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 (see Chart A, The Looming Threat below). Collision parts account for 50 to 93 percent of the U.S. design patents awarded to the car companies. Without a permanent solution, such as a “repair clause,” automaker design patent cases could eliminate the entire alternative replacement collision parts industry, thus removing competition in the marketplace and costing the U.S. tens of thousands of jobs.

Oral comments supporting consumers’ rights and opposing the design patents on individual aftermarket collision parts included:

“We support H.R. 5638, and applaud Rep. Lofgren, for introducing it, because we believe it provides a very limited exception to the design patent law which would enable LKQ and its competitors to continue supplying consumers a choice of quality alternative crash parts – when ‘the sole purpose of the…part is for the repair…to restore its original appearance.’ This bill still protects the ability of the car companies to enforce its designs against its car company competitors in the primary market.” Eileen A. Sottile, Vice President, Government Affairs, LKQ Corporation; Executive Director, Quality Parts Coalition

“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, Government Affairs for the Automotive Aftermarket Industry Association

“Consumers would benefit from the emergence of aftermarket manufacturers, not only from lower prices but also from the process and product design innovation that would follow. As for the original manufacturers, their main incentive to design innovation should not be to earn high profits in monopoly aftermarkets for differentiated repair parts but to make their new overall products safer and more attractive to consumers.” 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, 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

“MiCRA’s research, conducted on behalf of the Quality Parts Coalition, to determine what would happen to the prices of collision parts if OEMs are able to use design patents to block independent competitors from supplying replacement collision parts for their vehicles concluded that: eliminating competition in the automotive collision parts aftermarket would allow the OEMs to acquire a ‘second monopoly’ in the supply of collision parts for their vehicles; this would result in price increases of as much as 32 percent on parts that are currently supplied competitively; and the total cost to U.S. consumers could be as much as one and a half billion dollars per year.” Rick Warren-Boulton, economist and principal of MiCRA

For additional information on this issue, please visit www.qualitypartscoalition.com.