Company founder Henry Ford fought, and eventually defeated, a patent lawsuit early in Ford history that could have cost the company millions.
It’s well known that Ford Motor Company sold millions of Model Ts, but a costly patent lawsuit that was decided 110 years ago this week could have stifled the company in its early years and reshaped the course of American automotive history.
The Association of Licensed Automobile Manufacturers, which charged early American carmakers royalties on every gas-powered vehicle they produced, had set its sights on Ford right out of the gate. The group was bolstered by a very broad patent on internal combustion engines that had been granted to George Selden, a patent attorney, years earlier. The organization filed suit against Ford in its first year of operation in 1903.
Rather than fight the group, Henry Ford initially opted to apply for license and pay the ALAM’s 1.25 percent fee per vehicle, as other successful early automakers such as Old Motor Works and Packard Motor Car Company had done. However, the group rejected Ford, saying his company was an assembler and not a manufacturer of automobiles, while also harassing threatening potential Ford customers with litigation. With the case unresolved, Henry Ford took out newspaper advertisements reassuring dealers and other early Ford buyers about potential liability, saying Ford would assume all responsibility – with the company’s assets (and with that its very existence) offered as bond.
A 1904 advertisement reprinted in “The Ford Century” read: “You can’t frighten a grown-up man with a toy pistol, neither can you scare a man who wants the best car made from buying the Ford.” The spot touted Ford’s prices as being less than half of the cost of a vehicle built by an ALAM member company.
A back-and-forth print battle between Ford and the ALAM was eventually resolved by the courts, but the initial outcome didn’t bode well for Ford. In 1909, a court ruled that Selden’s patent was valid. By that point, Ford was setting sales records with the Model T and had produced nearly 90,000 vehicles in total while the litigation lingered. With the increased stakes, Ford quickly filed an appeal, and on Jan. 11, 1911, an appellate court decreed that Ford’s engine was not covered Selden’s patent.
In addition to the relief the ruling brought to Ford and other automakers, it earned him and his company national attention. “Nothing so well advertised the Ford car and the Ford Motor Company as did this suit,” Henry Ford said, according to “The Ford Century.” “We were the underdog and had the public sympathy.”
Ford went on to sell millions of Model Ts before it was retired, while the ALAM was reorganized as a national advocacy group for automobile manufacturers following Selden’s death in 1922.