding patent rights and royalties. The Reading Steel Casting Company had been granted a license by another company to use its patented process for making steel castings in return for royalty payments. However, during World War I, the government took control of all patents related to war materials production under an act passed by Congress known as Webb-Pomerene Act. This included the patent used by Reading Steel Casting Company who continued using it without paying any royalties arguing that they were not required to pay them since their usage was now authorized directly by federal law rather than through licensing agreement with original patent holder. The court disagreed with this argument stating that even though government could take over patents during wartime emergencies; it did not mean private agreements between parties concerning those patents became null and void unless specifically stated so in legislation or if such agreements conflicted with public interest which wasn't found to be true here. Therefore, it held that Reading Steel Casting Company was still obligated under contract law principles to continue paying agreed upon royalties despite change in circumstances due to war emergency measures taken up by government.

In the dissenting opinion for Reading Steel Casting Company v. United States, Justice McReynolds argued that the majority's decision to uphold a tax on manufacturing was unconstitutional. He contended that this tax was not an excise tax as defined by the Constitution but rather a direct tax on property and thus should be apportioned among states according to their populations. He also noted that if Congress could impose such taxes without regard to apportionment, it would have unlimited power over all forms of wealth and income, which he believed contradicted the intent of those who framed the Constitution. Furthermore, he expressed concern about potential abuses of this power in times of peace when there is no pressing need for revenue.