The latest skirmish in the long-standing battle over non-OEM crash parts doesn't involve disputes over quality but rather whether such parts even can be legally manufactured and imported into the United States.

Representatives of Ford Motor Company and the aftermarket parts industry squared off at the Collision Industry Conference (CIC) held in Las Vegas in November, with each side laying out its argument for or against legislation regarding the “design patents” that automakers are increasingly filing on the hoods, fenders and other crash parts, limiting non-OEM part competition for those parts.

“With limited and restrained competition, Ford has the marketing power to raise prices as it sees fit, and gouge consumers and all collision repair industry stakeholders along the way,” Dan Morrissey, a board member of the Automotive Body Parts Association, which represents non-OEM parts makers and distributors, charged.

“You take an American-designed part patented in America, and then you go overseas, clone it and bring it back. This helps America? This is what is at issue today,” Damian Porcari, an intellectual property attorney with Ford fired back. “Under this bill, anyone, anywhere, can copy anything if it's is attached to something else. You don't have to pay that person or even ask them for permission.”

The bill Porcari referred to is the federal “Access to Repair Parts Act,” introduced into Congress in June and backed by the non-OEM parts industry and some consumer groups. It would allow non-OEM parts manufacturers to produce copies of automotive parts that might otherwise be protected by design patents.

At CIC, Morrissey argued that such legislation is necessary because the number of design patents on crash parts filed by automakers – Chrysler, Ford, Honda, Nissan and Toyota, in particular – has doubled in recent years. As part of this “new business strategy” to eliminate non-OEM part competition, Morrissey said, Ford successfully challenged the import of non-OEM replacement crash parts for the F-150 pick-up. Only an agreement this year between Ford and LKQ Corp. – under which LKQ pays Ford a royalty fee to have the exclusive right to import and sell non-OEM replacements for about 280 parts covered under Ford design patents – has made the non-OEM parts available here.

“But this settlement should be seen as resolution to expensive litigation, and not as a solution to the problem,” Morrissey said.

He said design patents eliminating competition will result in higher OEM parts prices, using a chart that he said showed that prices for the seven F-150 parts covered under Ford's patent rose 20 to 81 percent from 2007 until November 2008. The lack of competitive parts hurt consumers and results in more total losses, Morrissey said. The legislation, which is modeled after similar rules in place in nine European countries and Australia, does not detract from an automaker's ability to patent the overall design of a vehicle, but allows for production and importation of non-OEM versions of individual replacement parts. Such competition, he said, results in OEM price-matching programs, and efforts by all suppliers to improve quality, warranty, profit-margin and delivery options for shops.

Ford's Porcari took several tacks in arguing against the legislation. He said that while the original design of vehicles and parts is as challenging and expensive now as it was decades-ago, laser-measuring and other technologies have made copying a part significantly easier and faster than ever. The legislation, he said, allows such copying not just of automotive parts, but for replacement parts on any manufactured product.

“It invites foreign manufacturers to take the best and coolest U.S. products and copy it,” he said. “We're telling the world: Copy our stuff.”

Under the bill, he said, someone designing a custom aftermarket headlamp for a vehicle, for example, could get a design patent on it, but the automaker who designed the original headlamp could not. A tire company, he said, that patents the design of a tire would risk losing that patent if the tire was included by an auto manufacturer on a vehicle.

He said it's insurers, not consumers, who want non-OEM automotive parts. Consumers always have the choice to use a salvage part, Porcari said, and under agreements like Ford and LKQ's, still have access to non-OEM versions of patent-protected parts. And competition from non-OEM parts is not the only thing that holds automaker parts pricing in check. Insurers, for example, take such pricing into effect when they price insurance policies on a vehicle, Porcari said.

“Everyone gets insurance before they drive a new car home,” he said.
“If they can't afford to insurer their car and ride it home, we don't get to sell a car.”

Porcari said the bill also is retroactive, nullifying existing design patents that manufacturers have “paid for and been counting on as a business model.”

But one of his over-arching arguments seemed to be the need to protect U.S. jobs.