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Legally Speaking with Bob Mionske: The Monopoly Machine, Part 1

Published: Feb. 10, 2005

Dear Readers,
Today’s column is the first of a three-part series written by attorney Bruce Epperson. Whether you are a triathlete, bike racer or just interested in bikes, the business/legal history of the bicycle is a rich one.
– Bob Mionske

The Monopoly Machine, Part 1

"For a decade afterward came the wonderful battles of bicycle patents. All along Pope extended this department, and practically was in the position of a Czar of the business. . . Pope was largely hated and the Columbia was called the monopoly machine." - Bicycling World, 1902

Starting in 1879, the infant bicycle industry was almost destroyed by a decade of protracted patent litigation. Col. Albert Pope, the great bicycle magnate, was the driving force behind most of these legal skirmishes. Many observers believed that the colonel's ultimate aim was to monopolize the bicycle industry. Pope and his lieutenants loudly dissented, arguing that their actions brought stability and prosperity to what otherwise would have been commercial anarchy. While he did rationalize much of the technology that went into the bicycle, there is no doubt that Pope's core intent was self-interest and his actions frequently stretched ethical and legal boundaries, even by the no-holds-barred business standards of the gilded age. Pope's men came very close to gaining a perpetual monopoly over the American bicycle industry, and were defeated only by the United States Supreme Court and a handful of adversaries who vowed to fight him to the finish.

The struggle over the Lallement patent
The first bicycle patent in the United States was Pierre Lallement's 1866 "Improvement in Velocipedes." Using his first prototype, built in Paris in 1863, two years before he immigrated to America, Lallement discovered that he could maintain his balance even while turning the pedals with his feet. However revolutionary, this finding was a discovery, not an legally patentable invention, so Lallement’s formal, 34-word claim included only a machine with two linear wheels, a set of treadles driving the front wheel, and a handlebar. Still, this was enough to establish the basic patent covering the front-wheel-drive bicycle. Or was it?

Seven years earlier, in 1862, Philip W. Mackenzie of New York had patented a wheeled horse simulator. The front legs of Mackenzie's hobby-horse were attached to cranks, which in turn drove the two front wheels. By pitching the front of the horse up and down, the rider turned the cranks and propelled the thing forward. The whole arrangement had very little to do with a bicycle, but it was a rolling device powered by cranks attached to the front wheels, which made it legally relevant to Lallement's subsequent invention.

Two years later, Mackenzie filed another patent for a variation on his hobby-horse. Like his earlier Cantering Propeller, both cranks went in the same direction, so this version also required that the rider thrust both feet forward at once. But this hobby-horse had “stirrups” attached to the cranks, allowing Mackenzie to claim that he was the first to patent a wheeled vehicle driven forward using a crank with attached foot-pedals. Both patents were assigned to one Stephen W. Smith, a New York manufacturer of hobby-horses.

Further muddying the waters, in 1865 Harvey A. Reynolds patented his own version of a horse simulator. The body of Reynolds's hobby-horse didn't bob up and down. Instead, the rider's feet rested on two opposable cranks, like Lallement's velocipede. The rider turned his feet in a circular motion, driving the two front wheels. Because Reynolds also included this feature within the claims language, his patent threatened the priority of Lallement's invention. The Mackenzie patents, in turn, posed a threat of "prior art" to the Reynolds patent.

These arcane patent doctrines became important when the American velocipede boom hit in mid-1868. Calvin Witty, a successful New York carriagemaker who manufactured one of the most popular velocipedes, started paying patent lawyers and consultants to examine the legal state of the art. To his surprise, the answer lay almost under his nose. In early 1869 a New Haven business associate told him that one of his employees claimed to own half of the basic rights to the bicycle. The man turned out to be James Carroll. Witty snapped up his half of the patent in January, 1896.

At the same time, Witty's agent in Paris, David Brandon, tracked down Lallement in a working-class district of the city, where he had returned in 1868 after finding no American backers for his and Carroll’s velocipede business. Brandon bought his half of the patent for Witty. The price Witty paid is subject to some dispute: Cycling journalist Karl Kron says Lallement was paid $2000; Witty claimed his total cost to search out and buy both halves of the patent was about $10,000.

Meanwhile, Smith, the owner of the Mackenzie patents, had gone even further and had Mackenzie’s 1862 patent reissued. At the time, the U. S. Patent Office permitted reissues as a way of correcting defects in an existing patent. The reissue replaced the original patent, but did not extend its 17-year tenure. Smith used the reissue to significantly alter the patent's claims away from a narrow focus on hobby-horse propulsion towards a broad coverage of any type of wheeled vehicle powered by a crank.

While the reissue wound its way through the patent office, Smith and Witty sued each other over the Mackenzie and Lallement patents. Instead of fighting it out, they settled out of court and combined forces, using Witty's resources to jointly enforce royalties. They demanded retroactive payments of $10 to $20 per unit from both importers and manufacturers. The velocipede craze was rapidly dying by this time, and the royalty demand persuaded many firms to pull out of the business. Exactly how much money they made is unclear. Witty claims he earned over $25,000 in December 1869 alone, and Lallement biographer David Herlihy believes he turned down a $75,000 offer at the peak of the fad. After Smith died in 1874 his wife sold off the Mackenzie patents to her husband's former lawyer, Charles Durgin, who in turn sold them in the spring of 1876 to the Montpelier Manufacturing Company, a Vermont maker of baby carriages, sleds, hobby-horses and other toys.

With the American velocipede industry dead after 1869, all four patents lay idle and ignored. However, as Americans began to show some interest in the high-wheeled bicycle after the 1876 Philadelphia world's fair, their owners started to pull them out of safes and file drawers and give them a second look. In July, 1877 the Montpelier firm reissued Mackenzie's 1864 patent, changing its claims language in a way similar to that earlier done by Smith to Mackenzie's 1862 patent.

In September, Calvin Witty sold the Lallement patent to the Boston firm of Richardson & McKee. The partnership of Henry M. Richardson and George McKee manufactured children's carriages and baby buggies. In 1876 and 1877 they were joined by a relative of George McKee named Joseph McKee. It was probably a part-time arrangement, as Joseph was a partner in a New York firm, McKee & Harrington, a manufacturer of carriages and carts. It is possible that Colonel Pope was acquainted with the Boston firm, as Albert A. Pope and Company, the colonel’s shoefindings firm, shared the same address as Richardson & McKee, 6 Merrimac, for several months in 1875. In any event, Pope took out a license from Richardson & McKee when he had the Weed Sewing Machine Co. of Hartford make his first 50 high-wheelers in early 1878.

Pope’s application galvanized Richardson & McKee. They immediately sought a reissue of the Lallement patent that dramatically expanded the scope of its claims language. Three days after the Lallement reissue was approved, Richardson & McKee bought three velocipede patents from Harvey Reynolds, including the crucial March 1865 patent with opposable cranks. In January, 1878 Richardson & McKee and Montpelier entered into an indenture agreement effectively pooling the rights to the eight patents they held, including the Lallement, Mackenzie and Reynolds documents. Together, the two firms now controlled the basic rights to the bicycle, and Pope was in a bind. By early 1879, Richardson & McKee were squeezing him for royalty demands totaling $27.50 per bicycle. Pope turned to Charles Eadward Pratt to sort out the mess.

Born in Vassalborough, Maine, in 1845, the son of a Quaker minister, Pratt graduated from Haverford College in Pennsylvania in 1870. By April 1878 he was working for Pope, writing David Brandon about French bicycle patents prior to 1866. Brandon replied, "We presume that your object is to find a previous patent in order to upset Lallement's U. S. Patent.” Brandon was correct, but the information he could locate was of little assistance, and unable to break the patent pool, Pope instead opened his checkbook.

In March 1879 Richardson & McKee sold half of their rights - a quarter of the total - in the eight pooled patents to the Pope Manufacturing Company. Although the agreement was dated March 19, the full text of the agreement that Pope was required to submit to the patent office was not sent until April 21, suggesting that the parties were tweaking the exact language of the document for a month after entering into their initial agreement. The next day, April 22, the directors of the Montpelier firm agreed to sell all rights in their one-half interest in the eight patents. Interestingly, Montpelier did not sell to the Pope Manufacturing Company, but to Charles Pope, the colonel’s father, who subsequently conveyed his interest to the firm.

Although the Pope company’s 1907 official history, with Albert talking Richardson & McKee into a deal, then racing through the night by express train from Boston to Vermont to cinch the Montpelier sale, makes for good reading, the patent office ledgers suggest that in reality Albert carefully crafted an agreement with the Boston firm, while Charles spent several days, possibly weeks, in Vermont negotiating with Montpelier. Once the Boston agreement was finalized, Albert wired his father in Vermont, who closed the other half of the deal. Six days later, Richardson & McKee capitulated and sold their remaining interests to Pope.

Next week: How to build a monopoly

Now read the fine print:

Bob Mionske is a former competitive cyclist who representedthe U.S. at the 1988 Olympic games (where he finished fourth in the roadrace), the 1992 Olympics, as well as winning the 1990 national championshiproad race.After retiring from racing in 1993, he coached the Saturn Professional Cycling team for one year before heading off to law school. Mionske's practice is now split between personal-injury work, representing professional athletes as an agent and other legal issues facing endurance athletes (traffic violations, contract, criminal charges, intellectual property, etc).If you have a cycling-related legal question, please send it to mionskelaw@hotmail.comBob will answer as many of these questions privately as he can. He willalso select a few questions each week to answer in this column. Generalbicycle-accident advice can be found at www.bicyclelaw.com.Important notice:
The information provided in the "Legally speaking"column is not legal advice. The information provided on this publicweb site is provided solely for the general interest of the visitors tothis web site. The information contained in the column applies to generalprinciples of American jurisprudence and may not reflect current legaldevelopments or statutory changes in the various jurisdictions and thereforeshould not be relied upon or interpreted as legal advice. Understand thatreading the information contained in this column does not mean youhave established an attorney-client relationship with attorney Bob Mionske.Readers of this column should not act upon any information contained inthe web site without first seeking the advice of legal counsel.