AMERICA’S LAWS GET BROKEN IN
Whitney had his patent, he had his partnership with Miller, and he was ready to make money.
He wouldn’t.
The business plan of Miller & Whitney did nothing but encourage infringements of their patent—and as they would soon learn, no Southern jury was going to champion their cause.
They would hate Whitney. Despise him. Yet they couldn’t survive without his invention.
The business plan of Miller & Whitney was to keep the gins to themselves, hid away in regionalized processing plants. Then they encouraged Southern planters to fill their lands with cotton, with the promise that Whitney’s gins would take care of their seed problems. Just plant, bring us your harvest, and we’ll take care of the rest.
Fine—except that Miller & Whitney wanted forty percent all of the cotton they processed as payment. Looking past the usurious royalty, their plan had some logic to it. At upwards of $500, none of the planters had the cash to buy a gin, so giving up some of their cotton was an easy way to handle the cash problem.
But forty percent was just too high of a rate for the business-savvy Southern planters. Even worse, Miller & Whitney failed to execute. The partnership never came close to being able to process the amount of cotton churned out by the Southern plantations at an ever-escalating rate. Yes, Miller had convinced the Southern landowners to plant, yet he and Whitney now couldn’t make good on their promise. Granted, most of it wasn’t Whitney’s fault. He’d even canceled his trip to England to secure a patent there so that he could personally make more gins. But back in New Haven he caught malaria, then in the spring of 1797, his shop burned down, completely destroying 20 completed gins and all his tools. It would take seven more months, and a generous financial donation from Catherine Greene, before he could build and ship twenty-six more.
It was too little, too late.
Miller’s promises left the Southerners in a bind. They had their cotton, but they weren’t about to give up two-fifths of their harvest, especially when Whitney couldn’t even guarantee that he could process it.
Patent or no patent, they were going to process their cotton. They weren’t going to let a monopoly stop them. After all, didn’t they just fight a war with Britain over the monopolistic chains she’d wrapped around her thirteen colonies? So the Southern planters made their own gins and challenged Whitney to come after them.
He did.
But both Whitney and Miller far underestimated the difficulties that loomed ahead. The Georgia planters immediately went on the offensive, taking Whitney and Miller by surprise. Not only did they boycott Whitney’s gins, but the offended Georgia planters started rumors that cotton processed by Whitney’s gins was damaged—inferior goods. The tales quickly spread to England, stopping any overseas demand for Whitney-processed cotton. Now, there was simply no revenue to pay off their ever-increasing loans. Miller had mortgaged Mulberry Grove, Catherine Greene’s pride and joy, to the hilt.
With both sides pinned down, a showdown was inevitable. Miller filed the first lawsuit in May 1797 against Edward Lyon, a man who was accused of dressing in disguise as a woman, breaking into the gin room at Mulberry Grove, and stealing one of Whitney’s gins. Most likely, Lyon learned of the gin when Miller made the mistake of showing the gin to several local planters. For two years, Lyon ran a brisk business selling infringing gins.
The suit was brought in Georgia while Whitney was busying himself making more gins. Miller supposed Whitney’s talents were better used increasing their inventory, rather than fighting legal battles. But Miller was naïve as to how Whitney’s patent would be treated. Still, Miller did his best. Miller wrote Whitney about his diligence in making sure they were fully prepared for trial.
We had the Judge with a Party to dine with us twice before the trial came on and got him fully prepared to enter into the merits of the case. We had also got the tide of popular opinion running in our favor and many decided friends who adhered firmly to our cause and interest. Added to this we got the trial brought on, against every measure they could devise for postponement and found them perfectly unprepared as to a knowledge of the strong grounds of their cause and without a single evidence in their favor. We were on the contrary pretty well prepared and neglected no means to become as much so as possible.
Miller thought he had the case in the bag. But he hadn’t considered the strength of Lyon’s defense—one that would successfully be borrowed dozens of times. The Southern planters quickly picked up on Jefferson’s dismantling of the patent system, and they were fully prepared to take advantage of it.
With no substantive examination, patents carried no presumption of validity, leaving the decision solely in the discretion of the jury. In essence, the jury became the country’s patent examiners. Whitney’s future was now being turned over to a pack of uneducated, self-interested jurists who hadn’t a clue about patents. How could they? America’s only experience with examining patents took place in Jefferson’s drawing room—and that only lasted a couple of years before Jefferson ended substantive examination of patent applications.
The defenses quickly took shape. The one that would catch hold and be repeated again and again was that Whitney didn’t invent the cotton gin; he’d stolen it from others. For every trial, there was a never ending stream of witnesses willing to come forward and testify that they knew of other gins. Even with clear jury instructions from the judge, juries could believe whatever they wanted.
And in Georgia, they did. Whitney brought several patent infringement suits at the end of the 1790’s and lost them all.
“The Judge gave a charge most pointedly in our favor,” Miller wrote of one case, meaning that the judge gave instructions to the jury favoring a finding of infringement. After the jury instructions, the defendant was certain that he was going to lose. According to Miller, “the Defendant himself told an acquaintance he would give two thousand dollars to be free from the verdict—and yet the jury gave it against us after a consultation of about an hour.”
It wasn’t a big intellectual leap for Miller to grasp the problems with the 1793 act. “… the imperfections of the Patent Law frustrated all our views and disappointed expectations which had become very sanguine.”
What happened to Whitney would set a pattern for how to attack patents for the next fifty years. Simply get the jury to believe that the invention was already made by somebody else. It didn’t matter how dubious the evidence. After all, the power was all in the hands of the jury. If the U.S. government didn’t want to be bothered with sorting through a patent’s validity, why should they?
It was a strategy that worked until 1836 when the patent system was so obviously broken that Congress stepped in and revamped it, forming a patent office that would substantively examine applications. Instead of placing a patent’s validity squarely on a jury, patent examiners would once again take the first crack. When Singer was sued for patent infringement and tried to argue the sewing machine was previously invented, his defense flat out failed. Colt’s infringers too tried a similar “already-invented” argument and failed, as did Goodyear’s infringers.
But at the end of the eighteenth century, an argument that an idea was already invented, whether fabricated or not, still worked. And it worked perfectly.
Miller and Whitney not only didn’t expect the verdict, but it essentially threw their financially reeling partnership into bankruptcy. The 1793 Patent Act allowed for triple damages, and Miller had already factored the recovery into his balance sheet. The damages were going to fund further expansion. At least that is what Miller thought. The reality was that he now had to sell Greene’s Mulberry estate to pay creditors. The estate sold for a mere $15,000—not nearly enough to cover $38,000 in debts. For Catherine Greene, the silent partner, the woman who had weathered the freezing nights in Valley Forge to bring freedom to her country, the reality of being forced to leave her estate could have been nothing short of utter devastation.
After years of courtship, Ms. Greene had married Miller on June 13, 1796 in Philadelphia. Out of deep respect for Ms. Greene’s sacrifice, President and Martha Washington served as witnesses to the wedding. With her marriage to Miller, Ms. Greene was as committed to the partnership as was Whitney himself. Difficult as it was to lose her home, Ms. Greene kept fighting.
Miller thought he could at least argue for a new trial, but he learned that Congress was sloppy when they’d printed the 1793 Act. The wording required an infringer to both make and use the invention—as opposed to make or use. It was a clear typographical error, yet the word “and” would plague Miller and Whitney for three more years. Lyon could simply argue that although he had made plenty of gins, he didn’t use any of them. It was the planters who used them. If Whitney went after a planter, he’d face the same argument in reverse—the planter was using the gin, but he certainly did not make the gin.
This left Miller to conclude that “the people of this state openly declare that they will defy the power of the Federal Laws … and make no secret of their means of safety in such defiance.”
Who could blame them? After all, this was their livelihood, and it wasn’t their fault that Congress had left them an opening they could use to enhance it.
When word got out that courts were unwilling to enforce Whitney’s patent, it only served to embolden the infringers. Whitney wrote to Robert Fulton that there were three gins within fifty yards of the courthouse, close enough to hear the rattling machinery, yet he could do nothing to stop them.
After constant petitions, Miller and Whitney in 1800 finally convinced Congress to fix their typo. But if he thought that would solve his problems, he was wrong. The infringers had no intention of stopping.
So why did Whitney keep going? Why keep filing fifty-nine more suits? Wasn’t life too short? For any rational business person—yes. For inventors—no. It’s a trait common to nearly every inventor. It’s not a matter of cutting losses and moving on, or in embracing the Christian notion of turning the other cheek and finding solace in forgiveness. Inventors don’t think that way. They can’t. The invention is a part of them, a creation that’s been wrongfully taken from them.
The cotton gin patent was Whitney’s baby. And he wasn’t letting go, no matter what the price.
His opponents had justified the infringement on the notion that patents were nothing more than illegal monopolies, against which they had just fought a war. Whitney disagreed.
I am well aware that much obloquy has been attempted to be thrown on the principle, as well as the practice of exercising exclusive rights under the authority of Patents—And to give plausibility to such attempts, the justly obnoxious epithet of monopoly (as applied to the force limitation of a general right) has been constantly misapplied. It is not the use of any general privilege which we would confine to ourselves, but the right of managing as we please our own property, a property which can be rendered useful to us in no other way than by sharing its benefits in some stipulated proportion with other members of the community.
Whitney was livid that politicians—especially Georgia’s governor—actually encouraged infringement because they believed Whitney’s patent was nothing more than an aristocratic monopoly, referred to as a general privilege, that could be ignored because America did not stand for such atrocities. In Whitney’s mind, patents were different. They were not a general privilege, but a very limited right given him by an act of Congress.
This same debate still rages today as some feel that patents really are intended to be a “general privilege,” akin to a fundamental right. Those in this camp want every sort of protection Congress can invent to protect patents. The result has served only to bog down the patent system, producing volumes of unduly complex statues put in place to protect inventors like Whitney. But the pendulum has gone too far. Not even Whitney would have wanted this. He didn’t want a general privilege—only a way to share his invention with the public and be adequately compensated. Three decades later, Congress would finally understand Whitney’s point.
But what would happen in the future provided no solace for Whitney. Undaunted, Whitney and Miller continued tracking the offenders in Georgia, suing them in turn: Henry Chambers, Captain John Hunton, James Hutchinson. Sue as they would, Whitney and Miller lost every case.
While the infringers continued in Georgia, Whitney turned elsewhere in hopes of finding more friendly markets, this time with a little more wisdom and a new plan. Based on advice from an old Yale classmate, Whitney chose to license the patent. First up: the entire state of South Carolina. It was a bold move to license an entire state, rather than dealing individually with each planter. He’d be trading a large number of potential licensees and corresponding royalty streams for the convenience of only one. For those who have ever tried to license a patent and experienced the administrative nightmares of keeping licensees in line, it was a well-reasoned decision. South Carolina could pay Whitney a lump sum, then recoup its investment by levying a tax on every gin sold. Even though South Carolina would likely pay a smaller royalty than Whitney could achieve if he negotiated licenses from each planter, an agreement with the state would remove an administrative nightmare for Whitney.
And it was a real possibility. The men of South Carolina treated patents differently than their neighbors to the south. As a colony, South Carolina had actually passed a patent act. They had a tradition of protecting inventions, and it was Charles Pinckney of that state who proposed the language to be placed into the Constitution.
Whitney prepared himself for the upcoming negotiations. He visited Washington where, for the first time, he met with Thomas Jefferson and James Madison, who gave him letters of recommendation. And his perseverance paid off. In 1802 he convinced the South Carolina legislature to take out one license for every planter in the state. Whitney asked for $100,000. South Carolina gave him $50,000. The deal provided $20,000 up front with staggered future payments. In return, Whitney agreed to provide the planters of South Carolina with models containing his improvements and to return any fees he had already collected in the state, a total of $508. Whitney was somewhat disappointed with the license fee, but he couldn’t afford to lose the deal. It was $50,000 he desperately needed to repay past debts.
Deal in hand, Whitney took a 2,800 mile ride on horseback, first to Georgia to visit Catharine Greene, then back to New Haven. After that, he visited North Carolina, which now also sought a license. But before he could finalize the agreement, disaster struck.
South Carolina reneged on its deal to pay $50,000. And the state wanted its money back. Several of the legislators had been swayed by the constant badgering from Georgia planters, accusing their sister state of selling out. The Georgians taunted them, cajoling the South Carolinians with statements about how they were paying good money that didn’t need to be paid.
Whitney’s agreement with South Carolina concerned Georgia planters. If South Carolina went ahead with the deal, it legitimized Whitney’s patent and made Georgian’s look like the horse thieves that they really were. The agreement with South Carolina could now be used as evidence in Georgia courts to show an entire state believed Whitney had a valid patent.
The heightened concern in Georgia came about when a man named Hodgen Holmes lost an infringement case to Whitney. Because the Georgian court never recorded the judgment, he weaseled his way out. Still, it raised the possibility that Georgia planters could be held liable for infringement.
The case against Holmes was an interesting one. Holmes had his own patent on the cotton gin, one of ten that Whitney counted as having been registered based on his same design. Because of Jefferson’s decision not to examine applications, anybody could apply for a patent, regardless of whether the same invention had already been patented. This forced Whitney to sue Holmes “to have his patent vacated,—after a tedious course of litigation & Delay we obtained a judgment on the ground that the principle was the same & that his patent was surreptitious—his patent was vacated & Declared void.” The court also ordered Holmes to pay damages to Whitney. “He came forward & paid up the costs & purchased a License of us to use the Machine for which he had pretended to get a patent & we now hold his not given for the License.” But when the court clerk neglected to record the judgment, Holmes took the position that the suit was void from the beginning. Nobody in Georgia, including the courts, disagreed.
Now Holmes was resurrected and shipped to South Carolina with his fabricated story about how he had actually invented the cotton gin before Whitney. The legislators took his testimony at face value and yanked the contract, all on the false pretext that Whitney’s patent was invalid. It was the same argument being made in dozens of courtrooms throughout Georgia.
Whitney was furious. To bolster his case, he went to Washington seeking affidavits to prove he was the true inventor. Sick and fatigued from traveling in ill weather, he lay in bed waiting to regain his strength. But he couldn’t get his patent battles off his mind. “The Cotton Machine is a thing of immense value & by pushing hard I hope to realize something for it … but so large a proportion of Mankind are such infernal Rascals that I shall never be able to realize but a trifling proportion of its value. You know I always believe in the ‘Depravity of Human nature.’ … God Almighty is continually pouring down cataracts of testimony upon me to convince me of this fact.”
After returning to good health, Whitney secured the testimony of several men, including Nathaniel Pendleton, General Greene’s aide-decamp during the Revolutionary War, to state that they had witnessed the machine at Mulberry Grove. Pendleton was so offended by South Carolina’s actions that he immediately wrote to General Pinckney. Even with faithful backers, the decade-long battle was taking its toll. Whitney was becoming disillusioned. And Georgia’s meddling with his affairs in South Carolina had left a sour taste in his mouth. “I might as well go to Hell in search of Happiness as apply to a Georgia Court for Justice,” he wrote.
In 1803, the South and her belligerence finally beat Miller, the hopeless legal battles had worn him down both physically and emotionally. Miller’s untimely death made Catherine Greene a widow for the second time. It was “Mellancholly tidings” for Whitney. He must have blamed himself for the strain that had been placed on Miller. The death of his friend meant that Whitney was alone in his battle against the infringers in Georgia and the hostile South Carolina legislature.
Still, Miller’s death didn’t slow Whitney. He was even more determined to justify his cause. Under the terms of the South Carolina deal, Whitney still needed to complete the improved models and repay his licensees. Back in New Haven, he slaved away until the models were finished. Then he promptly left for South Carolina—still enraged at his ill treatment.
When Whitney arrived in South Carolina in 1804 the authorities threatened to throw him into jail if he didn’t repay the $20,000. Whitney openly defied them. Cooler heads eventually prevailed and the deal was put back in place. Many South Carolinians deemed themselves men of honor and thought it reprehensible to renege on a contract—even if it was a bad deal. Now that Whitney had supplied the promised models, these men felt that Whitney should be paid the remaining $30,000. And he was.
Good news usually comes all at once. That was true for Whitney. The same day, he received news of a deal with Tennessee. Now he had three states licensed, a more than tacit recognition of his patent’s validity.
All that remained were the ongoing infringers in Georgia. But now he had a bankroll to go after them. The only problem was the looming expiration date of his patent. By 1807, it would be all over—unless he could convince Congress to extend his patent, which they never did. With only a few years left on his patent, any victories would be in name only. He simply couldn’t bring enough suits in the short amount of time to collect any significant damages. And everyone knew that his patent—which had never been upheld by a court—was getting ready to expire. The vultures in Georgia were now circling.
None of that meant anything to Whitney. He had licensing money from the two Carolinas and he was ready to litigate to the end. He met defeat after defeat. No jury was willing to uphold a patent that was never examined, especially not with so many testimonials of previous gins that predated Whitney’s. The stories were becoming legendary.
Undaunted, Whitney plodded ahead with even more lawsuits. Emotionally he needed to go through this. He needed vindication. To him, it was a solemn truth that “many of the Citizens of Georgia are amassing fortunes, living voluptuously and rolling in splendor by the surreptitious use [of his gin], while I am, and for more than six years past have been, chained down to this spot, struggling under a heave [sic] load of debt contracted for my very subsistence and expenses while I was solely employed in inventing and perfecting this machine.”
Session after session, the Georgia courts put off Whitney. Judges kept granting continuances, stalling until the day that Whitney’s patent would expire. Still, with three other states taking licenses, Georgia was quickly losing credibility. Their only remaining hope was to fend off the attacks until the patent was gone.
But then in 1806, a year before his patent expired, Whitney drew Judge Johnson. Whitney’s ill fortunes would finally come to an end.
Because Whitney faced so much opposition, he decided to go on the offensive. Even if the patent office couldn’t give him the presumption of validity, he could do it himself. So he “introduced the testimony of several witnesses, residing in New Haven, to prove the origin and progress of his invention.”
Then he readied himself for the parade of evidence that was sure to follow. By now, he’d heard every lie. But this time, they wouldn’t invalidate his patent.
First came a model of “a machine used in Great Britain for cleaning cotton, denominated the ‘Teazer’ or ‘Devil’” that was supposedly “seen in England, about seventeen years ago.” The next witness “testified that he had seen a machine in Ireland, upon the same principle, which was used for separating the motes from the cotton, before going to the carding machine.” Next, the defense raised Holmes—again.
Whitney came out of his corner, fists at the ready. He had his witnesses ready to show he was the true inventor. But Judge Johnson didn’t want to hear it. He didn’t need to hear it. The evidence he needed was everywhere. Just one look out the window and he could see the impact of Whitney’s gin.
It is not necessary to resort to such testimony to maintain this point. … There are circumstances within the knowledge of all mankind, which prove the originality of this invention more satisfactorily to the mind than the direct testimony of a host of witnesses. The cotton plant has furnished clothing to mankind before the age of Herodotus. The green seed is a species much more productive than the black, and by nature adapted to a much greater variety of climate; but by reason of the strong adherence of the fibre to the seed, without the aid of some powerful machine for separating it than any formerly known among us, the cultivation of it could never have been made an object. The machine, of which Mr. Whitney claims the invention, so facilitates the preparation of this species for use, that the cultivation of it has suddenly become an object of infinitely greater importance than that of the other species ever can be. Is it then to be imagined that if this machine had been before discovered, the use of it would ever have been lost, or could have been confined to any tract of country left unexplored by commercial enterprise? But it is unnecessary to remark further on this subject. A number of years have elapsed since Mr. Whitney took out a patent, and no one has produced, or pretended to prove the existence of, a machine of similar construction or use.
As a last ditch effort, the defense argued that their gin operated by a different principle—the equivalent of today’s non-infringement argument. This argument failed to catch Whitney flat-footed. Before trial, Whitney had built a replica of the infringing gin. Now, he was able to show that it operated identically to his own.
The judge agreed. Then, perhaps apologizing for the pain inflicted upon Whitney by entire state of Georgia, the judge concluded:
With regard to the utility of this discovery, the court would deem it a waste of time to dwell long on this topic. Is there a man who hears us who has not experienced its utility? The whole interior of the Southern states was languishing, and its inhabitants emigrating, for want of some objects to engage their attention, and employ their industry, when the invention of this machine at once opened views to them which set the whole country in active motion. From childhood to age, it has presented us a lucrative employment. Individuals who were depressed with poverty, and sunk in idleness, have suddenly risen to wealth and respectability. Our debts have been paid off, our capitals increased, and our lands have trebled in value. We cannot express the weight of obligation which the country owes to this invention; the extent of it cannot now be seen.
And so Whitney’s victory, at the conclusion of a thirteen-year battle, was little more than a verbal vindication from a federal judge. With his patent was ready to expire, that was about all that he could expect. Georgia had dragged its feet for over a decade, virtually eliminating any chance for him to collect on his patent. When all was said and done, Whitney’s recovery was heartbreaking. He finally did get his $50,000 from South Carolina, and another $14,000 from North Carolina. Tennessee’s payment is lost to history. Whitney received another $9,500 from various individuals. All told, Whitney received around $90,000. If Whitney had collected even a small fraction of the revenues made possible by his gin, he should have received millions.
Looking back, Whitney was convinced that the reason his patent was intentionally ignored was because it was simply too valuable to the nation’s economy. In 1811, Whitney wrote to Robert Fulton that people would “have had no difficulty in causing my rights to be respected if it had been less valuable & used only by a small portion of the community. But the use of this Machine being immensely profitable to almost every individual in the Country all were interested in trespassing & each justified & kept the other in countenance.”
But that wasn’t the real reason everyone shunned his patent. From a practical point of view, it is always wisest not to be too greedy—a lesson Whitney learned too late. Otherwise, everyone will fight you. It’s a common mistake still made by inventors today. If you come up with a great idea, make the licensing fee reasonable or be prepared for a fight.
But shouldn’t Whitney have been entitled to do whatever he wanted with his patent? Even if that kept the entire South in dire straits?
Yes, if the patent system were designed correctly. If patents aren’t upheld, no matter the cost, patents will have no teeth. In that case, everyone suffers because innovation stops as both inventors and investors realize that they will be unable to get a fair return on their investment. Whitney’s patent was largely ignored because his invention was so needed that nobody was willing to go without it. And because of the weak patent act of 1793, there was really no way to uphold his patent. When the Southern states made the decision that they would use Whitney’s gin without paying for it, there was little that could be done.
The result? The message was loud and clear—patents weren’t worth anything. And the truth was that they weren’t. They needed some clout. If you want to promote innovation, you need to craft patent rights so that they set the proper balance between promoting innovation and turning over the technology to the public, and then you need enough guts to enforce those rights. To do that, you need an effective patent statute that requires a thorough examination of the new idea. Ultimately, to promote innovation, the patent system needs credibility, and for that, people need to know exactly what patents cover and whether they are valid. For Whitney, the lack of examination permitted prevaricators to fill the court rooms, with dubious tales of prior cotton gins. Today, the battle ground has moved from prior invention to whether an idea is obvious. Either way, the patent system has lost most of its credibility.
So what of Jefferson’s decision to stop examination? Good idea?
If he wanted to see its effect on innovation, he didn’t have to wait long. He’d created a patent system that granted patents that were easily shot down and that lent itself to endless fraud. Although Americans did continue to invent, they did so on only a small scale. It would take until the 1840s before the patent system would prove so entirely lacking that Congress knew they had to step in.
In fact, the patent office would have to burn down before that would happen.