The SunnComm discussion on Slashdot led me to this very interesting Wharton report, Suing Your Customers: A Winning Business Strategy?, itself the basis for another Slashdot discussion: Suing Your Customers: Winning Business Strategy?. The article discusses something I had never heard of, the Selden Patent (#549,160), which was used to tie up the automobile manufacturing industry.
But the U.S. Patent Office had issued the Selden Patent and a group of powerful incumbents had purchased it and formed an association to enforce it. Litigation, then as now, was very expensive — especially for start-up companies with limited working capital. Nearly every car company fell into line to pay royalties to the Association for the privilege of making and selling cars.
Except Henry Ford. The association did not want another competitor in Detroit and it did not like his idea of driving prices down to where average people could afford a car. So it refused to license him. For Ford, it was either exit the industry or fight the Selden Patent in court. He decided to raise a legal war chest and fight the incumbents. The litigation lasted from 1903 until 1911 and along the way, the association launched hundreds of lawsuits against Ford’s customers to scare them away from his showrooms for buying “unlicensed vehicles.”
Most ordinary people of Ford’s era had been content to stand by and watch the automobile makers slug it out over the Selden Patent. It was just an industry cat fight. But when the big “money men” started suing ordinary people who were just trying to buy a cheap car, public sympathy shifted against the incumbents. People rallied to Ford’s side against the bullies. Editorials weighed in against the industry’s heavy-handed lawsuits, and Ford helped his own case by purchasing litigation insurance for his customers. By the time the patent litigation was over — Ford won on appeal in 1911 when the court ruled that the Selden Patent covered only cars made with a special type of engine nobody was using anymore — Ford was a hero, and the largest car manufacturer in America.
[...] As Henry Ford once summed it up, lawsuits against new technologies provide “opportunities for little minds … to usurp the gains of genuine inventors … and under the smug protest of righteousness, work a hold-up game in the most approved fashion.” What the recording industry needs now are new business models, not outdated legal strategies.
Sounds like Lessig’s Future of Ideas nightmare. And it gives some hope for the future. Because greedy people apparently never know when to stop, the public eventually decides to act on clear unfairness — as long as they are allowed to speak.
Suggesting the real dangers come from those who are able to be judiciously greedy. We can only hope that judicious greediness is a metastable state.
