George Selden received a patent for the automobile on this day in 1895, decades before Henry Ford began rolling his Model-Ts off the assembly line. But unlike Ford or Germany’s Carl Benz, Selden didn’t actually have any plans to produce cars. His main gig was as a patent lawyer; he expected that automobiles would be a big industry one day and knew that if someone could drag out the application process until the right time, as companies began to scale up, that they could swoop in and be able to gain huge royalties from any automaker making cars ending up on the roads. He was right.
After 16 years intentionally stuck in the application process, Selden patented the automobile. A few years later, he sold the patent to the Electric Vehicle Company, which produced electric taxicabs. The firm quickly sued the biggest automaker at the time, and almost won before the industry’s entrepreneurs got together to scheme on the best way out of the situation. After some negotiating, they struck a deal. The group of automakers would pay royalties (some of which went to Selden), but also gain the ability to prevent new competitors from getting licenses to produce automobiles.
Enter Henry Ford. His 1903 attempt to secure a Selden license from the group was rejected because his prior businesses had flopped, though the main reason was surely that he would be able to provide some strong competition in a Detroit market dominated by Oldsmobile, one of the group’s members. When he started shipping his cars anyway, Selden and his automaker allies sued. Even worse, they threatened to bring legal action against any owner of one of Ford’s vehicles.
Selden and his league of carmakers won the case at trial in 1909, at first, but the verdict changed on appeal. The judge said Selden’s patent relied on a car having a two-stroke engine, but by then, everyone had moved onto a four-stroke design. The licensing system collapsed, allowing Ford (and many entrepreneurs to follow him) the freedom to compete fairly.
