Saturday, July 01, 2006

Patent thickets and the Wright Brothers

In an IPBiz post on May 28, there was discussion of a CIRM document from an April 27 meeting of CIRM's IP Task Force: There was a conclusion about the U.S. aviation patent pool in World War I: "and that's what led to fighter planes being built for World War I."

IPBiz noted that there were no U.S. - built fighter planes ever used in World War I. For example, US ace Eddie Rickenbacker flew Nieuport 28 and SPAD XIII aircraft (French).

If we soften this inquiry to Weren’t there U.S.-built planes involved in the war?, the answer may be yes. The Jenny (the Curtiss JN-4) in some sense was "involved" in World War I as a trainer. However, the Jennies were not the planes going up over the lines.

The proper focus of the Wright patent inquiry concerning World War I aircraft is not with Franklin Delano Roosevelt (of the Navy Department) breaking a patent thicket but with the War Department's inept handling of the Wright Brothers's prescient recognition of the value of aircraft in warfare long before World War I began. The Wrights were knocking at the door and no one was listening. Roosevelt's intervention was long after the train had left the station, and did not lead to any US built fighter aircraft in World War I. The Norfolk (Virginia) Naval Air Station was created after the war was over.

One account of the Roosevelt role appears at essentialdrugs:

In 1917, as a result of a recommendation of a committee formed by the Assistant Secretary of the Navy (The Honorable Franklin D. Roosevelt), an aircraft patent pool was privately formed encompassing almost all aircraft manufacturers in the
United States. The creation of the Manufacturer's Aircraft Association was
crucial to the U.S. government because the two major patent holders, the
Wright Company and the Curtiss Company, had effectively blocked the building
of any new airplanes, which were desperately needed as the United States was
entering World War I.

A more thorough account appears on the NASA website. As some preface to the NASA account, Wilbur Wright died in 1912. Orville bought up the interests of Wright & Company, and sold to a syndicate that included Glenn Martin. This entity did not prosper and merged with other companies to become Wright-Martin in 1916. Glenn Martin left in 1917. The Wright-Martin Company has nothing to do with what later became Lockheed-Martin, and after 1917, had nothing to do with either Wright Brother or with Glenn Martin.

The NASA account -->

The Wright-Martin Company that bought him [Orville Wright] out, however, was primarily interested in recovering the more than $1,000,000 it had paid for the rights to the patent. In December 1916, the company notified other aircraft manufacturers that they would have to pay a royalty of five percent on each aircraft sold, with a minimum annual royalty of $10,000 per manufacturer. Wright-Martin demanded this royalty on all aircraft, whether they achieved differential lifting by the wing-warping technique of the Wrights or the far more popular ailerons employed by Curtiss. This was the final straw. Lawsuits and threats of suits had already frightened many manufacturers out of the field. The patent royalties that Curtiss was demanding for his numerous inventions - partly, no doubt, in retaliation against the Wright patents - were already making aircraft prices prohibitive. And now came the Wright-Martin demand. Just when the services wanted more airplanes than ever before, when it looked as if the United States would inevitably be drawn into the war in Europe, the nascent American aircraft industry faced an impasse.

The armed services turned once again to the NACA. In January 1917, Acting Secretary of the Navy Franklin D. Roosevelt and Acting Secretary of War W.M. Ingraham asked for the good offices of the Committee in arriving at some equitable solution. The first response considered by the Committee was confiscation. As the minutes of the 11 January meeting of the Executive Committee recorded it:

[39] Professor Pupin suggested that the time is ripe and the concrete case exists in this instance to recommend to Congress a change in the patent law to effect compulsory license.28

That was tough talk, not the type of thing these sober and established men believers all in the system of free enterprise and minimum government intervention took lightly. But this was a tough case and the security of the nation seemed to hang in the balance. At the next meeting, on I February, the Executive Committee resolved to recommend to the president that the government buy the basic aeronautic patents. But, before sending the letter, the Executive Committee' met with representatives of the Wright Martin Aircraft Corporation. Wright-Martin was willing to sell the patent to the government but, in the course of the meeting, it was also suggested that a cross licensing agreement might be worked out.29

Everyone's model for such an agreement was the one used in the automobile industry and administered by the National Automobile Chamber of Commerce. It had been worked out after the noted patent attorney, W. Benton Crisp, broke the Selden patent for Henry Ford, a patent as basic for the automobile as the Wright patent for the airplane. Crisp had subsequently represented Howard E. Coffin in the Hudson crankshaft patent case, and: Coffin was soon to move from the Naval Consulting Board to the chairmanship of the new Aircraft Production Board. Crisp was now attorney for the Curtiss Burgess company in its suit to break the Wright patent. The ties between the automobile industry's cross licensing agreement and the patent problems of the aircraft industry were many and complex, and it was inevitable that the model that had worked so well in the earlier case would be introduced into the aircraft dispute.30

First, however, the NACA needed some leverage. Two days after meeting with the Wright-Martin representatives, Walcott wrote to President Wilson recommending an amendment to either the naval or the military appropriations bill to provide $1,000,000 for the purpose of acquiring "by purchase, condemnation, donation, or otherwise, such basic patent or patents" as the government might need.31 Although Walcott's letter mentioned only the Wright patent, the wording of the proposed law left the government free to secure to itself any patents it deemed necessary.

Walcott opened the meeting by contrasting the rapid strides in European aircraft production with the sorry history of American manufacture. The industry was not entirely to blame; in the eight years before 1916, for example, the army had ordered only 59 airplanes, receiving only 54, of which only 22 were from the same manufacturer. Now, however, the threat of war had increased the demand. The army had ordered 366 planes in 1916 but had received only 64. Walcott estimated that the military services would need 4000 planes annually by 1919; if that figure was to be reached, the current deadlock in production would have to be broken.33

Walcott assured the meeting that the NACA viewed legal action against the existing patent only as a last resort. Preferable to the Committee, and no doubt to the manufacturers as well, would be a cross licensing agreement similar to the one used by the automobile industry. The agreement would require all aircraft manufacturers to join the Aircraft ' Manufacturers Association, effective 2 March 1917. Each member would pay into the Association $200 for each airplane manufactured. Of that amount, $135 would go to Wright-Martin, $40 to Curtiss, and $25 to the Association for operating expenses. Payments to Wright-Martin would cease on 22 May 1923 when the Wright patent expired. Payments to Curtiss would cease on 30 October 1933 when the last Curtiss patent expired, or whenever the total royalty paid to Curtiss equalled what had been paid to Wright-Martin. This plan tacitly recognized the Wright and Curtiss patent claims as being equally fundamental and valuable.34

Footnote 29 is of interest:

"Important Events in Early History"; minutes of special meeting of the Executive Committee, 3 Feb. 1917. Outsiders at the meeting were Howard E. Coffin of the Naval Consulting Board; E.F. Hagar, president of Wright-Martin; and Frederick P. Fish, counsel of Wright Martin. In defense of their policies, Hagar and Fish maintained that "the required license fee of ten thousand dollars a year is equitable, an a any manufacturer who can not afford to pay it is not in a position to help in the development of the industry along scientific lines; in other words, that a manufacturer with a limited amount of capital invested in his business can not possibly make airplanes successfully in the present advancing state of the art". It was just this philosophy that was to anger critics of the cross-licensing agreement that resulted from these negotiations.


The courts held that ailerons were the equivalent of wing-warping, so that the Wright patent was not blocked by the patents of Curtiss. "But for" the pool, Curtiss would have lost his shirt. The pool agreement was, not surprisingly, written by Curtiss' lawyer, Crisp. The Navy Department was interested in developments by Curtiss, while the War Department had been ignoring what the Wrights had been saying for years. FDR had much less of a role than you might think. Once a threat was made by the government, the private actors resolved the matter. The government did "take" patents in other areas in World War I (shipbuilding), but some compensation was arranged. Shortly after World War I, the government (Navy Department) arranged the demise of Marconi's interests in US radio.

US-built JN-4's were used as trainers to some extent, but were never used as fighters. All American fliers in WWI used foreign-made fighters. The surplus of (unused) JN-4's depressed prices for aircraft in the 1920's.

At the time of the pool, Wilbur was dead and Orville had sold his financial interests. After 1917, Martin was out of Wright-Martin, so that the actions of Wright-Martin were made by investors not connected to the Wrights or to Martin.

The pool discriminated against smaller businesses (John Simpson didn't mention the fee to join the pooling body) and was criticized on that ground by many. It perhaps escaped further criticism by virtue of its short life.


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