George B Selden would hardly have gotten a patent if it had suffered from the examiner of the Patent office. He discovered a British patent from one Pinkus from 1839. This patent concerned a tram that was probably powered by a non-compression engine and ran on gas. The judge ruling on the validity of the patent said Pinkus was talking about trams and that that patent could not be used against the Selden patent, which he said was not intelligent to say the least. Selden himself pointed out this illogical thought to the researcher and explained the difference. In the end, he was proved right by the researcher.  Selden are  application was not only for the engine, but also its use in a four-wheeled vehicle. He made many changes here, so that the whole process took 16 years. It is thought that he did this on purpose, waiting for an auto industry to emerge. The patent was granted on November 5, 1895.

The strange thing about this patent was that it really only had similarities to the vehicles the hundreds of manufacturers made in terms of fuel. Gasoline. The type of engine has never been successfully used in a motor vehicle. Furthermore, nothing was 'borrowed' from the patent. Still, Selden and his later associates believed that the patent covered all gasoline-powered cars.

The sale of the patent to the EVC and the new collaboration

The  US auto industry began to develop and  George Selden, despite never having produced a working car, had a  entitled claim to own the patent on  the automobile. It seems unlikely that the other automotive pioneers knew of the patent's existence. They would do it differently  because it contained nothing they could or would like to use. The engine was mounted directly on the front axle, in normal use on rough roads the vehicle would immediately fail. The patent lay unused in the drawer for the first few years. There were no manufacturers who wanted to make a Selden car and therefore wanted to pay royalties. In addition, Selden had no money at all to conduct lawsuits.  In 1899, a Wall Street syndicate led by William C. Whitney and Thomas Fortune Ryan teamed up with the Pope Manufacturing Company and renamed it the Columbia Automobile Company. people wanted  to build electric taxis for a royalty of $15 per car with  a minimum of $5,000 per year. For the form, they let their patent attorney, Herman F. Cuntz,  find out if there was a patent that could thwart the plan. Cuntz was already familiar with the Selden patent and was impressed. The Pope Company technical people were not. Whitney listened and learned that Selden was negotiating with 5 Wall Street people for an investment of $250,000. But he preferred to share his patent with a car manufacturer. Whitney decided to negotiate directly with Selden. They were allowed to use the patent and would pay Selden a fee and a percentage.  A year later, however, the company was in shambles thanks to internal corruption and low demand for electric cars.  For a while it looked like electric cars would have a future, the electric streetcar did well too (until GM thought buses were better and started replacing these streetcars with the National City Lines, but that's another story altogether) . As now, the problem was the range.

One of the managers came up with the idea to apply the Selden patent.  In November 1899 Selden sold  his rights to William C. Whitney of the Columbia Automobile Company. The Reorganized  Electric Vehicle  Company (EVC) which operates the Columbia Automobile Company, the ECV and the New Haven Carriage Company has a net worth of  $18,000,000 and  started using the Selden patent as an alternative source of income. A New York law firm was ordered to warn all manufacturers that they were infringing the patent and had to stop or pay compensation. The message was: Our customers inform us that you build and advertise cars  that comply with the Selden patent.... We inform you of this violation and request that you  will refrain from the same and will pay appropriate damages to the owner of the patent.  Whitney and Selden now worked together to  collect royalties from start-up car builders. Selden got  part of the proceeds and  $10,000.  

EVC vs Manufacturers Mutual Association

The auto industry saw no danger in Selden's claims for this collaboration. They were too absurd to consider. The month  lawsuits were subsequently filed against the Buffalo Gasoline Motor Company and the Winton Motor Carriage Company.  

In the beginning, people wanted 5% royalties on every car built. Around 1900 several lawsuits were filed. Their ultimate target of this battle was Alexander Winton and his Winton Motor Carriage Company. Founded in 1896, it was America's largest automaker by 1900. To get the patent recognized within the car industry, one had to go after the largest. The Winton firm erred in its defense by limiting itself to contesting the validity of the patent. By 1902 the matter was still undecided and Winton wanted to settle down. Other independent automakers came to his rescue and formed a group called the "Manufacturers Mutual Association" to revive the business. Founded by Henry Bourne Joy and Frederic L. Smith of Packard and Olds, they used their position to pressure the EVC. The MMA wanted lower royalties and wanted the legal and licensing rights to be controlled by the MMA.

Association of Licensed  Automobile Manufacturers

Whitney realized it could get expensive, he eventually agreed to MMA's demands. 05-03-1903 the MMA officially became the  Association of Licensed Automobile Manufacturers.  Winton became the first ALAM member and the lawsuit for patent infringement  was withdrawn against him. He didn't have to pay royalties on the cars sold for the lawsuit, nor for the...  number of cars that equaled the cost of the lawsuit. It  patent had acquired legitimacy without it ever having been established. 

They negotiated for a royalty  of 1.25% of which half went directly to legal and operational costs. Other sources speak of a deposit into a fund of $2,500 and 2.5% per car sold of which 2/5 was for the EVC, 2/5 for the costs and 1/5 for Selden.  Applications for ALAM membership and a Selden license were only granted by unanimous decision of a 5 member board of directors. This system made it cheaper for members to pay for the license than to challenge it through a lawsuit. The advantages were in the exchange of technical knowledge and information and the standardization of various matters. The group also publishes a handbook every year with illustrations of all the vehicles made by the members.  It also gave members the ability to exclude companies and even sue them. This made them the most important and most powerful group within the car industry at that time. Members said ao: ALAM  will not reputable and established manufacturers, who provide a reliable vehicle  build, exclude, these will all be licensed. However, no unreliable starters will be licensed. In this way, ALAM protects the public and is a good partner for all petrol car buyers. Another manufacturer said: All those already licensed can easily meet the demand. They were now in a position to pick the winners and the losers for the future auto industry. The ALAM believed that cars should remain a luxury product.  This anti-competitive and short-sighted policy ultimately led to the downfall of the ALAM.

The money poured in so fast it almost became embarrassing. 87% of all manufacturers were members and together they produced 90% of all American  cars. Part of the royalties was repaid in the form of a dividend. 
 

Henry Ford vs Alam

New player Henry Ford also wanted a license. He wanted to build a car for the working, barely existing, middle class. In 1896, 7 months after obtaining Selden's patent, Henry built a vehicle with which he drove 1600 km in a few months, the Quadricycle. He sold it for $200 and later bought it back for $65. It is now in the Ford museum.

Ford was refused because of its previous bankruptcies (Detroit Automobile Company and, among others, the Henry Ford Company) but also because of the protectionist climate of the ALAM. Olds' Frederic Smith was the most outspoken board member and also had the most to lose from such admission because he owned most of the Detroit affordable car market.  

Ford did not feel held back by this setback and raised enough money to build a factory and start car manufacturing. With his innovative production line he managed to build 15 cars a day against 1 or 2 of the competition. The ALAM was not happy about this because of all the royalties they missed out on.  She sued Ford.  Henry Ford, owner of the  Ford Motor Company founded in 1903, and many  other (small) car manufacturers are contesting the lawsuit filed by Selden on 10/22/1903 for patent infringement. Some manufacturers joined ALAM, but many joined Ford and wanted to see the outcome of the lawsuit. The rival organization headed by Ford was called the American Motor Car Manufacturers Association.  men  went  the legal battle that lasted eight years and cost more than $1 million.  It generated a research file of 14,000 pages. At that time, Ford built more than half of all cars in America. That way, he had gathered enough support and resources to continue his fight against the ALAM and the patent.  

The case was filed at the same time as the case against Standard Oil. Both cases ultimately concerned the monopoly position of the industry. In both cases the monopolies lost. This was made possible by the assassination of President William McKinley. McKinley was bought by the monopolies to let them run their course. JP Morgan, Rockefeller and other titans paid McKinley to have Roosevelt as his Vice President to get him out of their way. In the end this turned out not to work.

A nasty  PR fight between Ford and the ALAM. The ALAM launched a campaign in which it threatened to sue anyone who bought a Ford. Ford advertised with texts saying it would protect dealers, importers, agents and users of gasoline vehicles from ALAM prosecutions  and violating the patent, he also made  clear that he  the builder  of the 3rd car in America and that that car is not at all like the car that George Selden describes in his patent. The case went to court on 28-05-1909. Ford's testimony included the comment:  'It is quite right to say that George Selden in no way represents  industry has progressed...and it might have progressed further if he had never been born'.  One of the judge's rulings was: 'What was the state of the art in 1879 when Selden applied for the patent? Or as it was known in many testimonials and exhibits, the horseless carriage industry. The answer is simple. Such an industry did not exist. It consisted of conversation and hope. No motorized vehicle with a large radius of action suitable for a single driver, not an experienced engineer, had ever been built. There is no aptitude and convincing evidence that an experiment had ever traveled more than 100 feet. Steam dominated the mechanical world. 

The case was widely discussed in the newspapers and ended in a victory for Selden.  In his decision . wrote  Judge Hough on 9/15/1909 that the patent covers any car powered by an engine powered by gasoline vapors. Most manufacturers gave up confidence in Ford and paid the royalties until the end of the patent on 5  November 1912. The main man who gave up was Billy Durant of GM, which had been founded a year earlier. He paid $1 million in arrears of royalties for all of GM's brands.  

Ford teamed up with Panhard & Levassor, who supported him because importers  royalties were requested, on appeal.  The appeal was temporarily delayed because the EVC went bankrupt. The patent was transferred to another party and the appeal continued. Ford  won the case on 09-01-1911 on the grounds that his engines were not based on principles  of the Selden-improved  George Brayton engine but on that of the Otto engine. The Selden patent was declared valid, but because neither Ford nor any other manufacturer had built a car according to the Selden patent, no one owed the ALAM money.  This overwhelming defeat destroyed Selden's source of income. Of  With just over 1 year of patent validity, it was a scant victory for Ford. Whether he won or not, the patent was about to expire.

The ALAM chose to accept this ruling. The members of the ALAM also benefited from the ruling because they no longer had to pay. However, they were dissatisfied with the fact that they had paid $5 million in royalties when they were not required to do so. Selden himself had received $200,000 to $600,000 of that amount, according to various sources.  A nice amount for someone who had never contributed anything to the development of the automobile.

Maximum number of members reached

A wry footnote to the controversial history of the ALAM; under its own terms, all licenses had already been granted so that, in theory, no new members could join. Then, in 1906,  Selden himself wanted to join as a producer, he himself had to wait until the license of one of the other members had expired.  

The future and the end of the organization

The judge's ruling also resulted in the ALAM being dissolved in 1911. The part that set up the standardization of the industry was taken over by the SAE, the Society of Automotive Engineers. The members of the ALAM founded the Automobile Board of Trade at the end of 1911. In 1913 this became the National Automobile Chamber of Commerce.  In 1934, when the monopoly position of the ALAM was long gone, the group renamed itself the 'Automobile Manufacturers Association', this name they would keep the longest and thus become the most famous. In 1939 they moved from New York, where they were close to the bankers, to Detroit, where they were close to the car manufacturers. They had a budget of $1,000,000 at the time. During the beginning of World War II, they had a role in adapting the American car industry to war production, especially large aircraft engines. Within hours of the attack on Pearl Harbor on December 7, 1941, all major players in the auto industry, whether members or not, were invited to form a new cooperative. The 'Automotive Council for  War Production'. Around 654 companies joined and produced nearly $29 billion worth of equipment, including tanks, motor vehicles, engines and other products. Nearly 25% of all war production came from the auto industry. In 1950 a book was published.  Freedom's Arsenal: The story of the automotive council for war production. In 1972 the name was changed again. This time to 'Motor Vehicle Manufacturers Association' to also recognize the emerging truck industry. A new issue arose, which raised the question of whether foreign car manufacturers who, in addition to doing business in America, might also be allowed to join. It was not until 1986 that a ruling was made. Half of the cars sold in America  also had to be produced. Honda and Volvo were allowed to keep their license. In 1992, Toyota and Nissan complied. At the end of 1992, Honda and Volvo and major truck manufacturers were still excluded. Again the name was changed. This time in American Automobile Manufacturers Association. They again represented the big three and moved to Washington DC. The merger of Daimler Benz and Chrysler created a problem because there were only 2 American manufacturers left, too few to have an organization for. In January 1999 the AAMA was completed and the successor was already ready, the 'Alliance of Automobile Manufacturers'. Many foreign manufacturers are now also affiliated with this.