Evening star., 1932-06-24
AUTO INDUSTRY
CUTS LITIGATION
System of Cross-Licensing
Credited for Freedom
From Suits.
BY the Associated Press.

| BY the Associated Press.
DETROIT, June 2A.-Although there
is probably no industry IN the world
of comparable size that is SO highly
competitive, the automobile industry is
singularly free of litigation so far as
rival manufacturers are concerned.
Periodically, when o popular innopa-
tion is introduced by any one producer,
reports are heard IN trade circles OF
threatened suits for patent infringe
ments by other manufacf furers, but
rarely do such rlrlors develop into
actual court proceedings.
Most frequently the motor car
manufacturer has to defend himself
against suits brought by outside claim
ants who demand royalties for certain
appliances or Improvements upon the
modern motor car. Sometimes these
suits are successful, but more frequent
ly tt y fail.
TT few suits that have been brought
by clc producer against another tell
their own story Of the efforts the pion-
eers CT the industry made to put the
manufacture of automobiles on prof.
table basis unhampered by costly and
destructive litigation.
Cross-Lieensing Helps.
A cross licensing system. under which
for a certain period Of time each manu-
facturer Is allowed use OF the Inventions
of another within certain limitations,
accounts not only for the dearth OF law
suits between producers but, according
to leading executives Of the industry, Is
responsible In no small degree for the
rapid advancement Of the automobile
mechanically and in popular appeal
1t was the plan chiefly Of G. C..
Hanch, chairman of the Patents Com
mittee Of the National Automobile
Chamber of Commerce, and was first
introduced in 1915. subsequently being
renewed.
Prior to the development Of the
Hanch plan the automobile industry
was almost constantly involved In liti-
cation. Two court cases stand out
above others First Of these, of course,
b the noted Seiden patent case. The
other Is the long-drawn-out litigation
over the patent rights to the demount-
able rim. Stili q third suit involved
patent claims for non-skid chains.
6elden patent suit was fought out
almost single-handed by Henry Ford,
and It's successful conclusion definitely
shaped the destiny Of the automobile
INDUSTRY.
Long before automobiles were being
made on q commercial basis, George
B. Selden, New York lawyer, had OBJ
tained q patent on an internal COM
bustion engine. Although he did not
manufacture automobiles himself, he
demanded royalties from all who sub
sequently did.
Ford Alone Refused.
Ford alone refused and fought Sell
den's claims through the courts. The
Selden patent ultimately was sustained.
but it was ruled also that Ford's engine
did not infringe upon 1t.
OF almost equal importance at the
time was the Perlman rim patent suit.
| Louis H. Perlmarl, born In Kovno, Rus
sia. was the inventor of the rim. 1t
! brought him millions OF dollars, but 1t
| also brought many years of litigation
that for time threatened TO pauperize
Perlman. His first patent petition was
filed In 1906. His claims were moi
| finally sustained until 1918.
! Suits like these. however, have been
avoided by the motor car nnanufactur-
ers In the more modern days Of mass
production and standardized parts and
equipment.