The encyclopedia · Legal & Compliance · Legal decision · 1854–1860
Four sewing-machine rivals pooled patents to end the 1850s patent war
Singer, Wheeler & Wilson, Grover & Baker and Howe pooled patents in 1856; output exploded and Howe's royalties hit $444,000 a year.
Sewing Machine Combination
The solution
By the 1850s, sewing machines were a proven product but a legal disaster. Elias Howe, Isaac Singer, Wheeler & Wilson and Grover & Baker each held patents covering core parts, and by 1854 they were suing one another so hard that firms spent their time and money in court while the machine languished as a commercial product.
Orlando B. Potter, a lawyer who was also president of Grover & Baker, saw the deadlock and proposed the obvious-but-radical fix at a chance meeting in Albany in October 1856: combine the patents into a pool administered as a trust. The members kept competing in the market, cross-licensed each other, paid a per-machine fee into a common fund, and licensed any outsider who wanted to build machines.
Howe, who made money purely from royalties, had to be bought in with special terms: $5 per machine sold in the US, $1 per machine exported, and a promise of at least 24 licensees. In 1860 the fee dropped from $15 to $7. The Combination licensed hundreds of thousands of machines and became the model for every later patent pool.
Why it worked
- A patent pool turned litigation rivals into license-paying members
- Howe's special royalties guaranteed him income without building anything
- The per-machine fee funded a war chest for future lawsuits
- Outsiders could license instead of litigate, so machine output exploded
What can be applied
When everyone's patents block everyone else, the fastest fix is private pooling: keep the patents, license all comers, and turn litigation money into a war chest.
Aftermath
Howe's income went from a few hundred dollars a year to $444,000 a year in licensing fees within eight years of his first suit. The Sewing Machine Combination is remembered as the first privately formed patent pool, and its structure — cross-licenses, a common fund, open licensing — became the template for twentieth-century pools. Members continued to compete on price and design, and the sewing machine finally became a mass-market product.
Sources
- The Sewing Machine Combination — The First American Patent Pool
- The Rise and Fall of the First American Patent Thicket
- A Brief History of RAND
spotted an error? The archive wants to know.