Forty years ago, Kinze Manufacturing was just a small farm equipment startup near Williamsburg, Iowa. After developing several innovative products, the company was starting to attract the attention of farmers looking for ways to improve their farming efficiency. However, Kinze was also drawing the attention of the industry-giant, John Deere.
The following is the final installment of a five-part series describing Jon Kinzenbaw’s early battles with John Deere - both in the field and in the courtroom. What started out as suit over row unit availability, eventually ended in a ruling that forever changed Kinzenbaw’s young company - and the ag equipment industry as a whole!
This excerpt is from the book "Fifty Years of Disruptive Innovation" and is told in Jon’s own words. If you missed part one, part two, part three or part four, you'll want to go back and read the whole blog series.
Perseverance Pays Off
The next day was April 1, 1983. April Fool’s Day. I got on the witness stand, and we began the antitrust portion of the trial. Same jury, same smiling faces, and I picked up a sense, without a word being said, that the jury had already given us the victory. There was friendly eye-to-eye contact back and forth.
Jim Hill began his case by asking me about the row unit. I told the jury why I built the row unit, why mine looked like theirs, except it was black and white; why mine had a decal on it that said “Shortage Specialties Division” — a tongue-in-cheek poke at Deere’s “shortage.”
Hill told the jury, “Here’s the deal. It’s obvious that we have copied this row unit. But we want you to see the real reason. We want to show you the Kinze invention. There is a patent — I might add, a valid patent,” he said, emphasizing “valid” for effect, “on this folding frame. And we’re going to show you how this works. But before we show you how this works, we want to show you the way that John Deere moves a planter to and from a field.”
So we showed about 15 minutes of slides in very labored detail of how the Deere planter had to be pulled onto a trailer, and then how the farmer had to:
1) climb down and unhook the tractor from the planter,
2) climb back up on the tractor,
3) drive the tractor over to the trailer,
4) back up the tractor,
5) climb down and hook the trailer to the tractor,
6) climb back up on the tractor,
7) drive the trailer into the field near where the planter is sitting,
8) climb down and loosen bolts and chains to unfasten the axle from the trailer,
9) lock the mechanical brakes on the trailer axle,
10) climb back up on the tractor,
11) slide the trailer off its axle and lay it flat on the ground,
12) climb down, unhook the tractor,
13) climb back up on the tractor and back it up to the planter,
14) climb down and hitch the planter to the tractor,
15) climb back up on the tractor and drive across the trailer until the planter is crosswise to the elongated trailer,
16) get off the tractor and unhook the planter,
17) fold each half of the planter hitch around beside the planter frame to make it fit within the width of the trailer,
18) coil up hydraulic hoses and monitor cables for transport,
19) climb back up on the tractor and drive it around to the front of the trailer and back up,
20) get off the tractor and hook the trailer to the tractor again,
21) climb back up on the tractor and back the trailer bed up onto the trailer axle,
22) get off the tractor and fasten axle to the trailer, clamping it on with bolts and chains so it is fastened rigidly under the trailer,
23) release the mechanical brakes on the trailer axle (this sometimes required getting off and on the tractor multiple times),
24) tie down the planter to the trailer with log chains and binders so it doesn’t roll off going down the road.
25) At last! You are ready to get back on the tractor and drive out of the gate to go down the road to the next field.
This entire process took about 30-45 minutes and then had to be reversed at the next field. Once the planter was unloaded from the trailer, you might think you’re ready to plant, but the trailer is parked in the middle of the field and has to be hooked up and moved before planting.
Then we showed a series of slides of how the Kinze rear-fold planter simply folded so the farmer only had to release two latches, then drive forward. I went down on the floor with a quarter-scale model of a 12-row planter and showed the jury how the wings folded and unfolded. I basically spent the whole day testifying or demonstrating. Near the end of the day, my attorney said, “Now, Mr. Kinzenbaw, this planter sells for, give or take, $20,000 for a 12-row. Is that correct?”
“Yes, that’s correct.”
“Now you said the row units were listing for around $1,200. You got a 20 percent discount when you bought these row units. So you’re talking about row units here to the tune of maybe $10,000 or a little more for 12 of them by the time you got them purchased.”
I said, “That’s correct.”
“So then would it be safe to say the bar was between $8,000 to $10,000 for a typical folding bar?”
“That’s correct,” I said.
“So the bar and the row units are priced about the same?”
Again, I said, “That’s correct.”
He said, “You indicated the folding planter is patented. Did Deere ever try to buy this patent from you?”
Well, that question brought guffaws, grunts and objections again from the gallery that were unbelievable. Deere’s attorneys objected and all the attorneys approached the bench. I was close enough — within six to eight feet of them — to hear as they were whispering to the judge why I should not be allowed to answer the patent question. My attorney argued, “This is a very relevant question.” The judge said, “He may answer.”
After they all took their seats, my attorney asked me the question again.
I said, “Yes, they did try to buy it.”
“What did they want to pay you for this $10,000 bar?”
“Twenty-five dollars,” I said.
My attorney said, “Twenty-five dollars?” He gave a bewildered look to the judge and the jury. The jury looked at us. The judge looked at us. Jim said, “That’s a pretty small amount — that is decimal point zero-zero-something percent royalty!”
I said, “Yes, it is.”
He said, “Was that an acceptable offer?”
“Well, then what happened?”
I said, “I counteroffered it to them for $100.”
He said, “A hundred dollars for a $10,000 bar; that’s still a pretty small royalty.”
He asked, “What happened then?”
“Well,” I said, “I’ve always said that’s the day two fools met.” (Not to mention this was April Fool’s Day.)
Everybody perked up. I explained, “I’d have been a fool to take a hundred dollars, and they were sure fools not to give it to me.” The jury, even the judge — the whole courtroom — exploded in a roar of laughter. The judge banged on his gavel and said, “Order in the court!” When things calmed down, he said, “Since it is now four o’clock, we will adjourn for the day and reconvene tomorrow morning at nine o’clock.”
By then, John Deere had evidently had enough. That evening, Deere’s attorneys were more than happy to get the settlement finalized. The details of that final settlement were secret, but it did allow them to appeal the verdict finding their patents invalid. We were basically settled and the battle was won. Deere’s patent trial against Kinze lasted nearly a month, during which time we were able to prove that all five of the John Deere patents were invalid. They were either in prior-use, the statute of limitations had passed, or Deere hadn’t told the Patent Office all the facts. The only problem was that Deere appealed it all the way to the United States Supreme Court, so it took money, resources and time to beat Deere five times over seven years before we were finally rid of it.
After the trial, with the ongoing appeals, a lot of people, a lot of dealers, were misled into thinking that John Deere won. In fact, it lost this case hands down. But it was behind us and, ever since, we have built our own row units, and we continue to improve on and build better models of row units and planters.
Jim Hill told me after the settlement: “This will go down in history as a colossal blunder in the agricultural industry.” Deere used roughly 20 attorneys. Based on the fact that Kinze had two attorneys and spent $650,000, it is safe to assume they spent 10 times this amount with their 20 attorneys that consisted of a mix of in-house attorneys and big name law firms, who didn’t work cheap. Just based on attorney fees, Deere should have taken my $100 offer. Not only did they lose planter sales, but they lost the row unit sales, too. If Kinze had not been backed into a corner, we wouldn’t have discovered it was possible to manufacture a row unit, because, until then, we hadn’t done that precision type of manufacturing.
About a year after the trial, a local Cedar Rapids woman told us that she was not surprised when Deere lost because she was part of a mock jury trial that Deere conducted prior to the start of the actual trial. Deere wanted to see what its chances were to win this case with jurors from the Cedar Rapids area, so it had attorneys deliver both sides of the case in order to try and predict the actual outcome. Interestingly, the woman said that Deere lost during the mock trial and the jury ruled in Kinze’s favor. These mock jurors were sworn to secrecy, so this did not become public prior to the trial.
Since the big battle with John Deere, there have been other battles because our competitors would like to see us out of the planter business. In 2009, CNH sued Kinze over vacuum meter patents. The lawsuit went to trial in February 2011, and Kinze proved that it did not infringe on any of CNH’s patents. In addition, we were able to discredit many of the key patent claims that rendered some of CNH’s patents invalid.
During the litigation with John Deere, we learned the value of perseverance. We were very fortunate and blessed to have so many individuals helping us with evidence, and countless other friends and family praying for our company throughout the trial and during the years of appeals that followed. This was a pivotal time for our company — we had our backs against the wall and everything on the line — so we had no choice but to press forward.