The Association of Licensed Automobile Manufacturers (ALAM), originally the Manufacturer's Mutual Association (MMA), was an organization originally formed to challenge the litigation of the fledgling
automobileAn automobile, motor car or car is a wheeled motor vehicle used for transporting passengers, which also carries its own engine or motor...
industry by
George B. SeldenGeorge B. Selden was a patent lawyer and inventor who was granted a U.S. patent for an automobile in 1895....
and the
Electric Vehicle Company-History:The Electric Vehicle Company was founded as a holding company of battery-powered electric automobile manufacturers made up of several car companies assembled by Isaac L. Rice beginning in 1897. It was taken over in 1899 by William C. Whitney and P. A. B...
. Ultimately, the organization took advantage of its power and became Selden's greatest ally. In exchange for favorable royalty rates, the group gained the power to litigate and exclude other manufacturers from licensing, making them the most powerful group in the early automotive industry.
In 1899, the Electric Vehicle Company purchased the rights to Selden's automobile patent.
The Association of Licensed Automobile Manufacturers (ALAM), originally the Manufacturer's Mutual Association (MMA), was an organization originally formed to challenge the litigation of the fledgling
automobileAn automobile, motor car or car is a wheeled motor vehicle used for transporting passengers, which also carries its own engine or motor...
industry by
George B. SeldenGeorge B. Selden was a patent lawyer and inventor who was granted a U.S. patent for an automobile in 1895....
and the
Electric Vehicle Company-History:The Electric Vehicle Company was founded as a holding company of battery-powered electric automobile manufacturers made up of several car companies assembled by Isaac L. Rice beginning in 1897. It was taken over in 1899 by William C. Whitney and P. A. B...
. Ultimately, the organization took advantage of its power and became Selden's greatest ally. In exchange for favorable royalty rates, the group gained the power to litigate and exclude other manufacturers from licensing, making them the most powerful group in the early automotive industry.
Noble beginnings
In 1899, the Electric Vehicle Company purchased the rights to Selden's automobile patent. The patent was deemed flimsy by most of the industry, but the company purchased the rights to guarantee the legality of their new venture, the
Columbia Automobile CompanyThe Columbia Automobile Company was a leading early Hartford, Connecticut, United States manufacturer of automobiles.The Columbia Automobile Company was created as a joint venture of the Motor Vehicle Division of the Pope Manufacturing Company of Hartford, Connecticut, and the Electric Vehicle...
. A year later, however, the Columbia Automobile Company was in shambles thanks to internal corruption and low demand for electric vehicles, and the Electric Vehicle Company turned to the Selden patent as an alternative source of revenue. They set out to have manufacturers pay a 5% royalty on all cars produced.
By 1900, The Electric Vehicle Company launched several lawsuits against automobile manufacturers. Their ultimate target among the fray was Alexander Winton, and his
Winton Motor Carriage CompanyThe Winton Motor Carriage Company was a pioneer United States automobile manufacturer based in of Cleveland, Ohio. Winton was one of the first American companies to sell a motor car.-1897:...
. Originally formed in 1896, the Winton Company was by 1900 the highest-volume automobile producer in the US. If the patent were to gain validity in the industry, Selden believed, they needed to tackle the largest manufacturer.
The Winton Company's defense made the costly mistake of concentrating on challenging the patent’s validity through demurrer; by 1902 the case was still tied up and Winton was considering a settlement. In response to his distress, other independent automobile makers formed a group called the Manufacturers Mutual Association to breathe new life into Winton's legal defense. Formed by
Henry Bourne JoyHenry Bourne Joy was President of the Packard Motor Car Company, and a prominent figure on both sides of prohibition.- Early life :...
and Frederic Smith of
PackardPackard was an American luxury automobile marque built by the Packard Motor Car Company of Detroit, Michigan, and later by the Studebaker-Packard Corporation of South Bend, Indiana...
and
OldsOldsmobile was a brand of automobile produced for most of its existence by General Motors. It was founded by Ransom E. Olds in 1897. In its 107-year history, it produced 35.2 million cars, including at least 14 million built at its Lansing, Michigan factory...
, the two entrepreneurs used their position to threaten the Electric Vehicle Company. The MMA called for much lower royalty payments and for the legal and license rights to be controlled by the MMA, or else they would bolster Winton's dying legal fund.
Control of the industry
By 1903, the organization had officially become the Association of Licensed Automobile Manufacturers, and had secured favorable rights from the Electric Vehicle Company. Only a few months after the formation of the organization, Winton became an ALAM member, and the suit against his company was dropped. The patent had gained legitimacy without ever having its validity determined.
The ALAM gained from the agreement, giving them control over the entire automobile industry for a relatively low cost. The group negotiated a 1.25% royalty on all cars produced, one half of one percent of which went directly into the ALAM legal and operations funds. Applications for ALAM membership and a Selden license were granted only by the unanimous decision of a 5-member executive board. This system left ALAM members with royalties considerably lower than the costs of trying the Selden patent in the courts, and gave existing members the ability to exclude and even litigate unlicensed competitors.
The ALAM's exclusionary policies were ultimately its undoing. The up-and-coming
Ford Motor CompanyThe Ford Motor Company is an American multinational corporation based in Dearborn, Michigan, a suburb of Detroit. The automaker was founded by Henry Ford and incorporated on June 16, 1903. In addition to the Ford, Lincoln, and Mercury brands, Ford also owns Volvo Cars of Sweden, and a small stake...
was capitalized in 1903, and
Henry FordHenry Ford was the American founder of the Ford Motor Company and father of modern assembly lines used in mass production. His introduction of the Model T automobile revolutionized transportation and American industry. He was a prolific inventor and was awarded 161 U.S. patents...
immediately attempted to secure a Selden license. He was denied, officially due to his past business failures (the
Detroit Automobile CompanyThe Detroit Automobile Company was an early American automobile manufacturer founded on August 5, 1899, in Detroit, Michigan. It was the first venture of its kind in Detroit. Automotive mechanic Henry Ford attracted the financial backing of three investors; Detroit Mayor William Maybury, William...
and the
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, specifically), and also due to the protectionist climate of the ALAM. Frederic Smith of Olds was the executive board member most outspoken against Ford’s admission to the ALAM, and also had the most to lose from such an admission, as he held most of the
DetroitDetroit is the largest city in the U.S. state of Michigan and the seat of Wayne County. Detroit is a major port city on the Detroit River, in the Midwest region of the United States. Located north of Windsor, Ontario, Detroit is the only major U.S. city that looks south to Canada. It was founded...
market for affordable automobiles.
On October 22, 1903, the ALAM filed suit with the Ford Motor Company, and what followed was a messy public relations battle. The ALAM launched a campaign threatening to sue those who purchased Ford automobiles. Ford responded in-kind, summing up their position as, "We believe that the art would have been just as far advanced to-day if Mr. Selden had never been born."
On September 15, 1909, presiding Judge Hough found legitimacy in the Selden patent. The court of appeals later overturned the ruling, finding in favor of Ford on January 9, 1911. The ALAM chose not to contest the ruling.