The Bishop's Boys (65 page)

Now there was Peterkin’s proposal for an American Wright Company. If they agreed to the terms, they would receive $100,000 in cash for their patent rights and expertise. In addition, they would be given one third of the total shares, plus a 10 percent royalty on every machine built and sold. As the owner of the Wright patents, the new firm would take charge of prosecuting infringers, relieving the Wrights of all legal expenses, pursuing additional suits, and establishing a mechanism for licensing of patent rights.
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The arrangement was ideal—the terms were excellent, and the investors men with impeccable credentials in the world of business and finance. The brothers signed.

The Wright Company was incorporated under the laws of the State of New York on November 22, 1909, with a capital stock issue of $1 million. Wilbur would serve as president. Orville and Andrew Freedman, a New York financier, were elected vice-presidents. The board of directors included August Belmont, Robert J. Collier, Cornelius Vanderbilt, and Russell Alger.

The future, as Wilbur told Chanute, seemed very bright indeed. “All of us are in very good health. Father, though in his eighty-second year, is still quite active. My own health owing to the outdoor life of the past year is better than in former years. I trust that you will retain well your strength and enjoyment of life.”
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T
he Wrights both hoped that the formation of the new company would remove the burden of business affairs from their shoulders, freeing them to return to research. As Wilbur explained to Chanute: “The general supervision of the business will be in our hands though a general manager will be secured to directly have charge. We will devote most of our time to experimental work.”
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The new board of directors established corporate headquarters for the Wright Company in the Night and Day Bank Building at 527 Fifth Avenue, New York, but the factory would be in Dayton. Frank Russell, a cousin of Russell and Frank Alger, was hired as factory manager. He reported to the Wright Company in January 1910. Wilbur and Orville, cramped for space and loath to set up the manager of a major corporation in a bicycle repair shop, helped Russell find temporary quarters behind a plumbing store a block or so away.

So far as they were concerned, that was the end of their involvement in the day-to-day operations of the front office. To underscore their disinterest in paperwork, Wilbur called on Russell a few days later carrying a container stuffed with letters addressed to the new company. “I don’t know what you want to do with this,” he remarked. “Maybe they should be opened. But of course if you open a letter, there’s always the danger that you may decide to answer it, and then you’re apt to find yourself involved in a long correspondence.”
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While the brothers would no longer have to concern themselves with the sale of flying machines, only they could run the production side of the business.

Ground was broken for a Wright Company factory at 2701 Home Road in Dayton in January 1910. Until that building was ready for operation in November, the Wrights rented factory space in a corner of the Speedwell Motor Car Company plant at 1420 Wisconsin Boulevard.
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The old pattern airplanes, what the brothers would always call their 1907 machines, were a thing of the past. The Wrights built two new prototype designs in the temporary quarters at Speedwell.

They called the first of these new types the “Model B.” Clearly, while they had never applied the term “Model A” to the machines constructed since 1905, they thought of them as such. The Model B was a radical departure from its predecessors, with the elevator in the rear and wheels mounted on the skids. The development of a four-cylinder, 40-horsepower engine to propel the Model B enabled them to dispense with catapult launching. The Model R, a smaller, single-seat machine developed for speed and altitude competitions, was the second aircraft designed and built at Speedwell.

So long as they were directly in charge, the Wrights paid meticulous attention to the details of the machines on which they would risk their lives. Grover Loening, who went to work as Orville’s assistant in 1913, recalled that his boss “directed all of the design work in the shop, even to small metal fittings, and many a time I had designed some detail and made a fine drawing of it, only to find that meanwhile Orville had gone into the shop and, with one of his old trusted mechanics, such as Charlie Taylor or Jim Jacobs, he would not only have designed the part, but had it made right there.”
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But the Wrights’ primary goal was to establish their priority as the inventors of the airplane and to defend themselves against those who would profit at their expense. They chose the patent courts of America and Europe as their arena.

On January 3, 1910, Judge Hazel of the Federal Circuit Court in Buffalo issued an injunction restraining the Herring-Curtiss Company from the manufacture, sale, or exhibition of airplanes. The decision surprised everyone but Wilbur and Orville. Patent complaints are adjudicated through a legal process as involved as any murder trial, and just as time-consuming. A difficult infringement suit may require many months, even years, to run its course, particularly if an appeal is involved.
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In the case of
Wright
v.
Herring-Curtiss
, the opposing attorneys took hundreds of pages of sworn testimony. They collected reams of technical material, quizzed expert witnesses to buttress their arguments, and tied all of it together with complex legal briefs.

The judge could not begin to weigh the evidence until he had command of the technical issues involved. His next step was to ensure that the examiner issuing the patent had correctly applied the confusing welter of regulations governing the patent process. Only then could he determine whether, and to what extent, the defendant had infringed on a protected feature of the invention.

Fully aware of the length of time required, the Wrights sought to prevent Glenn Curtiss from profiting while the case was in progress. When Wilbur filed his suit in Buffalo on August 18, 1909, therefore, he also asked Judge Hazel to issue a preliminary injunction forbidding the Herring-Curtiss Company from using the technology in question until the court reached a decision.

In view of the complexity of most patent suits and the ruinous consequences of such a restraint on the defendant, injunctions of this sort were uncommon. Knowledgeable individuals following
Wright
v.
Herring-Curtiss
assumed that the general rule would apply here as well. They were wrong. Judge Hazel, ruling that the evidence on hand was sufficient to indicate that the final judgment would support the Wrights, issued the injunction.

Stunned, Curtiss posted a $10,000 bond with the court and filed an appeal. He could legally continue flying until the appelate court issued a ruling, but he took a terrible risk in doing so. If Judge Hazel’s decision was upheld, Curtiss would have to negotiate a settlement with the Wrights covering all of the monies earned during the time the injunction was in effect. It would spell financial ruin.

Having dealt with Glenn Curtiss, the Wrights next took action to put foreign aviators out of business as well. On January 4, 1910, the day after the injunction was issued in Buffalo, the Wright Company filed for a second injunction restraining the French aviator Louis Paulhan from giving exhibition flights inside the United States with machines that infringed the Wright patent.

Paulhan had won a Voisin machine in a model airplane competition in 1908, and emerged as one of the most popular and successful competitors at Reims. Invited to compete in an airshow to be held at Dominguez Field in Los Angeles, he arrived in New York in January 1910 with four machines—two Farmans and two Blériots. Taking the recent action of Judge Hazel into consideration, Judge Learned Hand, of the United States Circuit Court for the Southern District of New York, issued a restraint on February 17. Like Curtiss, Paulhan would have to post a bond ($25,000, later reduced to $6,000) if he wished to continue his exhibition flights prior to the adjudication of his case.
Having already earned some $20,000 at Los Angeles and other points on his U.S. tour, Paulhan returned to France.
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Only one of the Wright suits against an individual pilot actually came to trial. The English aviator Claude Grahame-White earned a grand total of $100,000 during a U.S. tour in 1911. The Wright Company sued him for half of that amount. The decision, handed down on January 24, 1912, was in favor of the plaintiffs, in the amount of $1,700. The sum was much smaller than requested, but enough to demonstrate that the American climate would not be congenial to aviators until the patent situation was finally resolved.
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Individuals like Curtiss, Paulhan, and Grahame-White could choose to post bond and take their chances in court, but corporate investors were unwilling to take that risk. The original injunction of January 3, 1910, doomed the already shaky Herring-Curtiss Company. The problems began in October 1909, when the board of directors met at Hammondsport to develop a strategy for fighting the Wright patent suit. Herring was asked to turn over the patent documents that he had pledged to the firm. Surely these materials, predating the Wright patent, would settle the issue. Rather than complying, as his backers had every right to expect, Herring equivocated.

The board, meeting again in a special session that December, threatened Herring with a court order if he did not produce the documents at once. As the discussion grew more heated, Herring and his lawyer withdrew from the boardroom for a private talk. When they did not return, the board members went looking, and discovered that the two men had left the building. Herring returned to New York and went into hiding to avoid being served with the court order for the patent documents. He could not comply. There were no patents—only a yellowing application based on a motorized version of the Chanute-Herring triplane that had been rejected by the Patent Office in 1896, and bits and pieces of correspondence with the Patent Office since that time.
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Judge Hazel’s injunction, arriving on the heels of Herring’s precipitous departure from the firm, finished the company. Unable to sell airplanes or to send an exhibition team into the field, income ceased to flow. Creditors, sensing trouble, quickly drained the treasury. The company filed for bankruptcy on April 10, 1910.

The Herring-Curtiss firm did not die a clean death. Courtlandt Field Bishop sided with Herring in a new lawsuit, claiming that the bankruptcy petition was nothing more than a ruse to get rid of Herring.
The suit was rejected and a decree of bankruptcy issued in December 1910.

In fact, Herring and Bishop were correct. On June 14, 1910, the United States Circuit Court of Appeals withdrew the injunction issued against Curtiss by Judge Hazel. The legal tradition against granting injunctions in cases of this sort prevailed. Curtiss was now free to do business until a decision was handed down in the suit.

The success of the appeal was a stroke of double good fortune for Curtiss. Not only was he free to produce flying machines again, but the original company, and the burden of an unwanted partner, were removed. Anxious to set up entirely on his own, he purchased his old plant back from the Herring-Curtiss trustees at auction, and by December 1911 was back in business as the Curtiss Aeroplane and Motor Company.
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The story was far from over. Seven years later, when Curtiss was flush with money as a result of lucrative war contracts with the U.S. and British governments, Herring returned for another round. Still holding two thousand shares of stock in the old company, he pointed out that while Herring-Curtiss had gone bankrupt, the company had not been legally dissolved. He brought suit on the old charges, claiming

once again that the whole episode was trumped up to remove him from the business. The suit was dismissed in 1923. Herring appealed the decision and eventually won a reversal in the New York Supreme Court, which established a panel of arbitrators to work out the financial arrangements.

Herring died in 1926. Curtiss lived until 1930, fighting the suit, which was carried on by Herring’s family with all the resources at their command. His widow, Lena Curtiss, was unwilling to continue the effort, however, and settled out of court for a sum that may have been as high as half a million dollars, although most of the money went for legal fees. Augustus Herring did not live to see it, but he had finally succeeded in making a fortune in the flying-machine business.
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The preliminary injunctions issued by Judges Hazel and Hand gave the Wright brothers an effective monopoly in the flying-machine business in America for the first six months of 1910. Even when the restraints were removed in June of that year, the Wright patent suits continued to threaten American pilots and aircraft builders. Having forced the Herring-Curtiss Company out of business and placed Glenn Curtiss and other competing aviators in legal jeopardy, the Wrights,
through their foreign licensees, launched a direct attack on their European competitors.

Late in 1910, the Compagnie Générale de Navigation Aérienne brought suit against six rival aircraft manufacturers (Blériot, Farman, Esnault-Pelterie, Clément-Bayard, Antoinette, and Santos-Dumont) for infringement on the Wrights’ French patents. The case was tried before the Third Civil Tribunal, composed of three judges and a substitute, a state’s attorney boasting special technical qualifications.
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The substitute, who was charged with advising the court on technical matters, issued a statement in March 1911 suggesting that, while the Wrights deserved all recognition and credit for the invention of the airplane, their patent application was invalidated by prior disclosure. Chanute’s lecture to the Aéro-Club in the spring of 1903, coupled with the publication of Wilbur’s first speech to the Western Society of Engineers, had revealed the essential features of the Wright technology prior to the grant of any patent.
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