Car Companies Threaten to Monopolize Market for Collision Repair Parts

For more than 60 years, consumers have enjoyed the benefits of competition for exterior collision repair parts (e.g., fenders, hoods, grills) when they need to repair their cars. Such competition has provided American motorists a choice between a car company part and a quality alternative part, which is typically priced 26-50 percent less expensive than the car company equivalent. Despite consumers’ expectation of choice over the past decades, the car companies have recently begun to enact a strategy to block competition for collision repair parts through the use of design patents.

The number of design patents held by the car companies on collision repair parts has more than doubled since 2005. If enforced, these restrictive, 14-year patents are capable of blocking quality alternatives from entering the marketplace and wiping out competition. In August 2007, Ford did just that: it effectively eliminated competition for seven collision repair parts on the F-150 pickup through an International Trade Commission (ITC) design patent enforcement action against its aftermarket competitors. In addition, in May 2008, Ford initiated another design patent enforcement action at the ITC against its aftermarket competitors, this time for certain collision repair parts on the 2005 Mustang.

As a result of a court settlement in April 2009, which ended legal actions in the Ford F-150 and Mustang cases, today, one aftermarket competitor has a temporary, exclusive license to compete in the aftermarket against Ford. This means that consumers have very limited choice in their repairs. Additionally, instead of pricing the parts in the free and open marketplace (typically 26-50 percent less than the car company price), that one competitor will now be forced to pay a royalty to Ford. This may increase the price of those parts to the detriment of the consumer – all because design patents were used to eliminate or squeeze the competition.

There are hundreds and hundreds of design patents on collision repair parts held by the car companies – and on all sorts of car makes and models. Consumers cannot afford to sit and wait until another car company files yet another design patent enforcement action on hood and fenders.

Consumers Need an Automotive “Repair Clause”

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. 

Quality alternative parts suppliers are an important part of the automotive marketplace. In addition to tens of thousands of U.S. jobs which are linked to the supplying of such parts, many U.S. auto dealers are customers of such suppliers and an important source of the parts which such dealers use to fix their customers’ cars. Particularly in light of the tragic economic troubles in which certain car companies currently are finding themselves, now more than ever, it is important that an alternative supply of collision repair parts is preserved to ensure that auto dealers and independent repairers continue to have access to repair parts for consumers’ cars which need them – even if the car company discontinues making them or cannot otherwise supply them.