The process began in December 2005, said Eileen Sottile, QPC executive director, when Ford filed a Section 337 case with the International Trade Commission (ITC) alleging patent infringement on 14 parts used in the manufacture of the F150, including the hood, fenders, and quarter panels.  Two aftermarket parts distributors and four manufacturers were named.

The patents in question were design patents, which apply to an ornamental design, Sottile said, as opposed to utility patents, which are granted for new and useful processes, machines, an article of manufacture or composition of matter, or an improvement thereof. 

 
Sottile noted that only about 4 percent of patents each year are design patents.  The ITC is a quasi-judicial federal agency with far-reaching powers, she said.

Four of the complaints were thrown out early in the process on technical grounds, Sottile said, resulting in a hearing in August of 2006 on 10 parts.  Subsequently, the judge handed down a decision on Dec. 5, 2006, upholding seven of the complaints and dismissing three others, she said.  The court recommended a general exclusion be issued, preventing the importation of the seven parts, she said.  "It was a very effective strategy on their part." A request for an appeal hearing was declined, Sottile said, and the 60-day presidential review period expired without intervention.

Sottile said the aftermarket parts industry has now begun a two-pronged effort to overturn the effort.  She said the first move is an aggressive appeal of the original decision, which has been filed in federal circuit court.  The second is the founding of QPC to inform federal legislators and the public about the situation and to pursue a change in the laws to allow the supply of aftermarket parts.

The effect of the rulings has been to create a monopoly for Ford on the parts in question, Sottile said, which if expanded to other parts could lead to parts shortages, escalating prices, and eventually more cars being totaled.  "The fact that car companies are able to obtain these patents is a huge threat to the collision repair industry," she said.

"We think that by design they have a business strategy to obtain patents and then file with the ITC to create a monopoly," Sottile said.  She said that since the decision, the number of design patents issued to Ford, Honda, and Toyota have climbed dramatically.  "We think other vehicle manufacturers are waiting to see what happens with this case before they act."

The impact on the industry may stretch beyond aftermarket parts suppliers, Sottile said, noting that OE prices tend to decrease once aftermarket equivalents are introduced.  "We have evidence that as soon as we introduce a part into the aftermarket, the OE prices immediately drop by an average of 8 percent," she said.  Prices of aftermarket parts tend to range from 26 percent to 50 percent less than the OE equivalent, she said.

"An increase in part prices will further exacerbate the problem with the growing number of totals in the collision repair industry," she said.

The first legislative attempt to change the law appears to be an amendment to the patent reform bill, which is expected to be voted on early in 2008.  "It's been debated for the last six years and is very complicated," Sottile said, noting the difficulty in getting a change inserted at this late date.

What the aftermarket parts industry is hoping for, she said, is the inclusion of a repair clause in patent law that would allow protection for the primary market but would also allow the creation of generic replacement parts.  For instance, she said, that would prevent another car manufacturer from copying Ford's patented design to produce a car but would still allow the manufacture and importation of generic repair parts.

Sottile said 18 European Union countries and Australia currently have repair clauses in their patent law, providing compelling precedents.

"There's a lot of common sense to this argument, so we are making progress," she said of the group's efforts in Congress but noted that they are a clear underdog.

"This is the first time we have really had to work at the federal level," Sottile said, noting that the majority of legislation affecting the aftermarket parts industry has been at the state level.  "We're in the tough position of needing (federal legislators') help before we know them."

Sottile said that in addition to the group's meetings with legislators, it has also been talking to consumer groups to discuss the possible impacts as well as other collision repair industry groups.  "The effect on the collision repair industry is very important to us," she said.  "We feel that they are being victimized by this just as much as we are.  Ultimately they will be the ones who pay the price by having fewer cars to repair.

"This is really a collision repair issue, and I am hoping that we can get by the ongoing debate that we have had about aftermarket parts and realize that this is not just a parts issue," Sottile said.  "The car companies are taking options away from collision repairers on how they fix cars."