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Quality Parts Coalition and automotive 'repair clause' supporters submit testimony to USPTO
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Washington--Advocating for consumer rights in automotive repair by the adoption of a "repair clause" in U.S. design patent law, leading consumer-based groups have recently submitted testimony to the United States Patent and Trademark Office (USPTO).  They were also joined in the submission of written testimony by proponents of competition in the automotive marketplace who appealed to the USPTO on the heels of a June 16 town hall meeting which addressed the issue of protection of industrial designs.

 
In recent years, the number of design patents awarded to the major automobile manufacturers has dramatically increased, growing to about 20 to 25 percent of the total U.S. patents awarded to those manufacturers.  Collision parts account for 50 to 93 percent of the U.S. design patents awarded to the car companies.  Without a permanent legislative change, such as a "repair clause," automaker design patent cases could eliminate the entire alternative replacement collision parts industry, thereby removing competition and consumer choice in the marketplace.

 
Fortunately, there is a solution available: H.R. 5638, legislation introduced by Rep. Zoe Lofgren (D-Calif.) which would amend Title 35, U.S. Code (Patents) to provide design patent exemption for alternative repair parts used for the purpose of repairing a vehicle to its original appearance. H.R. 5638 would guarantee consumers have access to much-needed replacement parts for their vehicles and ensure that the industry remains competitive and flourishes well into the future.


Written comments supporting a legislative change to ensure consumers' rights and the continuation of a successful 60-year-old collision repair parts industry included:


"LKQ and QPC agree wholeheartedly with Representative Zoe Lofgren (D-Calif.), who stated in introducing H.R. 5638 that, 'our patent system should provide an appropriate incentive for industrial designers to innovate.  However, the system must be balanced and take into account the legitimate needs of consumers.' With gas prices already making car ownership close to prohibitively expensive for some Americans, we believe that it is in the public interest to ensure that U.S. patent law does not eliminate a place in the market for less expensive, quality alternative collision repair parts.  LKQ and QPC are not asking for an extraordinary new 'right.'  Rather, they simply seek to preserve the traditional place in the market for competition in the sale of collision repair parts.  Consumers have come to expect that competition, and they deserve it."  Eileen A. Sottile, vice president of government affairs, LKQ Corp. and executive director of the Quality Parts Coalition.


"In the early 1990s, the car companies came to Congress and asked for special design copyright protection on these replacement parts and Congress said no.  Our concern today is that the car companies are now using design patents, not for the important and legitimate protection of the overall design of their vehicles, but to prevent competition when it comes to getting the parts we need to repair our vehicles.  Automakers are essentially hijacking design patent laws to create a parts monopoly.  The victims?  The hundreds of thousands of Americans who experience low speed collisions each year." Jack Gillis, director of public affairs for the Consumer Federation of America.


"With the cost of gasoline escalating at unprecedented rates, car owners still have access to the most affordable and convenient vehicle service industry in the world thanks largely to the fact that car owners have a choice as to where they have their vehicle repaired and with what parts. There are very few other products that boast such a strong market for the service of that product and many motorists take for granted the fact that they can take their car anywhere they want for service and purchase replacement parts that meets their price and quality needs." Aaron Lowe, vice president of government affairs for the Automotive Aftermarket Industry Association.


"As the USPTO listening tour continues, RetireSafe urges you to consider how American consumers, and more specifically, senior citizens, benefit from the presence of a flourishing automotive aftermarket. Conversely, decreased competition in the replacement parts industry harms consumerism and may limit seniors' access to the much-valued personal freedom of transportation. As a steadily-increasing segment of the American population, American seniors deserve the benefits that come with the continued tradition of a free American marketplace." Michele Plasari, president of RetireSafe.


"We expect H.R. 5638 to bring more competition to the component parts markets so that consumers benefit from much lower prices, broader choices and higher quality. The bill will ensure a more competitive environment so that independent parts providers can effectively compete with the manufacturers of original products. Consumers have only a limited ability to protect themselves against exploitation in the aftermarket for many products because of the difficulty in assessing total cost of ownership at the time of purchase. Several empirical studies support the conclusion that the existence of independent parts providers can lower the price of repair parts, especially in the automotive industry." Albert A. Foer, president, American Antitrust Institute and Norman Hawker, American Antitrust Institute Senior Research Fellow; Associate Professor of Finance and Commercial Law, Haworth College of Business, Western Michigan University.


"We believe that a comprehensive consideration of policy issues and objectives shows that the potential harm to consumers that would occur from the elimination of competitive repair parts greatly exceeds any societal benefits that would be gained from the application of design patent protection to individual parts. Vehicle owners, our members' auto insurance policyholders, should continue to be allowed to choose to have their autos repaired with lower-priced aftermarket parts, and they should continue to benefit from competition that minimizes repair costs." Dave Snyder, vice president of the American Insurance Association, providing a joint statement of the American Insurance Association, National Association of Mutual Insurance Companies, and Property Casualty Insurers Association of America.


"If H.R. 5638 or similar legislation is not passed, the U.S. government is in essence delivering a monopoly on crash replacement parts to the carmakers, a development which would financially burden an already over-taxed driving public with increased direct and indirect costs for consumers and threaten dire consequences for America's aftermarket parts industry." Stanley Rodman, executive director of Automotive Body Parts Association.


"Without competition, there is little or no reason for the car companies to develop better quality parts at competitive prices. A free-market system has always been used for innovation and improvements, resulting in consumer satisfaction. Aftermarket parts cost up to 50 percent less than the identical car company parts, and aftermarket parts come with long-term or life-time warranties, which car company parts do not. CARE, of course, supports protection for the car companies' intellectual property. However, this is not about violation of intellectual property, but it is about the car companies' historic desires and actions to restrict the manufacture of aftermarket parts that, in this case, must look and function like the original part in order to sell." Sandy Bass-Cors, executive director or The Coalition for Auto Repair Equality (CARE).


"The OEMs thus have a strong incentive to raise the prices of collision parts on their vehicles to far above the competitive level if they can use design patents to block independent competitors from supplying replacement collision parts for their vehicles. And that is consistent with what we actually observe in the   data – that competition has resulted in a significant fall in the prices consumers pay for collision parts."  Rick Warren-Boulton, economist and principal of MiCRA.

 
"For consumers already feeling the squeeze from soaring gas prices during their daily commute, the resulting increased prices will be a large burden to bear. Hitting closer to home for FAIA and our members is the fact the excessive patenting of automotive crash parts leads to continued monopolization of the auto repair parts market by the big automakers, meaning far fewer jobs in an industry that represented annual sales in Florida of more than $16 billion." George Ehrhard, ASE, executive vice president & administrator of the Florida Automotive Industry Association, Inc.


For additional information visit www.qualitypartscoalition.com. To access full testimony submitted by H.R. 5638 supporters and QPC members visit: www.qualitypartscoalition.com/press/uspto_testimony.html.  




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