On May 16, 1811 the [New York] Public Advertiser ran an article that began: "A company of iron mongers and attorneys in Albany have been fitting out two Picaroon Steam-Boats, which the public may have observed to the south of Courtlandt-street dock. It is impossible to look on those boats and not to see that they are exact copies from the boats of Messrs. Livingston and Fulton, to whom America owes the useful invention.
Perhaps a more infamous attempt has never been made to pirate patent rights, and invade the property of inventive and useful citizens. While such a scandalous act is universally condemned, and execrated by every honest man, we sincerely hope it will meet with the just punishment which the laws have power to inflict ..."
On June 22, the Hope, the steamboat built by those "iron mongers and attorneys," aka "the Albanians," set sail for Albany.
Livingston took the iron mongers and attorneys to court.
New York's Chief Justice, James Kent, one of the most respected jurists in the nation at the time, consistently ruled in favor of the monopoly, beginning with issuing a permanent injunction against the Hope (Robert R. Livingston vs. James Van Ingen et al, 9 Johnson 506), saying all commerce within a state was exclusively in the power of the state.
A company of iron mongers and attorneys in Albany, have been fitting out two Picaroon Steam-Boats, which the public may have observed to the south of Courtlandt-street dock. It is impossible to look on these boats and not to see that they are exact copies from the boats of Messrs. Livingston and Fulton, to whom America owed the useful invention. Perhaps a more infamous attempt has never been made to pirate patent rights, and invade the property of inventive and useful citizens. While such a scandalous act is universally condemned, and execrated by every honest man, we sincerely hope it will meet with the just punishment which the laws have power to inflict. One of the kindest gifts of heaven unto man is genius; its labours well applied, improve our conveniences, and extend its beneficial effects to all society. The produce of ingenuity among a civilized people, is therefore morally and politically the most sacred of rights, and should be as well protected as the produce of any corporeal exertion; morally from a sense of right – politically by encouraging ingenuity to exertions which may produce improvements useful to our country and society in general; but if ingenious men are to be robbed of the fruits of their labour by companies of speculators, no inventor can be secure in his rights; the patent laws would be useless, and the genius of our country unprotected, would cease to be productive. Therefore, on every principle of national pride, for the honour and protection of the useful arts, and on every principle of justice, and national interest, we thus call the attention of the public to this infamous Albany speculation, in which there is interwoven, an intrigue and collateral influence, which, if the subscribers and their coadjutors have not fronts like Agamemnon's shield, which was six double of bull hide covered with a plate of brass; they would blush to hear their names mentioned on the trial in this important case. But it is not enough that the law should punish them by touching their purse; the public respect for science, should punish them by the contempt which so shameful a conspiracy against the arts, merits.
After the partnership between the two men dissolved, Ogden secured an injunction against Gibbons from Chancellor James Kent of New York on Oct. 21, 1818. Gibbons appealed but the injunction was upheld by Kent on Oct. 6, 1819 and by the state Court of Errors on April 27, 1820.
Gibbons vs. Ogden:
Commerce Clause of the U.S. Constitution over States' Rights
On March 2, 1824, the Supreme Court struck down the law of New York State that prevented out-of-state commercial steamboats from doing business on its waters. Justice Marshall's opinion was considered to be a tremendous "knockout blow" against states' rights, but it did much to establish federal power in matters of interstate commerce, opening the door for easy trade between the states and national economic growth. In his opinion, Marshall held that the Constitution, having granted Congress the power to regulate commerce, also meant for Congress to have the power to regulate navigation. He wrote that:
"[T]he power to regulate commerce does not look to the principle by which boats were moved. That power was left to individual discretion. The act demonstrates the opinion of Congress that steamboats may be enrolled and licensed in common with vessels using sails. They are, of course, entitled to the same privileges and can no more be restrained from navigating waters and entering ports, which are free to such vessels, than if they were wafted on their voyage by the winds instead of being propelled by the agency of fire. The one element may be as legitimately used as the other, for every commercial purpose authorized by the laws of the river, and the act of a State inhibiting the use of either to any vessel, having a license under the act of Congress, comes, we think, in direct collision with that act."
"The acts of the Legislature of the State of New York, granting to Robert R. Livingston and Robert Fulton the exclusive navigation of all the waters within the jurisdiction of that State, with boats moved by fire or steam, for a term of years, are repugnant to that clause of the constitution of the United States, which authorizes Congress to regulate commerce, so far as the said acts prohibit vessels licensed, according to the laws of the United States, for carrying on the coasting trade, from navigating the said waters by means of fire or steam."
Ogden vs. Gibbons (1824)