Closing arguments were given on June 4. Frederick Fish, lead counsel for Electric Vehicle (who would later represent the Wright brothers in their infringement suit against Glenn Curtiss), presented an argument “marked with a charm rare in presentations of patent lawyers.”6 He focused principally on the question of pioneer status and was simple and straightforward, stressing the revolutionary nature of Selden’s design—he compared the inventor to a poet—and asserting that every gasoline automobile manufactured since had been built atop Selden’s foundation. He particularly attacked the defense’s allegation that Selden had never built an actual machine. “It was not the work for a mechanic. Bell was not a mechanic. Edison was not a mechanic. They approached their problems not from the point of view of the mechanic at all, and neither did Selden.”7
Ford’s team stressed that Selden’s design had never resulted in a workable automobile, that he had based it on an obsolete technology—Brayton constant compression—and that he was simply a man who had manipulated the patent system in order to profit from the work of genuine inventors, of which Henry Ford was one.
Judge Hough had given his word to both parties that he would read the entire record, and to that end he ordered all necessary paperwork, crates of it, to be shipped to his summer home in Rhode Island. The task would take three months.
Frustrated with their inability to get their ideas across during the trial, Ralzemond Parker and Ford’s other attorneys, with the exception of the recently hired W. Benton Crisp (who would later represent Glenn Curtiss against the Wrights), had drowned their argument in detail with an immense brief of more than thirteen hundred pages. This was a thorough approach, to be sure, but hardly reader friendly—and why Parker and his colleagues would believe that Judge Hough, who had shown such a reluctance to delve into minutiae during the trial, would now be willing to wade through this impenetrable mass is uncertain. Frederick Fish and his fellow counsel did in writing what Fish had done orally and presented a relatively short, cogent, and direct argument—less than one-sixth the length of that of the defendants—focusing principally on justifying pioneer status of the patent.
Ford’s attorneys were no more successful in written argument than they had been in the courtroom. On September 15, 1909, Judge Hough agreed that before George Selden filed for his patent, “there was no industry, the art existed only in talk and hope, and no vehicles even faintly fulfilling the requirements outlined had ever been built.”8 Hough did not indicate whether he gave any credence at all to Ford’s arguments, but at the very least he used Fish’s brief as his base. He fully accepted the argument that, regardless of current technology, Selden’s formulation was groundbreaking and deserved pioneer status, rejecting the notion that Ford’s automobiles were new technologies. He did not agree that there were fundamental differences between Selden’s machine, particularly the engine, and the automobiles that had subsequently been built.
Before getting into the case itself, however, the judge spent a good deal of time “protesting against the methods of taking and printing testimony in Equity, current in this circuit (and probably others), excused if not justified by the rules of the Supreme Court, especially to be found in patent causes and flagrantly exemplified in this litigation.” Hough detailed what he termed a “horrible example” of the practice of taking testimony outside the rules of judicial procedure. “The records in these cases, as printed, bound and submitted, comprise thirty-six large octavo volumes of which more than one-half contain only repeated matter, i.e., identical depositions with changed captions, and exhibits offered in more than one case.*4 In reading the testimony of one side in one set of cases, there were counted over a hundred printed pages recording squabbles…concerning adjournments—and after arriving at this number it seemed unnecessary to count further.”
Hough’s plea for change did not fall on deaf ears. In November 1912, the Supreme Court would reform the manner in which “cases in equity” were heard. Describing the process as “too cumbersome, too slow, and too expensive,” the Court limited depositions, required testimony to be taken in court, and restricted many of the stalling tactics in which attorneys regularly indulged to extend proceedings—and increase their fees.9
When Hough got to the issue itself, he began by noting, “Selden does not pretend to have invented any new machine or combination of matter in the same sense that Whitney invented the cotton gin or Howe the sewing machine,” but that “he selected, adapted, modified, coordinated, and organized the enumerated parts (including the usual mechanical adjuncts of each part) into a harmonious whole capable of results never before achieved,” and that “after thirty years, no gasoline motor car has been produced that does not depend for success on a selection and organization of parts, identical with or equivalent to that made by him in 1879.”
Hough cited Coxe’s decision in the demurrer and traced the development of internal combustion engines, following almost verbatim the plaintiffs’ outline. He accepted Frederick Fish’s contention that differences between the Otto engine and the Brayton were merely semantic. All that mattered, Hough insisted, was that Selden “devised and used an arrangement of Brayton’s engine never before attempted, one that Brayton himself never suggested, made or patented, and without which the road vehicle was an impossibility. This mental concept constituted invention, if capable of reduction to operation, and if an operative example (not all operative examples) thereof was shown by the patentee.” When Hough wrote a bit later, “If I have correctly apprehended it, there was clearly room for a pioneer patent, and it must now be held that on its face and in view of the art, Selden’s is such a patent,” Ford’s fate was sealed.
Hough did have a final comment as to the oddity of the case before him. “No litigation closely resembling these cases has been shown to the court, and no instance is known to me of an idea being buried in the patent office until the world caught up to and passed it, and then embodied in a patent only useful for tribute.” And while “Selden has contributed very little to motor-car advancement…the patent speaks from the date of issue, and unless Selden did something unlawful during his sixteen years’ wrangle with Examiners…he is within the law, and his rights are the same as those of the promptest applicant.” Indeed, Selden had broken no law, had gone afoul of no statute. “Patents are granted for inventions, the inventor may use his discovery, or he may not, but no one else can use it for seventeen years. That seventeen years begins whenever the United States so decrees by its patent grant. That the applicant for patent rights acquiesces in delay, or even desires delay, is immaterial to the Courts so long as the statute law is not violated. On these principles, complainants are entitled to a decree.”
And so no gasoline automobile could be sold in the United States without infringing the Selden patent. The patent was due to expire in 1912, but the total uncollected royalties from date of issue would total about $5 million, the largest chunk from the booming sales of the Ford Motor Company. In addition, as the losing party, Ford was now liable for additional fees and penalties if the Selden forces chose to pursue them.
There was little criticism of the decision in the trade magazines. Most, as they had done in the run-up to the trial, strained for neutrality while stressing the importance of the decision. Motor World, for example, merely stated that “in an opinion as pointed, pungent and comprehensive as it is long,” Judge Hough “sustains the validity of the Selden patent, broadly construing its first claim as covering all gasolene automobiles.”10
Horseless Age was the exception. It had always been kind to ALAM and seemed positively gleeful at the trial’s result:
It was the very prevalent view in the industry that [the patent] would not successfully withstand a test. In fact, this belief was so strong in recent years that the possibility of being compelled to pay royalties under the patent would have been laughed to scorn by many unlicensed manufacturers. Now, however, the patent has stood the test. One of the best known judges of the United States Circuit Court, widely expe
rienced in patent litigation, has declared it to be valid and legal, and to cover all forms of gasoline automobiles.11
There were other expressions of joy at the verdict. In the same issue of Motor Way and Automobile Trade Journal that ran the complete text of Judge Hough’s decision, the Selden Motor Vehicle Company ran a triumphant full-page ad. A banner halfway down the page proclaimed, “The Selden Car. Made by the Father of Them All.” The text sounded as if it had been written by Selden himself, and perhaps it was. Whoever was the author, there is very little ad copy, then or now, that was anything like it. (If nothing else, this may be the only advertisement in history to contain a verbatim legal opinion.)
The “Know-It-Alls” said derisively, “That patent is no good,” but Judge Hough, of the United States Circuit Court, says: “This Statement of complainants’ position seems to show that the subject matter of these suits is the modern gasoline automobile. If I have correctly apprehended it, there was clearly room for a pioneer patent, and it must now be held that on its face and in view of the art, Selden’s is such a patent. If these defendants infringe, it is because complainants own a patent so fundamental and far-reaching, as to cover every modern car, driven by any form of petroleum vapor, and as yet commercially successful. It is so found, and decrees will pass accordingly.”
Don’t let the “Wiseacres” fool you any longer. The “Selden Patent” is not air, it is substance, and its validity is recognized by the United States Patent Office and the Courts. Now, listen! If Mr. Geo. B. Selden was the original inventor of the automobile—of a vehicle propelled by a gasoline engine, under power produced by hydro-carbon internal combustion—as these highest authorities broadly admit, can any rational man believe the Selden car of today would be permitted by Mr. Selden to be anything but the best in material and in correct and careful mechanical construction? Such a supposition is absurd. This is not stated at all as a defensive argument, but as a simple fact which may not have occurred to some minds. The makers of the SELDEN car have nothing to apologize for. The car has a splendid record and speaks for itself, and the many hundreds of owners throughout the country are praising it in a chorus which reaches from coast to coast. Ask any Selden owner and he will confirm this statement. The Selden car has not figured conspicuously in spectacular “races” and similar “contests,” it is true. We have never cared much to risk life and limb for the transitory glory of a race track “win.” But the Selden car, built for comfortable riding and thorough service, has done innumerable “stunts,” and amazing ones, in the way of hill climbing and long and difficult tours, which have not been heralded by paid press agents, and many owners of cars made by the “wise-acres” have been too dizzy and dust-blinded to identify the Selden car when it passed them on the road!12
But George Selden’s crowing was premature. Within three years, both his fame and his automobile would be gone.
* * *
*1 Ralzemond Parker was alone in thinking Hough a dangerous choice. He preferred George C. Holt, another of the judges on the federal bench, but judges were chosen randomly, so Parker had no recourse.
*2 What follows is merely a hint of Morse’s vast dealings. He was among the most brazen and joyously dishonest financiers in American history.
*3 Morse got the last laugh, however. After exhausting his appeals, Morse finally went to Atlanta in 1910, but two years later he contracted a mysterious illness that a team of army doctors agreed would soon kill him. He was pardoned by President William Howard Taft and sailed to Germany for treatment. He recovered miraculously, however, and later revealed he had been drinking soap suds and a chemical brew to precipitate his symptoms. Again a free man, Morse returned to New York and the shipping business, which he conducted no more scrupulously than before. He was ultimately indicted for mail fraud and war profiteering, among other charges, but never spent another day in prison. He died peacefully in 1933, at age seventy-seven, in Bath, Maine, the town in which he was born.
*4 The actions against Panhard as well as some others had been combined in one case, but Ford’s suit was by far the most important.
CHAPTER 24
In the wake of Judge Hough’s ruling, nonlicensed manufacturers fell over like so many dominoes. Within weeks, more than thirty of the independents had been accepted into the ALAM ranks as paying members. Billy Durant, whose General Motors had been refusing to pay licensing fees, settled with the organization and paid $1 million, although some portion of this would come back to him as fees for the carmakers in his group—including Buick—that had held ALAM licenses.
Not surprisingly, ALAM members were exultant, filling the newspapers and trade magazines with a series of pronouncements praising justice and the American legal system. The most ironic of these came from Alexander Winton, who had more or less set events in motion when, after the most vitriolic denunciations of his current allies, he had accepted $40,000 to switch sides almost a decade before. “Every automobile manufacturer was warned years ago not to infringe on the Selden patent,” Winton exclaimed. “The patent has withstood the assault of the ablest legal talent on this continent; it emerges from the court triumphant, and nothing now remains but to exact from the trespassers a share of that income which they have enjoyed for years without legal right and in utter defiance of the American law which rewards inventive genius with letters patent.”1 For Winton, this was the first time in many tries that he ended a contest ahead of Henry Ford.
Although Winton’s remarks in particular must have infuriated him, Ford remained stolid, at least in public, categorizing the defeat as only a temporary setback. A boxed insert in Motor Way magazine, on the same page where Hough’s decision was explained, read, “Selden suit decision has no effect on Ford policy. We will fight to a finish. Henry Ford.” He sent the same terse vow to newspapers and the other trades.
“I simply knew we were right,” Ford wrote later in My Life and Work, and portrayed his determination to see the matter through to the Supreme Court if necessary as always having been set in stone. He did admit that he had been apprehensive that “many buyers would be frightened away from buying because of the threats of court action against individual owners.”2 ALAM had previously sued a number of car buyers, albeit with mixed results, and some members of the association stated publicly that they would do so again. But ultimately, Ford insisted, such tactics would be moot. He told anyone who would listen that Hough’s decision was “neither final nor conclusive” and that he would both “continue to produce motor cars to the limit of his capacity, [and] resist all overtures and threats from the Selden camp.”3
Privately, however, Ford was apparently a good deal less confident. Horace Rackham, hardly a detractor, noted that Ford was gloomy, “in a very serious frame of mind.”4 Even with the Model T now an established success—he had sold seventeen thousand cars in 1909 and would double that figure in 1910—he seemed ready to get out. According to Couzens, “he constantly talked about retiring and becoming a farmer”—a telling comment given how much Ford hated farming.5
In the months before the case was decided, Couzens had approached Billy Durant on Ford’s behalf and told him, “Mr. Ford is very much concerned about the Selden patent suit and its outcome. The prospects of winning or losing the case are equal. To lose means payment of a very large sum of money. He is not a member of the license agreement and, on general principles, has opposed the right of any man to control this patent situation. General Motors, with its several companies holding licenses, would probably be able to make a very satisfactory adjustment with Selden if it owned the Ford Company.”6 Durant was unwilling to make a commitment to Ford until after the ruling, but just weeks after Hough’s decision came down, he met with Couzens in a New York hotel to discuss the sale. Ford, who was staying at the same hotel, did not attend because, as Couzens put it, he was “sick in body and mind” and had entrusted Couzens with the negotiations.7
Hough’s ruling notwithstanding, both sides knew it would cost Durant a good deal more to acquire Fo
rd Motor than the figure agreed on the previous year. Couzens wanted to remain involved, but Ford intended to cash out. The number Durant and Couzens came to was $8 million, of which $2 million would go to Couzens in stock. Ford would receive $2 million at the time of sale and the remaining $4 million, with interest at 5 percent, within three years.*1 Ford would continue to draw a prorated share of the profits until he was paid in full. The remaining Ford shareholders would, like Couzens, receive stock. When Couzens went to Ford’s room to recount the terms, he reported that Ford called out from the bathroom, “Tell him he can have it, if it’s all cash. And I’ll throw in my lumbago.”8 Ford was so anxious to sell, however, that he eventually agreed to the initial arrangement of cash and notes.
The deal progressed far enough for Durant to receive a written option, for which he paid $75,000, and to visit the Ford plant in secret to check inventory. On October 26, the board of General Motors ratified the agreement. Durant, his local lines of credit having no further leeway, was off to New York to secure financing.
His first stop was 23 Wall Street for a meeting at J. P. Morgan and Company. Durant later recalled the meeting. “Loan me $8,000,000 legal tender,” he proposed to a group of assembled partners and investors, “and for security I’ll assign to you until repaid the whole of General Motors, and the Ford Motor Company, and will give my personal note.” Durant said that George Perkins, the Morgan partner who had been most disappointed at the collapse of the previous scheme, gave him an hour to present his case.
I explained to the Morgan partners that the age of the horse and buggy was over. That a new era in transportation, communication, and rapid travel between cities was coming. We explained the necessity for steel companies to enlarge their plants to be able to take care of the orders that would flood their present capacities; that the cotton growers in the south would have to double and treble their crops to supply the demand for textile material for automobiles; that good roads someday would cross the nation from ocean to ocean and from Michigan to Florida. I was then backing a young man in Michigan, who we called “Good Roads” Earle. The first good road we personally paid for. It was called the Buick Road, and was a gravel constructed route that went through Grand Blanc, to Atlas, and Clarkston, on to Detroit. That was the beginning of the Michigan Highway Department. We pointed out that a new prosperity would follow in America that would affect the entire continent, with the certain success of the motor industry. At that time we had our eyes on such men as Charles Kettering, Alfred Sloan, Walter Marr, Albert Champion, Charles S. Mott, A. B. C. Hardy, William Little, Robert Burman, and the Chevrolet Brothers, among others…men of vision whose soundness of judgment and mechanical engineering genius would assure the eventual success of the new automotive industry.9
Drive!: Henry Ford, George Selden, and the Race to Invent the Auto Age Page 32
