Blonder-Tongue Laboratories, Inc. v. University of Illinois Foundation/Opinion of the Court

Respondent University of Illinois Foundation (hereafter Foundation) is the owner by assignment of U.S. Patent No. 3,210,767, issued to Dwight E. Isbell on October 5, 1965. The patent is for 'Frequency Independent Unidirectional Antennas,' and Isbell first filed his application May 3, 1960. The antennas covered are designed for transmission and reception of electromagnetic radio frequency signals used in many types of communications, including the broadcasting of radio and television signals.

The patent has been much litigated since it was granted, primarily because it claims a high quality television antenna for color reception. One of the first infringement suits brought by the Foundation was filed in the Southern District of Iowa against the Winegard Co., an antenna manufacturer. Trial was to the court, and after pursuing the inquiry mandated by Graham v. John Deere Co., 383 U.S. 1, 17-18, 86 S.Ct. 684, 693-694, 15 L.Ed.2d 545 (1966), Chief Judge Stephenson held the patent invalid since 'it would have been obvious to one ordinarily skilled in the art and wishing to design a frequency independent unidirectional antenna to combine these three old elements, all suggested by the rpior art references previously discussed.' University of Illinois Foundation v. Winegard Co., 271 F.Supp. 412, 419 (SD Iowa 1967) (footnote omitted). Accordingly, he entered judgment for the alleged infringer and against the patentee. On appeal, the Court of Appeals for the Eighth Circuit unanimously affirmed Judge Stephenson. 402 F.2d 125 (1968). We denied the patentee's petition for certiorari. 394 U.S. 917, 89 S.Ct. 1191, 22 L.Ed.2d 452 (1969).

In March 1966, well before Judge Stephenson had ruled in the Winegard case, the Foundation also filed suit in the Northern District of Illinois charging a Chicago customer of petitioner, Blonder-Tongue Laboratories, Inc. (hereafter B-T), with infringing two patents it owned by assignment: the Isbell patent and U.S. Patent No. Re. 25,740, reissued March 9, 1965, to P. E. Mayes et al. The Mayes patent was entitled 'Log Periodic Backward Wave Antenna Array,' and was, as indicated, a reissue of No. 3,108,280, applied for on September 30, 1960. B-T chose to subject itself to the jurisdiction of the court to defend its customer, and it filed an answer and counterclaim against the Foundation and its licensee, respondent JFD Electronics Corp., charging: (1) that both the Isbell and Mayes patents were invalid; (2) that if those patents were valid, the B-T antennas did not infringe either of them; (3) that the Foundation and JFD were guilty of unfair competition; (4) that the Foundation and JFD had violated the 'anti-trust laws of the United States, including the Sherman and Clayton Acts, as amended'; and (5) that certain JFD antenna models infringed B-T's patent No. 3,259,904, 'Antenna Having Combined Support and Lead-In,' issued July 5, 1966.

Trial was again to the court, and on June 27, 1968, Judge Hoffman held that the Foundation's patents were valid and infringed, dismissed the unfair competition and antitrust charges, and found claim 5 of the B-T patent obvious and invalid. Before discussing the Isbell patent in detail, Judge Hoffman noted that it had been held invalid as obvious by Judge Stephenson in the Winegard litigation. He stated:

'This court is, of course, free to decide the case at bar on     the basis of the evidence before it. Triplett v. Lowell, 297     U.S. 638, 642, (56 S.Ct. 645, 80 L.Ed. 949) (1936). Although     a patent has been adjudged invalid in another patent      infringement action against other defendants, patent owners      cannot be deprived 'of the right to show, if they can, that,      as against defendants who have not previously been in court,      the patent is valid and infringed.' Aghnides v. Holden, 22      (6) F.2d 949, 951 (7th Cir. 1955). On the basis of the     evidence before it, this court disagrees with the conclusion      reached in the Winegard case and finds both the Isbell patent      and the Mayes et al. patent valid and enforceable patents.'      App. 73.

B-T appealed, and the Court of Appeals for the Seventh Circuit affirmed: (1) the findings that the Isbell patent was both valid and infringed by B-T's products; (2) the dismissal of B-T's unfair competition and antitrust counterclaims; and (3) the finding that claim 5 of the B-T patent was obvious. However, the Court of Appeals reversed the judgment insofar as Judge Hoffman had found the Mayes patent valid and enforceable, enjoined infringement thereof, and provided damages for such infringement. 422 F.2d 769 (1970).

B-T sought certiorari, assigning the conflict between the Courts of Appeals for the Seventh and Eighth Circuits as to the validity of the Isbell patent as a primary reason for granting the writ. We granted certiorari, 400 U.S. 864, 91 S.Ct. 101, 27 L.Ed.2d 103 (1970), and subsequently requested the parties to discuss the following additional issues not raised in the petition for review:

'1. Should the holding of Triplett v. Lowell, 297 U.S. 638,     (56 S.Ct. 645, 80 L.Ed. 949), that a determination of patent      invalidity is not res judicata as against the patentee in      subsequent litigation against a different defendant, be      adhered to?

'2. If not, does the determination of invalidity in the     Winegard litigation bind the respondents in this case?'

* In Triplett v. Lowell, 297 U.S. 638, 56 S.Ct. 645, 80 L.Ed. 949, this Court held:

'Neither reason nor authority supports the contention that an     adjudication adverse to any or all the claims of a patent      precludes another suit upon the same claims against a      different defendant. While the earlier decision may be comity be given great weight in a     later litigation and thus persuade the court to render a like      decree, it is not res adjudicata and may not be pleaded as a      defense.' 297 U.S., at 642, 56 S.Ct., at 647.

The holding in Triplett has been at least gently criticized by some judges. In its opinion in the instant case, the Court of Appeals for the Seventh Circuit recognized the Triplett rule but nevertheless remarked that it 'would seem sound judicial policy that the adjudication of (the question of the Isbell patent's validity) against the Foundation in one action where it was a party would provide a defense in any other action by the Foundation for infringement of the same patent.' 422 F.2d, at 772.

In its brief here, the Foundation urges that the rule of Triplett be maintained. Petitioner B-T's brief took the same position, stating that '(t) hough petitioners stand to gain by any such result, we cannot urge the destruction of a long-accepted safeguard for patentees merely for the expediency of victory.' Brief for Petitioner 12. The Government, however, appearing as amicus curiae, urges that Triplett was based on uncritical acceptance of the doctrine of mutuality of estoppel, since limited significantly, and that the time has come to modify Triplett so that 'claims of estoppel in patent cases (are) considered on a case by case basis, giving due weight to any factors which would point to an unfair or anomalous result from their allowance.' Brief for the United States 7. The Government's position was spelled out in a brief filed more than a month after petitioner B-T filed its brief.

At oral argument the following colloquy occurred between the Court and counsel for B-T:

'Q. You're not asking for Triplett to be overruled?

'A. No. I'm not. I maintain that my brother here did have a     right if there was a genuine new issue or some other      interpretation of the (patent) claim or some interpretation      of law in another circuit that's different than this Circuit,      he had a right to try, under Triplett below, in another      circuit.

'In this particular case, where we're stuck with     substantially the same documentary evidence, where we were      not able to produce (in the Seventh Circuit) even that      modicum of expert testimony that existed in the Eighth      Circuit, we think there may be as suggested by the Solicitor      General, some reason for modification of that document (sic)      in a case such as this.' Tr. of Oral Arg. 7-8.

In light of this change of attitude from the time petitioner's brief was filed, we consider that the question of modifying Triplett is properly before us.

Triplett v. Lowell exemplified the judge-made doctrine of mutuality of estoppel, ordaining that unless both parties (or their privies) in a second action are bound by a judgment in a previous case, neither party (nor his privy) in the second action may use the prior judgment as determinative of an issue in the second action. Triplett was decided in 1936. The opinion stated that 'the rules of the common law applicable to successive litigations concerning the same subject-matter' did not preclude 'relitigation of the validity of a patent claim previously held invalid in a suit against a different defendant.' 297 U.S., at 644, 56 S.Ct., at 648. In Bigelow v. Old Dominion Copper Co., 225 U.S. 111, 127, 32 S.Ct. 641, 642, 56 L.Ed. 1009 (1912), the Court had stated that it was 'a principle of general elementary law that the estoppel of a judgment must be mutual.' The same rule was reflected in the Restatement of Judgments. Restatement of Judgments § 93 (1942).

But even at the time Triplett was decided, and certainly by the time the Restatement was published, the mutuality rule had been under fire. Courts had discarded the requirement of mutuality and held that only the party against whom the plea of estoppel was asserted had to have been in privity with a party in the prior action. As Judge Friendly has noted, Bentham had attached the doctrine 'as destitute of any semblance of reason, and as 'a maxim which one would suppose to have found its way from the gaming-table to the bench' * *  * .' Zdanok v. Glidden Co., 327 F.2d 944, 954 (CA2 1964), cert. denied, 377 U.S. 934, 84 S.Ct. 1338, 12 L.Ed.2d 298 (1964) (quoting 3 J. Bentham, Rationale of Judicial Evidence 579 (1827), reprinted in 7 Works of Jeremy Bentham 171 (J. Bowring ed. 1843)). There was also ferment in scholarly quarters.

Building upon the authority cited above, the California Supreme Court, in Bernhard v. Bank of America Nat. Trust & Savings Assn., 19 Cal.2d 807, 122 P.2d 892 (1942), unanimously rejected the doctrine of mutuality, stating that there was 'no compelling reason * *  * for requiring that the party asserting the plea of res judicata must have been a party, or in privity with a party, to the earlier litigation.' Id., at 812, 122 P.2d, at 894. Justice Traynor's opinion, handed down the same year the Restatement was published, listed criteria since employed by many courts in many contexts:

'In determining the validity of a plea of res judicata three     questions are pertinent: Was the issue decided in the prior      adjudication identical with the one presented in the action      in question? Was there a final judgment on the merits? Was     the party against whom the plea is asserted a party or in privity with a party to the prior adjudication?' 19 Cal.2d,      at 813, 122 P.2d, at 895.

Although the force of the mutuality rule had been diminished by exceptions and Bernhard itself might easily have been brought within one of the established exceptions, 'Justice Traynor chose instead to extirpate the mutuality requirement and put it to the torch.' Currie, Civil Procedure: The Tempest Brews, 53 Calif.L.Rev. 25, 26 (1965).

Bernhard had significant impact. Many state and federal courts rejected the mutuality requirement, especially where the prior judgment was invoked defensively in a second action against a plaintiff bringing suit on an issue he litigated and lost as plaintiff in a prior action. The trend has been apparent in federal-question cases. The federal courts found Bernhard persuasive. As Judge Hastie stated more than 20 years ago:

'This second effort to prove negligence is comprehended by     the generally accepted precept that a party who has had one      fair and full opportunity to prove a claim and has failed in      that effort, should not be permitted to go to trial on the      merits of that claim a second time. Both orderliness and     reasonable time saving in judicial administration require      that this be so unless some overriding consideration of fairness      to a litigant dictates a different result in the      circumstances of a particular case.

'The countervailing consideration urged here is lack of     mutuality of estoppel. In the present suit (the plaintiff)     would not have been permitted to take advantage of an earlier      affirmatime finding of negligence, had such finding been made      in (his first suit against a different defendant). For that     reason he argues that he should not be bound by a contrary      finding in that case. But a finding of negligence in the     (plaintiff's first suit) would not have been binding against      the (defendant in a second suit) because (that defendant) had      no opportunity to contest the issue there. The finding of no     negligence on the other hand was made after full opportunity      to (plaintiff) on his own election to prove the very matter      which he now urges a second time. Thus, no unfairness results     here from estoppel which is not mutual. In reality the     argument of (plaintiff) is merely that the application of res      judicata in this case makes the law asymmetrical. But the     achievement of substantial justice rather than symmetry is      the measure of the fairness of the rules of res judicata.'      Bruszewski v. United States War Shipping Administration, 181      F.2d 419, 421 (CA3 1950), cert. denied, 340 U.S. 865, 71     S.Ct. 87, 95 L.Ed. 632 (1950).

Many federal courts, exercising both federal question and diversity jurisdiction, are in accord unless in a diversity case bound to apply a conflicting state rule requiring mutuality.

Of course, transformation of estoppel law was neither instantaneous nor universal. As late as 1961, eminent authority stated that '(m)ost state courts recognize and apply the doctrine of mutuality, subject to certain exceptions * *  *. And the same is true of federal courts, when free to apply their own doctrine.' Moore & Currier, Mutuality and Conclusiveness of Judgments, 35 TulL.Rev. 301, 304 (1961) (footnotes omitted); see also, 1B J. Moore, Federal Practice 0.412(1), pp. 1803-1804 (1965). However, in 1970 Professor Moore noted that 'the trend in the federal courts is away from the rigid requirements of mutuality advocated herein.' Id., Supp. 1970, at 53. The same trend is evident in the state courts.

Undeniably, the court-produced doctrine of mutuality of estoppel is undergoing fundamental change in the common-law tradition. In its pristine formulation, an increasing number of courts have rejected the principle as unsound. Nor is it irrelevant that the abrogation of mutuality has been accompanied by other developments-such as expansion of the definition of 'claim' in bar and merger contexts and expansion of the preclusive effects afforded criminal judgments in civil litigation -which enhance the capabilities of the courts to deal with some issues swiftly but fairly.

Obviously, these mutations in estoppel doctrine are not before us for wholesale approval or rejection. But at the very least they counsel us to re-examine whether mutuality of estoppel is a viable rule where a patentee seeks to relitigate the validity of a patent once a federal court has declared it to be invalid.

The cases and authorities discussed above connect erosion of the mutuality requirement to the goal of limiting relitigation of issues where that can be achieved without compromising fairness in particular cases. The courts have often discarded the rule while commenting on crowded dockets and long delays preceding trial. Authorities differ on whether the public interest in efficient judicial administration is a sufficient ground in and of itself for abandoning mutuality, but it is clear that more than crowded dockets in involved. The broader question is whether it is any longer tenable to afford a litigant more than one full and fair opportunity for judicial resolution of the same issue. The question in these terms includes as part of the calculus the effect on judicial administration, but it also encompasses the concern exemplified by Bentham's reference to the gaming table in his attack on the principle of mutuality of estoppel. In any lawsuit where a defendant, because of the mutuality principle, is forced to present a complete defense on the merits to a claim which the plaintiff has fully litigated and lost in a prior action, there is an arguable misallocation of resources. To the extent the defendant in the second suit may not win by asserting, without contradiction, that the plaintiff had fully and fairly, but unsuccessfully, litigated the same claim in the prior suit, the defendant's time and money are diverted from alternative uses-productive or otherwise-to relitigation of a decided issue. And, still assuming that the issue was resolved correctly in the first suit, there is reason to be concerned about the plaintiff's allocation of resources. Permitting repeated litigation of the same issue as long as the supply of unrelated defendants holds out reflects either the aura of the gaming table or 'a lack of discipline and of disinterestedness on the part of the lower courts, hardly a worthy or wise basis for fashioning rules of procedure.' Kerotest Mfg. Co. v. C-O-Two Co., 342 U.S. 180, 185, 72 S.Ct. 219, 222, 96 L.Ed. 200 (1952). Although neither judges, the parties, nor the adversary system performs perfectly in all cases, the requirement of determining whether the party against whom an estoppel is asserted had a full and fair opportunity to litigate is a most significant safeguard.

Some litigants-those who never appeared in a prior action-may not be collaterally estopped without litigating the issue. They have never had a chance to present their evidence and arguments on the claim. Due process prohibits estopping them despite one or more existing adjudications of the identical issue which stand squarely against their position. See Hansberry v. Lee, 311 U.S. 32, 40, 61 S.Ct. 115, 117, 85 L.Ed. 22 (1940); Bernhard, 19 Cal.2d, at 811, 122 P.2d, at 894. Also, the authorities have been more willing to permit a defendant in a second suit to invoke an estoppel against a plaintiff who lost on the same claim in an earlier suit than they have been to allow a plaintiff in the second suit to use offensively a judgment obtained by a different plaintiff in a prior suit against the same defendant. But the case before us involves neither due process nor 'offensive use' questions. Rather, it depends on the considerations weighing for and against permitting a patent holder to sue on his patent after it has once been held invalid following opportunity for full and fair trial.

There are several components of the problem. First, we analyze the proposed abrogation or modification of the Triplett rule in terms of those considerations relevant to the patent system. Second, we deal broadly with the economic costs of continued adherence to Triplett. Finally, we explore the nature of the burden, if any, that permitting patentees to relitigate patents once held invalid imposes on the federal courts.

Starting with the premise that the statutes creating the patent system, expressly sanctioned by the Constituion, represent an affirmative policy choice by Congress to reward inventors, respondents extrapolate a special public interest in sustaining 'good' patents and characterize patent litigation as so technical and difficult as to present unusual potential for unsound adjudications. Although Triplett made no such argument in support of its holding, that rule, offering the unrestricted right to relitigate patent validity, is thus deemed an essential safeguard against improvident judgments of invalidity.

We fully accept congressional judgment to reward inventors through the patent system. We are also aware that some courts have frankly stated that patent litigation can present issues so complex that legal minds, without appropriate grounding in science and technology, may have difficulty in reaching decision. On the other hand, this Court has observed that issues of nonobviousness under 35 U.S.C. § 103 present difficulties 'comparable to those encountered daily by the courts in such frames of reference as negligence and scienter, and should be amenable to a case-by-case development.' Graham v. John Deere Co., 383 U.S., at 18, 86 S.Ct. 684, 694, 15 L.Ed.2d 545. But assuming a patent case so difficult as to provoke a frank admission of judicial uncertainty, one might ask what reason there is to expect that a second district judge or court of appeals would be able to decide the issue more accurately. Moreover, as Graham also indicates, Congress has from the outset chosen to impose broad criteria of patentability while lodging in the federal courts final authority to decide that question. 383 U.S., at 10, 86 S.Ct., at 690. In any event it cannot be sensibly contended that all issues concerning patent validity are so complex and unyielding. Nonobviousness itself is not always difficult to perceive and decide and other questions on which patentability depends are more often than not no more difficult than those encountered in the usual nonpatent case.

Even conceding the extreme intricacy of some patent cases, we should keep firmly in mind that we are considering the situation where the patentee was plaintiff in the prior suit and chose to litigate at that time and place. Presumably he was prepared to litigate and to litigate to the finish against the defendant there involved. Patent litigation characteristically proceeds with some deliberation and, with the avenues for discovery available under the present rules of procedure, there is no reason to suppose that plaintiff patentees would face either surprise or unusual difficulties in getting all relevant and probative evidence before the court in the first litigation.

Moreover, we do not suggest, without legislative guidance, that a plea of estoppel by an infringement or royalty suit defendant must automatically be accepted once the defendant in support of his plea identifies the issue in suit as the identical question finally decided against the patentee or one of his privies in previous litigation. Rather, the patentee-plaintiff must be permitted to demonstrate, if he can, that he did not have 'a fair opportunity procedurally, substantively and evidentially to pursue his claim the first time.' Eisel v. Columbia Packing Co., 181 F.Supp. 298, 301 (Mass. 1960). This element in the estoppel decision will comprehend, we believe, the important concerns about the complexity of patent litigation and the posited hazard that the prior proceedings were seriously defective.

Determining whether a patentee has had a full and fair chance to litigate the validity of his patent in an earlier case is of necessity not a simple matter. In addition to the considerations of choice of forum and incentive to litigate mentioned above, certain other factors immediately emerge. For example, if the issue is nonobviousness, appropriate inquiries would be whether the first validity determination purported to employ the standards announced in Graham v. John Deere Co., supra; whether the opinions filed by the District Court and the reviewing court, if any, indicate that the prior case was one of those relatively rare instances where the courts wholly failed to grasp the technical subject matter and issues in suit; and whether without fault of his own the patentee was deprived of crucial evidence or witnesses in the first litigation. But as so often is the case, no one set of facts, no one collection of words or phrases, will provide an automatic formula for proper rulings on estoppel pleas. In the end, decision will necessarily rest on the trial courts' sense of justice and equity.

We are not persuaded, therefore, that the Triplett rule, as it was formulated, is essential to effectuate the purposes of the patent system or is an indispensable or even an effective safeguard against faulty trials and judgments. Whatever legitimate concern there may be about the intricacies of some patent suits, it is insufficient in and of itself to justify patentees relitigating validity issues as long as new defendants are available. This is especially true if the court in the second litgation must decide in a principled way whether or not it is just and equitable to allow the plea of estoppel in the case before it.

An examination of the economic consequences of continued adherence to Triplett has two branches. Both, however, begin with the acknowledged fact that patent litigation is a very costly process. Judge Frank observed in 1942 that 'the expense of defending a patent suit is often staggering to the small businessman.' Picard v. United Aircraft Corp., 128 F.2d 632, 641 (CA2 1942) (concurring opinion). In Lear, Inc. v. Adkins, 395 U.S. 653, 669, 89 S.Ct. 1902, 1910, 23 L.Ed.2d 610 (1969), we noted that one of the benefits accruing to a businessman accepting a license from a patentee who was threatening him with a suit was avoiding 'the necessity of defending an expensive infringement action during the period when he may be least able to afford one.' Similarly, in replying to claims by alleged infringers that they have been guilty of laches in suing on their patents, patentees have claimed that the expense of litigating forced them to postpone bringing legal action. See, e.g., Baker Mfg. Co. v. Whitewater Mfg. Co., 430 F.2d 1008, 1014-1015 (CA7 1970). In recent congressional hearings on revision of the patent laws, a lawyer-businessman discussing a proposal of the American Society of Inventors for government-sponsored insurance to provide funds for litigation to individual inventors holding nonassigned patents stated: 'We are advised that the average cost for litigating a patent is about $50,000.'

This statement, and arguments such as the one made in Baker Mfg., supra, must be assessed in light of the fact that they are advanced by patentees contemplating action as plaintiffs, and patentees are heavily favored as a class of litigants by the patent statute. Section 282 of the Patent Code provides, in pertinent part:

'A patent shall be presumed valid. The burden of establishing     invalidity of a patent shall result on a party asserting it.'

If a patentee's expense is high though he enjoys the benefits of the presumption of validity, the defendant in an infringement suit will have even higher costs as he both introduces proof to overcome the presumption and attempts to rebut whatever proof the patentee offers to bolster the claims. In testimony before the Senate subcommittee considering patent law revision in 1967, a member of the President's Commission on the Patent System discussed the financial burden looming before one charged as a defendant in a complex infringement action in terms of amounts that sometimes run to 'hundreds of thousands of dollars.'

Statistics tend to bear this out. Patent suits constitute between 1% and 2% of the total number of civil cases filed each year in the District Courts. Despite this relatively small figure, and notwithstanding the overwhelming tendency to try these suits without juries, patent cases that go to trial seem to take an inordinate amount of trial time. While in 1961 a Senate staff report stated that the 'typical patent trial, without a jury, was completed in 3 days or less,' recent figures indicate that this description of the time required is today inaccurate. And time-particularly trial time-is unquestionably expensive.

As stated at the outset of this section, the expense of patent litigation has two principal consequences if the Triplett rule is maintained. First, assuming that a perfectly sound judsgment of invalidity has been rendered in an earlier suit involving the patentee, a second infringement action raising the same issue and involving much of the same proof has a high cost to the individual parties. The patentee is expending funds on litigation to protect a patent which is by hypothesis invalid. These moneys could be put to better use, such as further research and development. The alleged infringer-operating as he must against the presumption of validity-is forced to divert substantial funds to litigation that is wasteful.

The second major economic consideration is far more significant. Under Triplett, only the comity restraints flowing from an adverse prior judgment operate to limit the patentee's right to sue different defendants on the same patent. In each successive suit the patentee enjoys the statutory presumption of validity, and so many easily put the alleged infringer to his expensive proof. As a consequence, prospective defendants will often decide that paying royalties under a license or other settlement is preferable to the costly burden of challenging the patent.

The problem has surfaced and drawn comment before. See, e.g., Nickerson v. Kutschera, 419 F.2d 983, 988 n. 4 (CA3 1969) (dissenting opinion); Picard v. United Aircraft Corp., 128 F.2d, at 641-642 (concurring opinion). In 1961, the Senate Judiciary Subcommittee on Patents, Trademarks, and Copyrights published a staff study of infringement and declaratory judgment actions terminated in the district courts and courts of appeals during 1949-1958; the report showed 62 actions commenced after an earlier determination that the patent in suit was not valid. It also noted that the 'vast majority' of such suits were terminated without a second adjudication of validity. 1961 Staff Report 19. It is apparent that termination without a second adjudication of validity was the result of a licensing agreement or some other settlement between the parties to the second suit. It is also important to recognize that this study covered only cases filed and terminated; there were undoubtedly more suits that were threatened but not filed, because the threat alone was sufficient to forestall a challenge to the patent.

This is borne out by the observations of the President's Commission on the Patent System and recent testimony on proposals for changes in the patent laws. Motivated by the economic consequences of repetitious patent litigation, the Commission proposed:

'A final federal judicial determination declaring a patent     claim invalid shall be in rem, and the cancellation of such      claim shall be indicated on all patent copies subsequently      distributed by the Patent Office.' Recommendation XXIII,      Commission Report 38.

The Commission stressed the competitive disadvantage imposed on an alleged infringer who is unable or unwilling to defend a suit on the patent, stating also that a 'patentee, having been afforded the opportunity to exhaust his remedy of appeal from a holding of invalidity, has had his 'day in court' and should not be allowed to harass others on the basis of an invalid claim. There are few, if any, logical grounds for permitting him to clutter crowded court dockets and to subject others to costly litigation.' Id., at 39. The report provoked the introduction of several bills to effect broad changes in the patent system. Some bills contained provisions imposing an inflexible rule of in rem invalidity operating against a patentee regardless of the character of the litigation in which his patent was first declared invalid. See S. 1042, 90th Cong., 1st Sess., § 294 (1967), and H.R. 5924, 90th Cong., 1st Sess., § 294 (1967); cf. S. 3892, 90th Cong., 2d Sess., § 294 (1968). Hearings were held in both Houses on these and other patent revision bills.

In the Senate hearings, a member of the President's Commission remarked:

'The businessman can be subjected to considerable harassment     as an alleged infringer. Even in cases where he feels     strongly that the patent would ultimately be held invalid,      when he considers the hundreds of thousands of dollars in      complex cases that could be involved in defending a suit, he      may conclude that the best course of action is to settle for      less to get rid of the problem. These nuisance settlements,     although distasteful, are often, under the present system,      justified on pure economics.

'In many instances the very survival of the small businessman     may be at stake. His cost of fully litigating a claim against     him can seriously impair his ability to stay in business.'      1967 Senate Hearings 103.

The tendency of Triplett to multiply the opportunities for holders of invalid patents to exact licensing agreements or other settlements from alleged infringers must be considered in the context of other decisions of this Court. Although recognizing the patent system's desirable stimulus to invention, we have also viewed the patent as a monopoly which, although sanctioned by law, has the economic consequences attending other monopolies. A patent yielding returns for a device that fails to meet the congressionally imposed criterial of patentability is anomalous. This Court has observed:

'A patent by its very nature is affected with a public     interest. * *  * (It) is an exception to the general rule      against monopolies and to the right to access to a free and      open market. The far-reaching social and economic     consequences of a patent, therefore, give the public a      paramount interest in seeing that patent monopolies spring      from backgrounds free from fraud or other inequitable conduct      and that such monopolies are kept within their legitimate      scope.' Precision Instrument Mfg. Co. v. Automotive     Maintenance Machinery Co., 324 U.S. 806, 816, 65 S.Ct. 993,     998, 89 L.Ed. 1381 (1945).

One obvious manifestation of this principle has been the series of decisions in which the Court has condemned attempts to broaden the physical or temporal scope of the patent monopoly. As stated in Mercoid v. Mid-Continent Investment Co., 320 U.S. 661, 666, 64 S.Ct. 268, 271, 88 L.Ed. 376 (1944):

'The necessities or convenience of the patentee do not     justify any use of the monopoly of the patent to create another monopoly. The fact that the patentee has     the power to refuse a license does not enable him to enlarge      the monopoly of the patent by the expedient of attaching      conditions to its use. United States v. Masonite Corp., (316     U.S. 265,) 277, 62 S.Ct. 1070, 86 L.Ed. 1461 ((1942)). The     method by which the monopoly is sought to be extended is      immaterial. United States v. Univis Lens Co., (316 U.S. 241,)     251-252, 62 S.Ct. 1093, 1094, 86 L.Ed. 1408 ((1942)). The     patent is a privilege. But it is a privilege which is     conditioned by a public purpose. It results from invention     and is limited to the invention which it defines.'

A second group of authorities encourage authoritiative testing of patent validity. In 1952, the Court indicated that a manufacturer of a device need not await the filing of an infringement action in order to test the validity of a competitor's patent, but may institute his own suit under the Declaratory Judgment Act. Kerotest Mfg. Co. v. C-O-Two Co., 342 U.S., at 185-186, 72 S.Ct., at 222. Other decisions of this type involved removal of restrictions on those who would challenge the validity of patents.

Two terms ago in Lear, Inc. v. Adkins, 395 U.S. 653, 89 S.Ct. 1902, 23 L.Ed.2d 610 (1969), we relied on both lines of authority to abrogate the doctrine that in a contract action for unpaid patent royalties the licensee of a patent is estopped from proving 'that his licensor was demanding royalties for the use of an idea which was in reality a part of the public domain.' 395 U.S., at 656, 89 S.Ct., at 1904. The principle that 'federal law requires, that all ideas in general circulation be dedicated to the common good unless they are protected by a valid patent,' 395 U.S., at 668, 89 S.Ct., at 1910, found support in Sears and Compco and the first line of cases discussed above. The holding that licensee estoppel was no longer tenable was rooted in the second line of cases eliminating obstacles to suit by those disposed to challenge the validity of a patent. 395 U.S., at 663-668, 89 S.Ct., at 1907 1910. Moreover, as indicated earlier, we relied on practical considerations that patent licensees 'may often be the only individuals with enough economic incentive to challenge the patentability of an inventor's discovery.' 395 U.S., at 670, 89 S.Ct., at 1911.

To be sure, Lear obviates to some extent the concern that Triplett prompts alleged infringers to pay royalties on patents previously declared invalid rather than to engage in costly litigation when infringement suits are threatened. Lear permits an accused infringer to accept a license, pay royalties for a time, and cease paying when financially able to litigate validity, secure in the knowledge that invalidity may be urged when the patentee-licensor sues for unpaid royalties. Nevertheless, if the claims are in fact invalid and are identical to those invalidated in a previous suit against another party, any royalties actually paid are an unjust increment to the alleged infringer's costs. Those payments put him at a competitive disadvantage vis-a-vis other alleged infringers who can afford to litigate or have successfully litigated the patent's validity.

This has several economic consequences. First, the alleged infringer who cannot afford to defend may absorb the royalty costs in order to compete with other manufacturers who have secured holdings that the patent is invalid, cutting the profitability of his business and perhaps assuring that he will never be in a financial position to challenge the patent in court. On the other hand, the manufacturer who has secured a judicial holding that the patent is invalid may be able to increase his market share substantially, and he may do so without coming close to the price levels that would prevail in a competitive market. Because he is free of royalty payments, the manufacturer with a judgment against the patent may price his products higher than competitive levels absent the invalid patent, yet just below the levels set by those manufacturers who must pay royalties. Third, consumers will pay higher prices for goods covered by the invalid patent than would be true had the initial ruling of invalidity had at least the potential for broader effect. And even if the alleged infringer can escape royalty obligations under Lear when he is able to bear the cost of litigation, any royalty payments passed on to consumers are as a practical matter unrecoverable by those who in fact paid them. Beyond all of this, the rule of Triplett may permit invalid patents to serve almost as effectively as would valid patents as barriers to the entry of new firms-particularly small firms.

Economic consequences like these, to the extent that they can be avoided, weigh in favor of modification of the Triplett mutuality principle. Arguably, however, the availability of estoppel to one charged with infringement of a patent previously held invalid will merely shift the focus of litigation from the merits of the dispute to the question whether the party to be estopped had a full and fair opportunity to litigate his claim in the first action. Moore & Currier, supra, n. 7, at 309-310. It would seem sufficient answer to note that once it is determined that the issue in both actions was identical, it will be easier to decide whether there was a full opportunity to determine that issue in the first action than it would be to relitigate completely the question of validity. And, this does not in fact seem to have been a problem in other contexts, where strict mutuality of estoppel has been abandoned.

It has also been suggested that 35 U.S.C. § 285, which allows a court to award reasonable attorney's fees to a prevailing party 'in exceptional cases,' and 35 U.S.C. § 288, under which a patentee forfeits his right to recover costs even as to the valid claims of his patent if he does not disclaim invalid claims before bringing suit, work to inhibit repetitious suits on invalid patents. But neither of these provisions can operate until after litigation has occurred, and the outlay required to try a lawsuit presenting validity issues is the factor which undoubtedly forces many alleged infringers into accepting licenses rather than litigating. If concern about such license agreements is proper, as our cases indicate that it is, the accused infringer should have available an estoppel defense that can be pleaded affirmatively and determined on a pretrial motion for judgment on the pleadings or summary judgment. Fed.Rules Civ.Proc. 8(c), 12(c), and 56.

As the preceding discussion indicates, although patent trials are only a small portion of the total amount of litigation in the federal courts, they tend to be of disproportionate length. Despite this, respondents urge that the burden on the federal courts from relitigation of patents once held invalid is de minimis. They rely on the figures presented in the 1961 Staff Report: during the period 1948-1959, 62 federal suits were terminated which involved relitigation of a patent previously held invalid, a figure constituting about 1% of the patent suits commenced during the same period. The same figures show that these 62 suits involved 27 patents, indicating that some patentees sue more than once after their patent has been invalidated. Respondents also urge that most of these 62 suits were settled without litigation. 1961 Staff Report 19. But, as we have suggested, this fact cuts both ways.

Even accepting respondents' characterization of these figures as de minimis, it is clear that abrogation of Triplett will save some judicial time if even a few relatively lengthy patent suits may be fairly disposed of on pleas of estoppel. More fundamentally, while the cases do discuss reduction in dockets as an effect of elimination of the mutuality requirement, they do not purport to hold that predictions about the actual amount of judicial time that will be saved under such a holding control decision of that question. Of course, we have no comparable figures for the past decade concerning suits begun after one declaration of invalidity, although a number of recent, significant examples of repeated litigation of the same patent have come to our attention. Regardless of the magnitude of the figures, the economic consequences of continued adherence to Triplett are serious and any reduction of litigation in this context is by comparison an incidental matter in considering whether to abrogate the mutuality requirement.

It is clear that judicial decisions have tended to depart from the rigid requirements of mutuality. In accordance with this trend, there has been a corresponding development of the lower courts' ability and facility in dealing with questions of when it is appropriate and fair to impose an estoppel against a party who has already litigated an issue once and lost. As one commentator has stated:

'Under the tests of time and subsequent developments, the     Bernhard decision has proved its merit and the mettle of its      author. The abrasive action of new factual configurations and     of actual human controversies, disposed of in the common-law      tradition by competent courts, far more than the commentaries      of academicians, leaves the decision revealed for what it is,      as it was written: a shining landmark of progress in justice      and law administration.' Currie, 53 Calif.L.Rev., at 37.

When these judicial developments are considered in the light of our consistent view-last presented in Lear, Inc. v. Adkins-that the holder of a patent should not be insulated from the assertion of defenses and thus allowed to exact royalties for the use of an idea that is not in fact patentable or that is beyond the scope of the patent monopoly granted, it is apparent that the uncritical acceptance of the principle of mutuality of estoppel expressed in Triplett v. Lowell is today out of place. Thus, we conclude that Triplett should be overruled to the extent it forecloses a plea of estoppel by one facing a charge of infringement of a patent that has once been declared invalid.

Res judicata and collateral estoppel are affirmative defenses that must be pleaded. Fed.Rules Civ.Proc. 8(c). The purpose of such pleading is to give the opposing party notice of the plea of estoppel and a chance to argue, if he can, why the imposition of an estoppel would be inappropriate. Because of Triplett v. Lowell, petitioner did not plead estoppel and respondents never had an opportunity to challenge the appropriateness of such a plea on the grounds set forth in Part III-A of this opinion. Therefore, given the partial overruling of Triplett, we remand the case. Petitioner should be allowed to amend its pleadings in the District Court to assert a plea of estoppel. Respondents must then be permitted to amend their pleadings, and to supplement the record with any evidence showing why an estoppel should not be imposed in this case. If necessary, petitioner may also supplement the record. In taking this action, we intimate no views on the other issues presented in this case. The judgment of the Court of Appeals is vacated and the cause is remanded to the District Court for further proceedings consistent with this opinion.

Vacated and remanded.