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The Looming Threat: Car Company Monopoly on Crash Parts
Rise in Design Patents Granted a New and Disturbing Trend
Note 1: The term “crash parts” includes bezels, bumper covers, deck lids, door shells, fenders, fascias, front/rear grilles, header panels, headlamps, high-mounted brake lights, hoods, pickup beds, pickup box sides, quarter panels, radiator supports, side markers, side mouldings, tailgates, taillamps, and wheel houses as defined by the Certified Automotive Parts Association at http://www.capacertified.org/whatparts.asp. Note 2: Figures shown are cumulative.
What role do design patents play in consumers’ right to quality, affordable collision repair parts?
- There are two types of patents for articles of manufacture such as automotive parts: utility patents may be granted to anyone who invents or discovers a new and useful process, machine, article of manufacture, or composition of matter, or any new and useful improvement thereof (U.S. Patent & Trademark Office). Design patents are granted to those who invent a new, original and ornamental design for an article of manufacture.
- The number of design patents granted to the major car companies on collision repair parts (e.g., bumpers, hoods, fenders, etc.) has increased: as the graph above illustrates the number of design patents held by the car companies has more than doubled since 2005. By enforcing design patents on seven collision replacement parts for the 2004 Ford F-150 through a complaint at the International Trade Commission (ITC), Ford temporarily eliminated all competition for seven F-150 collision repair parts. This allowed Ford to drive up the prices of most of these parts, to the detriment of the consumer. In May 2008, Ford initiated another design patent enforcement action at the ITC against its aftermarket competitors, this time for parts on the 2005 Mustang.
What does this mean for American motorists?
- Repair costs will skyrocket: the ability to choose alternative collision replacement parts currently saves consumers approximately $1.5 billion each year. These parts – while equal in quality – are far less expensive. Often, these parts are priced 26 to 50 percent less. Insurers estimate that a car company monopoly will result in a $3 billion increase in insurance premiums. In the current economic environment, the savings provided to consumers by using quality replacement parts is now more important than ever.
- Choice may disappear: as a result of a court settlement in April 2009 which ended legal action on the Ford F-150 and Mustang, today, the millions of Ford F-150 and Mustang owners in the U.S. have limited alternative options for quality replacement collision parts. The settlement, which awarded one aftermarket competitor with a temporary, exclusive license to distribute aftermarket Ford parts, further hurts the consumer, who may shoulder the added cost of the royalty in the increased price of parts. Car companies like Ford are strategizing to enforce these patents on collision repair parts of many new car makes and models to further monopolize the automotive collision repair parts market.
Is there a solution?
- Congress must enact the "Access to Repair Parts Act": Representative Zoe Lofgren (D-Calif.) and Senator Sheldon Whitehouse (D-R.I.) introduced the “Access to Repair Parts Act” in June 2009. The identical bills, H.R. 3059 and S.1368, strike a balance between protecting intellectual property and ensuring free competition by creating a limited design patent exception for collision repair parts. Joining Rep. Lofgren in support of the House legislation are original cosponsors Reps. Rick Boucher (D-Va.), Steve Cohen (D-Tenn.), William D. Delahunt (D-Mass.), Sheila Jackson-Lee (D-Texas) and Charles A. Wilson (D-Ohio). Rep. G.K. Butterfield (D-N.C.) is a cosponsor. Adoption of this legislation would bring the U.S. in line with a number of nations that ascribe to free competition in the collision repair parts market. The European Union is in the process of adopting a similar design directive.
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