FERGUSON vs. FORD - 1944 to 1952
Trying to put together the events surrounding the end of the agreement into a chronological sequence is difficult. According to the different historical accounts I have read the ‘handshake agreement’ was terminated each year between 1944, and 1947. Typical of this confusion, the Time Magazine article below indicates the date as 1946, whilst the ‘Ferguson Family Museum web site’ shows 1944. What is not in dispute is that it was Henry Ford II who terminated the agreement and he took over as President in 1945. My choice of events is as follows: Near the end of 1946, Ford II advised Ferguson that his agreement would be ending on 30th June 1947. It was in July 1947 that Ford introduced a new model, the Ford 8N (see photo below), which had many similarities with the Ford-Ferguson 2N. With his supply of tractors gone Ferguson had nothing to give his extensive sales network to sell, yet he could clearly see his patents being used and sold in the new model 8N. A lawsuit was filed. This litigation achieve great notoriety at the time for it was billed as David (Ferguson) vs Goliath (Ford Motor Co.) and it was to last until 1952. The photo on the left below was taken outside Claridges Hotel in London after Ferguson stormed out of a lawsuit meeting mid-way though the litigation in 1949.
During the dispute both parties manufactured and sold what was in effect the same tractor.
REPRINT OF A TIME MAGAZINE REPORT OF THE SETTLEMENT IN 1952…
"It'll be a grand fight," predicted Irish Inventor Harry Ferguson four years ago, when he slapped a $251 million antitrust and patent infringement suit against Ford Motor Co., its subsidiary, Dearborn Motors Corp., Henry Ford II and other Ford officials.
The fight started when Henry Ford II cancelled an oral agreement which his grandfather had made in 1939 to manufacture a tractor for Ferguson according to Ferguson's specifications. Old Henry had been intrigued by the tractor's ingenious hydraulic lift and new method of linking other farm implements to it. Young Henry was appalled at the manufacturing costs. During the seven years of the agreement, the Ford company made 303,501 tractors which Ferguson sold along with farm implements made by others for $313 million, netting Ferguson $4.3 million in 1946 alone. But the Ford company itself, said young Henry, had lost $25 million on the deal. He decided to set up his own company, Dearborn Motors Corp., to market his own tractors. Ferguson's aides took one look at the new Ford tractor with its hydraulic lift, and filed suit.
Ferguson's immediate problem was to stay in business. He had no plant, but he hastily built one near Detroit, and for the first time began producing his own machines in the U.S. He ran the works, by remote control, from his enormous English stone mansion near Stow on the Wold, Gloucester. In 1949, young Henry called on him to try to settle their differences. Ferguson set such stiff terms that Ford gave up. Finally, in Manhattan's federal court last year, the trial began.
In the year since then, 10,000 pages of testimony were taken, and the defence had not yet had its turn to be heard. Ford had already spent more than $3,000,000 in trial expenses: Ferguson Inc. had spent as much, and it looked as if the expensive legal fight would go on for years. But Ferguson, who had based part of his case on the charge that Ford was monopolizing the tractor business, could not prove it. His own sales in 1951 reached $64.5 million (v. their $79.4 million peak while Ford was making the tractor), and his company netted $406,956. The antitrust part of the suit was dismissed by the court.
Last week Ford and Ferguson made a deal and settled the case out of court. The cost to Ford: $9,250,000, the biggest patent settlement ever paid in a U.S. suit. In the settlement, Ford conceded that it had infringed Ferguson's patents by copying the hydraulic valve, coupling system, and the power-take-off setup, agreed to make restitution to Ferguson on the basis of about $21 for each of the 441,000 tractors Dearborn Motors has made since mid-1947 (Ferguson had asked $100). Ford also agreed to alter the designs of its own tractors enough to remove any further infringement. In England, Harry Ferguson estimated that his company will be able to keep $5.6 million of the payment after taxes.