Factors That Influence Patent and Licensing Policies at Ford Motor

9 Factors That Influence Patent and Licensing Policies at Ford Motor Company JAMES T. WEST

Downloaded by SUFFOLK UNIV on January 18, 2018 | http://pubs.acs.org Publication Date: June 1, 1978 | doi: 10.1021/bk-1978-0081.ch009

Engineering and Research Staff, Ford Motor Co., Room E-1133, Scientific Research Laboratory, Dearborn, MI 48121

Ford Motor Company is probably best known as a major producer of automotive products on a world-wide basis. It is true that Ford's primary emphasis as a company i s on the production and marketing of automobiles, trucks and tractors. But Ford and i t s subsidiaries also produce steel, glass, v i n y l , paint, radios, and sophisticated electronic componentry. This complex product line involves a broad spectrum of product, material and processing technologies. No single patent and licensing policy would be adequate to deal with all of these technologies. Interestingly, some people outside the industry have the opinion that the automotive industry is not particularly interested i n patents. It occurred to me that there might be an h i s t o r i c a l basis for this latter point of view, since the automotive industry today seems to place a great deal of emphasis on patents. I can assure you that we at Ford are not only very much interested i n patents, but also in the related subject of licensing. Therefore, it w i l l be pertinent to review some of the early history of the automotive industry i n the United States as i t relates to patent and licensing p o l i c i e s , especially since Ford is presently celebrating i t s Diamond Jubilee, having been organized in 1903. This history was strongly influenced by a single U.S. patent. This patent (No. 546,160) was issued to George Baldwin Selden i n 1895. The Selden patent included a number of claims. One of these claims related to the use "of a liquid hydrocarbon gas engine of the compression type" in "combination with a roadlocomotive". The drawings and specifications described a horseless carriage of the general type that a number of inventors were tinkering with about that time. In other words, Mr. Selden claimed to have invented the automobile, and the issuance of a patent shows that the U.S. patent office of that day agreed with him. At this point, I shall frankly admit that, although there 0-8412-0454-3/78/47-081-099$05.00/0 © 1978 American Chemical Society Marcy; Patent Policy ACS Symposium Series; American Chemical Society: Washington, DC, 1978.


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i s a popular legend that Henry Ford invented the automobile, t h i s was not the case. In f a c t , the automobile was not i n v e n t e d by any one man, but by many i n v e n t o r s , and i t was the i n v e n t i o n o f a p r a c t i c a l i n t e r n a l combustion engine t h a t e v e n t u a l l y made the automobile a commercial r e a l i t y . In 1873 George Br ay ton o f Boston invented one v e r s i o n o f a compression engine using g a s o l i n e , and i n 1876 N i k o l a u s Otto o f Germany invented another v e r s i o n . I t was the Otto c y c l e t h a t was t o become the b a s i s f o r the modern passenger c a r engine, but t h i s s u p e r i o r i t y only became c l e a r as i n v e n t o r s continued t o develop a l t e r n a t i v e concepts. The d i f f e r e n c e between the Brayton and Otto engines has an important b e a r i n g on the Selden s t o r y . Both were i n t e r n a l combustion engines o f the r e c i p r o c a t i n g p i s t o n type, but the Brayton engine was arranged so t h a t compression and expansion took p l a c e i n separate chambers while i n the O t t o engine, the f u e l / a i r mixture i s compressed, i g n i t e d , and expanded i n the same chamber. As I mentioned e a r l i e r , Selden's patent was granted i n 1895. A c t u a l l y , the o r i g i n a l patent a p p l i c a t i o n had been f i l e d i n 1879, but i t s issuance was delayed f o r 16 y e a r s . Selden was a v e r y astute patent attorney — i n f a c t , he was George Eastman's patent attorney, and Eastman's s i g n a t u r e appears on the Selden p a t e n t as a witness. In 1899, Selden s o l d c o n t r o l o f h i s patent t o the Columbia Motor Car Company, under a c o n t r a c t by which he was t o r e c e i v e a percentage o f the p r o f i t s from the e x p l o i t a t i o n o f the p a t e n t . The next year t h i s company sued the Winton Motor C a r r i a g e Company f o r infringement. I t was not u n t i l t h i s time t h a t a worki n g model o f the Selden car was a c t u a l l y b u i l t , as evidence f o r t h i s patent infringement s u i t . In 1903, the v a l i d i t y o f the patent was sustained by the c o u r t . At t h i s p o i n t the ten companies which had been l i c e n s e d t o b u i l d c a r s under the Selden patent formed the A s s o c i a t i o n o f Licensed Automobile Manufacturers. The main purpose o f t h i s Ass o c i a t i o n was to c o l l e c t and pay to the Columbia Motor Car Company r o y a l t i e s of 1-1/4% o f the r e t a i l p r i c e o f a l l automobiles s o l d . A second purpose was t o assure t h a t no rugged i n d i v i d u a l i s t could escape h i s share o f the burden. A f t e r Ford Motor Company was formed i n 1903, Mr. Ford was contacted by the A s s o c i a t i o n and advised t h a t he would have t o j o i n and pay r o y a l t i e s on the Selden patent. But Mr. Ford was not about to concede that i t was Mr. Selden who had i n v e n t e d the automobile. He refused t o j o i n the A s s o c i a t i o n or t o pay r o y a l t i e s . A c c o r d i n g l y , a lawsuit was brought a g a i n s t Ford Motor Company and seven other defendants who a l s o r e f u s e d t o pay. Although there were e i g h t defendants, the f i g h t was mainly against Ford, and was not l i m i t e d to the courtroom. The A s s o c i a t i o n took out newspaper advertisements to warn customers not to buy Ford c a r s . Ford r e t a l i a t e d by o f f e r i n g t o indemnify both d e a l e r s and purchasers.

Marcy; Patent Policy ACS Symposium Series; American Chemical Society: Washington, DC, 1978.


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Meanwhile, the i s s u e i n the courts dragged on. Neither p a r t y seemed w i l l i n g t o l e t the matter be brought to a c o n c l u s i o n . New testimony was i n t r o d u c e d , expert witnesses were c a l l e d i n from Europe, and the expensive l e g a l b a t t l e continued. F i n a l l y , on September 15, 1909 the c o u r t rendered a d e c i s i o n s u s t a i n i n g the v a l i d i t y o f the patent. A f t e r the s u i t was decided i n favor o f the p l a i n t i f f s , most of Ford's co-defendants entered the A s s o c i a t i o n . But Ford wouldn't concede and the v e r d i c t was appealed. On January 9, 1911 the a p p e l l a t e c o u r t reversed the d i s t r i c t court's decree. A c t u a l l y , the c o u r t upheld the v a l i d i t y o f the patent but r u l e d t h a t Ford was not i n f r i n g i n g . The b a s i s f o r t h i s d e c i s i o n was r a t h e r s u b t l e . The Selden patent d e s c r i b e d a "road-locomotive" d r i v e n by "an engine o f the compression type". However, the drawings supporting the c l a i m , and the a c t u a l model t h a t was subsequently b u i l t , were based on a v e r s i o n o f the Brayton engine. The v e h i c l e s a c t u a l l y being b u i l t by Ford and o t h e r s u t i l i z e d Otto c y c l e engines. The r u l i n g h e l d that "the two engines do not perform the same f u n c t i o n i n subs t a n t i a l l y the same way" and hence were not e q u i v a l e n t . The court was thereby able t o s t r a d d l e the i s s u e and h o l d t h a t the patent was v a l i d but not i n f r i n g e d . As f a r as the owners o f the Selden patent were concerned, the d e c i s i o n d i d not make much d i f f e r e n c e . By t h i s time, the patent has l e s s than a year to run, and the A s s o c i a t i o n had already r e c e i v e d about two m i l l i o n d o l l a r s i n r o y a l t i e s , of which Selden got one-tenth. As a r e s u l t o f the d e c i s i o n , the A s s o c i a t i o n o f L i c e n s e d Automobile Manufacturers was d i s s o l v e d and no more r o y a l t i e s were p a i d . But the impact o f the long court b a t t l e made a l a s t i n g imp r e s s i o n on the new automotive i n d u s t r y . The p o t e n t i a l value o f patents had been amply demonstrated. More importantly, the pot e n t i a l r i s k o f patent infringement was apparent. A common problem had been i d e n t i f i e d , and steps were taken t o r e s o l v e the problem. A t t h i s p o i n t i n the the h i s t o r y o f the automotive i n d u s t r y , there were more than 100 small companies producing cars i n the United S t a t e s . Each o f these competing companies employed engineers and i n ventors t o advance the s t a t e o f the a r t . The patent s i t u a t i o n soon became h o p e l e s s l y tangled. Nobody knew what s o r t o f automobile he might l e g a l l y make. To d e a l w i t h the problem, the N a t i o n a l Automobile Chamber o f Commerce was formed i n 1913. A l l o f the U.S. manufacturers except Ford Motor Company e v e n t u a l l y j o i n e d . T h e i r s o l u t i o n t o the problem o f patent infringement l a w s u i t s was t o form a patent p o o l . T h i s was a c r o s s - l i c e n s i n g agreement under which each p a r t y t o the agreement l i c e n s e d i t s patents to a l l o f the other p a r t i e s w i t h out payment o f r o y a l t i e s . The patent pool went i n t o e f f e c t i n 1915 f o r an i n i t i a l p e r i o d o f ten y e a r s . A l l o f the members o f



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the N a t i o n a l Automobile Chamber of Commerce except the Packard Motor Car Company became p a r t i e s to the c r o s s - l i c e n s i n g agreement. In the e a r l y years, membership i n the patent p o o l averaged about 130 companies. Upon t e r m i n a t i o n of the o r i g i n a l agreement i n 1925, i t was extended f o r a f u r t h e r p e r i o d of f i v e years. At the end of t h a t p e r i o d the agreement was again extended f o r a f u r t h e r f i v e - y e a r p e r i o d , but to i n c l u d e only those patents h e l d by the members as o f January 1, 1930. Through 1930, the agreement had r e s u l t e d i n the exchange of l i c e n s e s under about 1700 patents. As the i n d u s t r y went through i t s i n e v i t a b l e shakeout, membership i n the patent p o o l dropped to l e s s than 50 companies. In 1934, the N a t i o n a l Automobile Chamber of Commerce changed i t s name to the Automobile Manufacturers A s s o c i a t i o n . The agreement was again extended i n 1935, but to i n c l u d e only those patents h e l d by members up t o 1920. The f i n a l extension of the agreement occurred i n 1940, but excluded any i n v e n t i o n s t h a t had been made by d i v i s i o n s and s u b s i d i a r i e s not d i r e c t l y engaged i n the manufacture of automobiles. T h i s e x c l u s i o n e f f e c t i v e l y emasculated the agreement because of the l a r g e volume of patents o r i g i n a t i n g with d i v i s i o n s engaged i n the manufacture of p a r t s and a c c e s s o r i e s . The l a s t patent to be c r o s s - l i c e n s e d expired i n 1957. During a l l these years, Ford never j o i n e d the N a t i o n a l Automobile Chamber of Commerce and t h e r e f o r e d i d not p a r t i c i p a t e i n the c r o s s - l i c e n s i n g arrangement. Packard was a member o f the NACC, but not of the patent p o o l . Each had i t s own approach t o patents and l i c e n s i n g . According to a r e c o r d o f testimony given before a Congress i o n a l committee s h o r t l y before World War I I , i t was not the p o l i c y o f Ford t o sue i n f r i n g e r s . Anyone r e q u e s t i n g a l i c e n s e from Ford was granted a r o y a l t y - f r e e l i c e n s e without r e s t r i c t i o n s . Conversely, when Ford needed a l i c e n s e , i t d i d not expect to pay royalties. Packard, on the other hand, granted and took out r o y a l t y bearing l i c e n s e s . Apparently, Packard was the only automotive company t o operate i n t h i s f a s h i o n d u r i n g the years p r i o r to World War I I . From t h i s review of the recorded h i s t o r y of patent and l i censing p o l i c i e s of the automotive i n d u s t r y d u r i n g i t s e a r l y years, i t i s d i f f i c u l t to f i n d an h i s t o r i c a l b a s i s f o r the view t h a t the automotive i n d u s t r y was not p a r t i c u l a r l y i n t e r e s t e d i n p a t e n t s . With the exception o f Packard, the i n d u s t r y apparently d i d not t r y to make money out of patents through c o l l e c t i o n of r o y a l t i e s but, as we have seen, the subject o f patents d i d r e c e i v e a g r e a t d e a l of a t t e n t i o n . As you may have guessed by now, I had another reason f o r taki n g you through a l l - o f t h i s h i s t o r y . The purpose was to i l l u s t r a t e t h a t the automobile has been i n p r o d u c t i o n f o r a long time by many companies. Obviously, none o f these companies has been able to gain c o n t r o l of the market through the use of p a t e n t s .



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Research and development today i s o f t e n a process o f seeking p r a c t i c a l s o l u t i o n s t o extremely d i f f i c u l t t e c h n i c a l problems. These s o l u t i o n s o f t e n r e q u i r e long and expensive r e s e a r c h to develop new m a t e r i a l s and manufacturing processes. I t i s not unusual t o a r r i v e a t p r a c t i c a l s o l u t i o n s long a f t e r the b a s i c "conceptual" patent has run i t s course. To i l l u s t r a t e how patents and the r e l a t e d l i c e n s i n g a c t i v i t y can impact today's t e c h n i c a l i n n o v a t i o n process, I have chosen three examples o f recent o r on-going r e s e a r c h p r o j e c t s . Each of these examples r e l a t e s t o engines t h a t may — someday — r e p l a c e the p i s t o n engine. Each example i l l u s t r a t e s a d i f f e r e n t patent o r l i c e n s i n g s i t u a t i o n . The examples are the gas t u r b i n e engine, the S t i r l i n g engine, and the Wankel, o r r o t a r y engine. The gas t u r b i n e engine operates on a v e r s i o n o f the Brayton c y c l e which, as we have already noted, was invented by Brayton i n 1873. The gas t u r b i n e engine i s an i n t e r n a l combustion engine with continuous combustion; the r e c i p r o c a t i n g compressors and power p i s t o n s o f Brayton's o r i g i n a l engine are r e p l a c e d by r o t a t i n g components. I n t e r e s t i n the gas t u r b i n e engine s t a r t e d to i n t e n s i f y p r i o r to World War I I ; the technology then developed r a p i d l y d u r i n g and a f t e r the War f o r m i l i t a r y a i r c r a f t a p p l i c a t i o n s . The s t a t e o f the a r t has s i n c e advanced t o a h i g h l y s o p h i s t i c a t e d l e v e l . Much of the progress i n the development o f t h i s engine has r e s u l t e d from the development o f new s u p e r a l l o y s and the r e l a t e d f a b r i c a t i o n techniques. Gas t u r b i n e engines now are a l s o widely used i n s e l e c t e d n o n - a i r c r a f t a p p l i c a t i o n s , p a r t i c u l a r l y where a t t r i b u t e s such as l i g h t weight o r quick s t a r t - u p are important. Research and development work on automotive gas t u r b i n e engines s t a r t e d a t Ford i n the e a r l y 1950s. T h i s e a r l y work was able t o u t i l i z e some o f the m a t e r i a l s technology and aerodynamic p r i n c i p l e s t h a t had become p u b l i c l y a v a i l a b l e from the development of the a i r c r a f t engine. In most other r e s p e c t s , however, the automotive a p p l i c a t i o n r e q u i r e d a f r e s h approach. During the 1950s and 1960s a number o f Ford-designed p r o t o type gas t u r b i n e engines o f d i f f e r e n t s i z e s and c o n f i g u r a t i o n s were b u i l t and t e s t e d i n v e h i c l e s as w e l l as i n non-automotive a p p l i c a t i o n s . Most of the l a r g e r automotive manufacturers around the world have a l s o b u i l t and t e s t e d prototype gas t u r b i n e engines at one time o r the other d u r i n g the p a s t 25 y e a r s . There i s f a i r l y g e n e r a l agreement t h a t the automotive gas t u r b i n e engine has the p o t e n t i a l f o r major improvements i n f u e l economy versus the p i s t o n engine. Demonstrating t h i s p o t e n t i a l i n hardware has, however, proven to be a d i f f i c u l t task. The a b i l i t y o f an automotive gas t u r b i n e engine to meet l e g i s l a t e d emission standards — p a r t i c u l a r l y the NO standard — must a l s o be demonstrated. Commercialization o f the engine i s dependent on the r e s o l u t i o n o f these open i s s u e s i n hardware t h a t can be mass produced a t reasonable c o s t . Based on t h i s very b r i e f review of the gas t u r b i n e engine's x



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h i s t o r y and s t a t u s , the patent and l i c e n s i n g s i t u a t i o n can be summarized as f o l l o w s : 1) There are no b a s i c c y c l e patents that would prevent any company from manufacturing gas t u r b i n e engines i f i t chose t o do so. 2) The thermodynamic p r i n c i p l e s are, f o r the most p a r t , w e l l understood. 3) Since many companies have supported gas t u r b i n e R&D programs over the y e a r s , i t i s u n l i k e l y t h a t any one company has a commanding patent p o s i t i o n . 4) The r i s k o f patent infringement can o n l y be evaluated a t the time a p r o d u c t i o n engine has been designed and i t s manufacturing processes have been i d e n t i f i e d . T h i s does not mean there are no present o p p o r t u n i t i e s f o r the l i c e n s i n g o f gas t u r b i n e engine technology. F o r example, l i cense grants might i n c l u d e the patents and know-how r e l a t e d t o s p e c i f i c components o r systems. Now l e t ' s t u r n from the gas t u r b i n e engine t o the S t i r l i n g engine, where a completely d i f f e r e n t patent and l i c e n s i n g s i t u a tion exists. The S t i r l i n g c y c l e i s even o l d e r than the Brayton and Otto c y c l e s , having been invented i n 1816. The S t i r l i n g engine enjoyed c o n s i d e r a b l e commercial success f u r i n g the 19th century unt i l i t was made o b s o l e t e by the i n t e r n a l combustion engine. In 1938, the f i r m o f N.V. P h i l i p s , l o c a t e d i n Eindhoven, the Netherlands, " r e d i s c o v e r e d " the S t i r l i n g engine. P h i l i p s i s a major manufacturer o f e l e c t r o n i c products, such as r a d i o s . In the p r e - t r a n s i s t o r age, there was a need f o r an e l e c t r i c a l power source f o r r a d i o s operated i n remote areas. A f t e r the i n v e n t i o n of the t r a n s i s t o r , the need f o r an e l e c t r i c a l power source f o r r a d i o s i n remote areas became l e s s important. By t h i s time, however, the S t i r l i n g engine was beginning t o look a t t r a c t i v e f o r other a p p l i c a t i o n s . Because P h i l i p s was the o n l y f i r m with a major S t i r l i n g engine development program f o r many years, they were able t o develop a p r o p r i e t a r y p o s i t i o n both i n patents and i n know-how. T h i s know-how i n c l u d e s a more complete understanding o f the c y c l e , as w e l l as computer programs t h a t permit the o p t i m i z a t i o n o f an engine f o r p a r t i c u l a r a p p l i c a t i o n s . In the S t i r l i n g engine, combustion i s continuous and the products o f combustion do not come i n t o contact w i t h the working fluid. Continuous e x t e r n a l combustion permits f l e x i b i l i t y with r e s p e c t t o the type o f f u e l used, as w e l l as i n the c o n t r o l o f exhaust emissions. Ford was a t t r a c t e d t o the S t i r l i n g engine because o f i t s pot e n t i a l f o r low emissions together with improved f u e l economy. Other a t t r a c t i o n s i n c l u d e m u l t i - f u e l c a p a b i l i t y and r e l a t i v e l y quiet operation. In J u l y o f 1972, Ford entered i n t o a j o i n t development p r o gram and l i c e n s e agreement w i t h P h i l i p s . P h i l i p s had p r e v i o u s l y



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granted l i c e n s e s t o United S t i r l i n g o f Sweden and t o two German d i e s e l engine manufacturers, M.A.N, and M.W.M. Subject t o the terms o f these p r i o r l i c e n s e s and c e r t a i n other r e s t r i c t i o n s , Ford obtained a p a r t i a l l y e x c l u s i v e l i c e n s e and s u b l i c e n s e r i g h t s f o r most automotive-type a p p l i c a t i o n s . Ford l a t e r entered i n t o a non-exclusive l i c e n s e agreement with United S t i r l i n g t h a t a l s o includes c e r t a i n sublicense r i g h t s . From t h i s b r i e f summary o f the S t i r l i n g engine's development h i s t o r y , i t can be seen that the S t i r l i n g ' s h i s t o r y d i f f e r s from t h a t o f the gas t u r b i n e ' s i n two main r e s p e c t s t h a t have a beari n g on the patent and l i c e n s i n g s i t u a t i o n : 1) Although S t i r l i n g engines were produced d u r i n g the 19th century, commercial production i n recent years has been l i m i t e d t o cryogenic devices (not e n g i n e s ) . Gas t u r b i n e engines, on the other hand, have been i n commercial prod u c t i o n f o r many eyars by many companies as a i r c r a f t engines and f o r other non-automotive a p p l i c a t i o n s . 2) While many automotive manufacturers around the world have b u i l t and tested prototype gas t u r b i n e engines a t one time o r the other during the p a s t 25 y e a r s , comparat i v e l y few o f these manufacturers have had s i m i l a r S t i r l i n g engine development programs. For these reasons, the S t i r l i n g patent and l i c e n s i n g s i t u a t i o n , although s i m i l a r t o that o f the t u r b i n e i n some r e s p e c t s , is different i n others: 1) There are no b a s i c c y c l e patents t h a t would prevent any company from manufacturing e i t h e r gas t u r b i n e o r S t i r l i n g engines i f i t chose t o do so. 2) While the thermodynamic p r i n c i p l e s o f the gas t u r b i n e engine a r e , f o r the most p a r t w e l l understood, t h i s i s not the case with respect t o c e r t a i n aspects o f the S t i r l i n g c y c l e . The S t i r l i n g c y c l e i s complex, and much o f the d e t a i l e d know-how i s p r o p r i e t a r y with i t s developers. 3) Since r e l a t i v e l y few companies have supported S t i r l i n g engine R&D programs over the y e a r s , p r e s e n t l y e x i s t i n g patents are owned o r c o n t r o l l e d by these few developers. 4) As would be the case with the gas t u r b i n e engine o r any other component, the r i s k o f patent infringement can only be evaluated a t the time a p r o d u c t i o n engine has been designed and i t s manufacturing processes have been identified. I t would appear, however, that the r i s k o f infringement today might be g r e a t e r i n the case o f S t i r l i n g than i t would be i n other s i t u a t i o n s . My f i n a l example i s the Wankel, o r " r o t a r y p i s t o n " engine. The patent and l i c e n s i n g s i t u a t i o n surrounding t h i s engine i s t o t a l l y d i f f e r e n t from the two previous examples. In t h i s case, i t i s the c o n f i g u r a t i o n o f the engine t h a t i s important. The Wankel i s an i n t e r n a l combustion engine t h a t uses the same b a s i c thermodynamic c y c l e s t h a t conventional r e c i p r o c a -



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t i n g p i s t o n engines have used f o r y e a r s . The d i f f e r e n c e i s i n the mechanical arrangement; the r e c i p r o c a t i n g motion o f the p i s tons i s r e p l a c e d by an e p i t r o c h o i d a l r o t a r y motion. T h i s c o n f i g u r a t i o n , and the adaptation o f the Otto c y c l e t o i t , were invented by F e l i x Wankel i n Germany i n the l a t e 1950s. I have not researched the h i s t o r y t o determine when the f i r s t f o r e i g n patents i s s u e d , or when and how c o n t r o l o f these patents was t r a n s f e r r e d to the eventual l i c e n s o r s . Two U.S. p a t e n t s , c l a i m i n g the e p i t r o c h o i d a l r o t a r y engine c o n f i g u r a t i o n and the a p p l i c a t i o n o f the f o u r - s t r o k e engine c y c l e p r i n c i p l e to t h i s c o n f i g u r a t i o n , i s s u e d June 13, 1961. While these patents w i l l e x p i r e t h i s year, subsequent patents o f p e r haps l e s s fundamental importance w i l l continue t o e x i s t f o r a t l e a s t the next s e v e r a l y e a r s . What i s known of the l i c e n s i n g h i s t o r y i s i n t e r e s t i n g . The German l i c e n s o r s , Audi NSU Auto Union AG and Wankel GmbH, granted an e x c l u s i v e l i c e n s e f o r North America t o C u r t i s s - W r i g h t . Therea f t e r , p o t e n t i a l l i c e n s e e s seeking world-wide r i g h t s found i t necessary to n e g o t i a t e with both the German and the North American l i c e n s o r s . While t h i s complicated arrangement may have i n h i b i t e d some engine manufacturers, others became l i c e n s e e s and s t a r t ed development programs. Ford obtained a l i c e n s e of l i m i t e d scope and i n i t i a t e d an i n t e n s i v e r o t a r y engine development program. T h i s program was termi n a t e d when Ford concluded t h a t a f u l l y - d e v e l o p e d r o t a r y engine would not be competitive i n terms of f u e l economy with other a l ternatives. Some companies are c o n t i n u i n g t o produce r o t a r y engines and others are c o n t i n u i n g r e s e a r c h and development programs. The i n ventions t h a t Ford made i n the course of i t s r e s e a r c h may prove to be o f i n t e r e s t t o these developers. The Wankel l i c e n s i n g s i t u a t i o n may w e l l be a "once i n a l i f e time" s t o r y . In the e a r l y 1970s, some i n d u s t r y observers were p r e d i c t i n g t h a t a l l passenger v e h i c l e s would be equipped with r o t a r y engines w i t h i n 10 or 15 y e a r s . The Arab o i l embargo broke t h a t bubble, along with many o t h e r s . As so o f t e n happens i n t h i s i n d u s t r y , some very promising technology was made o b s o l e t e while i t was s t i l l on the drawing boards. As I i n d i c a t e d i n my opening remarks, no s i n g l e patent and l i c e n s i n g p o l i c y would be adequate to d e a l with a l l o f the technologies with which Ford Motor Company i s i n v o l v e d . I hope t h a t the examples o f the gas t u r b i n e , S t i r l i n g , and Wankel engines adequately i l l u s t r a t e the need f o r f l e x i b i l i t y .

Abstract Ford Motor Company is probably best known as a major producer of automotive products on a world-wide basis. But Ford also has other business interests, including aerospace and communications products, and is a significant producer of basic materials such


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as steel, glass, paint, p l a s t i c s , and chemicals. This complex product line involves a broad spectrum of product, material, and processing technologies. It would be d i f f i c u l t to maintain a single patent and licensing policy that would be applicable in every situation. This paper discusses past and present licensing a c t i v i t i e s , with emphasis on automotive products, to i l l u s t r a t e how licensing fosters the technical innovation process.


Biographic Notes James T. West has had a long career with the Ford Motor Company, serving in various engineering and planning assignments both in the United States and overseas. He presently i s Manager of the New Technology Contract and Licensing Department of Ford's Engineering and Research Staff. Mr. West graduated from Northwestern University with a baccalaureate in Mechanical Engineering. RECEIVED August 8, 1978.


Factors That Influence Patent and Licensing Policies at Ford Motor

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