Seldon held a basic patent covering the use of the gasoline engine as motive power in self-propelled vehicles. When automobiles began to be put on the market, he claimed his right under that patent to a royalty on all such vehicles. Other automobile manufacturers almost without exception acceded to his claim and operated under a lease from him, adding the royalty to the selling price.
Henry Ford balked. He had been running a self-propelled gasoline engine long before Seldon had applied for his patent; furthermore, the royalties interfered with the long-cherished dream of cheapening his cars. He flatly refused to make the payments.
The lessees of the Seldon rights, perceiving in Ford a dangerous adversary in the automobile field, who would become still more dangerous if he succeeded in eliminating the royalty payments from his manufacturing costs, immediately began to fight him with all the millions at their command.
CHAPTER XXIII
FIGHTING THE SELDON PATENT
By sheer force of an idea, backed only by hard work, Henry Ford had established a new principle in mechanics; he had created new methods in the manufacturing world—methods substantially those which prevail in manufacturing to-day; now he entered the legal field. His fight on the Seldon patent—a fight that lasted nearly ten years—was a sensation not only in the automobile world, but among lawyers everywhere.
The intricacies of the case baffled the jurists before whom it was tried. Time and again decisions adverse to Ford were handed down. Each time Ford came back again, more determined than before, carried the contest to a higher court and fought the battle over again.
On one side the Association of Licensed Automobile Manufacturers was struggling to save patent rights for which they had paid vast sums of money, to maintain high prices for automobiles, and to protect their combination of manufacturing interests. On the other, Ford was fighting to release the industry from paying tribute to a patent which he believed unsound, to smash the combination of manufacturers, and to keep down his own factory costs so that he could make a still cheaper car.
With the first adverse decision, the A. L. A. M. carried the fight into the newspapers. Most of us can recall the days when from coast to coast the newspapers of America blossomed with page advertisements warning people against buying Ford cars, asserting that every owner of a Ford car was liable to prosecution for damages under the Seldon patent rights.
Those were chaotic years in the industry. The hysteria which followed the huge profit-making of the first companies, checked only temporarily by the panic of 1907-8, mounted again in a rising wave of excitement. Dozens of companies sprang up, sold stock, assembled a few cars, and went down in ruin. Buyers of their cars were left stranded with automobiles for which they could not get new parts.
It was asserted that the Ford Motor Company, unable to pay the enormous sums accruing if the Seldon patent was upheld, would be one of the companies to fail. Buyers were urged to play safe by purchasing a recognized car—a car made by the licensed manufacturers.