The Top Ten Patent Wars – Automobiles (#3)
Our next patent war has an interesting twist, in that the man most associated with this invention never claimed to be the inventor, yet a patent lawsuit won him the public acclaim that launched his industry. That man was Henry Ford.
George Baldwin Selden appears to have been the first inventor to have filed a patent on what became the automobile, having filed for a patent on a gasoline-powered horseless carriage with wheels in 1879, amending the patent every few years to delay issuance of U.S. Pat. No. 549,160 in 1895 (which would be illegal under today’s filing rules).
The automobile had actually been invented in Germany in 1889 by Gottlieb Daimler, Karl Benz and Nicholas Otto, who had invented the four-cycle internal combustion engine in 1876. Selden’s patent was claimed to predate any such commercialization, but he was a patent attorney, not an automaker, and never even created a prototype. That did not stop investors from gaining the rights to the Selden patent, filing lawsuits against upstart automakers, resulting in a trust, which they called the Association of Licensed Automobile Manufacturers (ALAM). The ALAM required anyone who wanted to enter the automobile industry to take a license to the Selden patent, as shown by the below notice:
The irony is that Ford was initially turned down in his request for a license from the ALAM, who determined that he was just an assembler, and not a candidate for a license. Ford, at the time having failed in multiple automobile ventures and nearly broke, decided to make cheaper cars without a license and fight back against the ALAM. As a result, Ford invented the modern assembly line to keep costs down, and mastered various techniques of manufacturing that made his company so successful. Ford later stated that he invented nothing new, and had simply built on the works of others. That humility earned him much credit in the popular press of the time (and in the history books).
But the patent war still came. The ALAM sued Ford, in a battle lasting eight years, from 1903 to 1911. Ford’s new methods of manufacturing, including the launch of the Model T in 1908, enabled him to sell a large number of cars and have the resources to defend the company in this patent war. Ford, and others, actually lost the initial federal court case in the Southern District of New York. Others settled, including General Motors. But Ford refused to settle, and he won the appeal in 1911, in Columbia Motor Car Co. v. C.A. Duerr & Co., 184 F. 893 (2d Cir. 1911), where the Second Circuit held that “[f]or over 16 years the application lay in the Patent Office . . . During this long time the automobile art made market advances along different lines, and when, in 1895, the patent was granted, it disclosed nothing new. Others had then made the patentee’s discovery and had reduced it to practice in ignorance of what he had done . . . The public gained absolutely nothing from his invention, whatever it was.” The Court held that Selden’s patent was valid, but that Ford’s automobiles (and other automaker’s cars) would not infringe the Selden patent, narrowly confining it to the claimed invention which referenced a specific type of engine not used by automakers, who instead used the Otto engine invented in Germany.
Ford went on to lead the automobile industry, unhindered by patents, gaining public approval by being the person who opposed a trust seeking to hold back the industry. The lesson, as in the prior war we examined with telephones, is that while protecting patentable interests clearly has its place in promoting innovation, the consumer marketplace is really where the winners are determined. Ford never claimed to invent automobiles, yet he put the time and effort into making it a product that helped society, so the patent “troll” is this case was properly limited to his contribution, in this case a historical footnote and $200,000 that Selden collected over the years from his patent. Ford is widely credited with popularizing, but not inventing, the auto industry.