In the 1891 case of Waterman v. Banks, the United States Supreme Court dealt with a dispute over patent rights. The plaintiff, Waterman, had sold his patent for an improvement in fountain pens to Banks but retained royalty rights on future sales. When disagreements arose regarding these royalties and their calculation method, Waterman sought legal intervention to enforce his claim against Banks. The court ruled in favor of Waterman stating that he was entitled to receive royalties as per the agreement made at the time of sale despite having transferred ownership of the patent itself. This decision established a precedent that allowed inventors who sell their patents outright still retain certain financial benefits from its commercial use if such terms are agreed upon during initial negotiations.

In the dissenting opinion for Waterman v. Banks, Justice Brewer argued that the majority's decision to uphold a lower court ruling against Mr. Waterman was incorrect because it failed to consider key aspects of contract law and equity principles. He believed that when Mr. Waterman sold his patent rights to a third party who then defaulted on payments, he should have been able to reclaim those rights without having them seized by creditors of the defaulting party (Banks). According to Justice Brewer, this case involved more than just property rights; it also concerned contractual obligations and fairness in business transactions. Therefore, he contended that upholding the lower court's ruling would set an unfair precedent where inventors could lose their patents due simply to financial misfortunes suffered by others with whom they had done business.