Bill threatens patent rights for Michigan auto parts manufacturers
(Editor's note: This guest column was written by Kelly Burris, a patent attorney and shareholder in the Ann Arbor office of Brinks Hofer Gilson & Lione, a national intellectual property law firm.)
What do California lawmakers have against the Detroit auto industry anyway? Suppose you slap down a couple grand to lease a brand spanking new 2012 Cadillac ATS for three years. Subject to mileage and other standard limitations, the car is yours for three years, right? Wrong, if the same illogical premise behind proposed patent legislation was applied.
Photo courtesy of Brinks Hofer Gilson & Lione
The bill, titled the "Promoting Automotive Repair, Trade, and Sales” (PARTS) Act, allows for the blanket manufacture, testing, importation and pre-sale distribution of repair parts that would otherwise infringe a design patent for automotive “component parts.”
The PARTS bill only limits use and sale of such repair parts until 30 months after the patented part is offered for sale. If the bill is allowed to pass, original equipment manufacturer (OEM) patentees of automotive parts will effectively suffer a complete obliteration of their design patent rights.
By way of background, design patents are one among three types of patents in the United States. Design patents protect the ornamental appearance of an object, or essentially what a product looks like. (The other two types of patents are utility patents that protect how something works or how it is constructed, and plant patents that protect asexually reproduced plants).
The quid pro quo, or something for something, in the world of patents is that an inventor obtains an exclusive right to the invention for a limited period of time in exchange for disclosing their invention to the public.
The PARTS bill purports to “preserve consumer choice, reduce insurer and driver costs and improve competition in the market for replacement automotive parts.” In effect, however, non-OEM manufacturers can immediately begin developing, testing and manufacturing repair parts, and even begin their marketing efforts without being liable for infringement. And once the brief 30-month period approaches expiration, these non-OEM manufacturers, distributors and related companies can effectively gain market share in what is meant to be reserved for patentees for 14 years under the patent laws. Instead of a quid pro quo, the PARTS bill equates to a quid pro nihil, or something for nothing.
Allowing such a bill to pass could start the U.S. on a slippery slope to eliminating the Constitutional rights of product developers and disincentivize automotive innovations. What’s next for Congress, drug patents?
Mon, Apr 9, 2012 : 10:05 p.m.
Issa legislation is usually suspect and thanks Mr. Monk for telling us what is going on. Somewhere down the line some friends of Issa are going to benefit (and perhaps Mr. Issa along the way). Issa is a 'cash and carry' legislator and business man (with a criminal past if you look him up).
John R. Monks
Thu, Mar 1, 2012 : 1:43 p.m.
This legislation has been the topic of a number of recent articles in auto repair trade journals. The move to lessen regulation of parts suppliers is driven by the vast amounts of money generated by auto crash parts. The insurance industry will continue to push this legislation under guise of representing that aftermarket/non-oem parts will save the consumer money; however, rarely do we see reductions in insurance premiums, unless some other risk factor has changed,[i.e.- child taken off policy, 3 years since receiving a moving violation, etc.]. The real factor here is that by using an imitation part, the cost of repairs is reduced, and thus, more profit is generated by the insurance company handling the claim. In many cases, the consumer does not fully realise the wisdom of an old adage-"you get what you pay for" until the durability, or poor quality of these aftermarket parts becomes evident, usually after the completion of repairs. Most of us are shocked by the cost of parts for our vehicles, but it is worth remembering that the cost of any given part represents all of the man hours that went into designing, building , packaging, and shipping that part, as well as testing for durability, and safety. Aftermarket suppliers merely make a reverse mold of a part, and start turning them out. Only recently, have saftey concerns over crash parts begun to be addressed. Last year, Ford Motor Company was threatened with a lawsuit regarding a demonstration they presented at a industry conference which clearly showed that an aftermarket bumper for a Ford Mustang was in no way equivalent to an oem part. There are many other problems with this issue. Lets hope the California lawmakers can see through the smoke screen, and make the right choice; otherwise, we will see this pop up here in Michigan as soon as the insurance industry can mobilize their lobbyists.
Sun, Feb 26, 2012 : 2:12 p.m.
It takes years and millions of dollars to develop one new automobile. The new technology on these vehicles are the fruit of this investment. Selling cars, and replacement parts, is how these companies make their investment back- and profit (isn't that the point?). Aftermarket companies have plenty of opportunity to build and provide non-OEM parts- this is about a few corporate political contributors trying to copy their way into a market by supplying replacement parts for some of the high-tech systems being produced today. Regardless where they are based, this will lower the cost of components today, but in the long-term, just cause the free exchange of ideas to slow down as the risk/reward aspect of research efforts makes development look less attractive. Worthless politicians. Somebody check their pockets?
Wed, Feb 22, 2012 : 3:36 p.m.
Vendors can already supply replacement parts immediately - they just can't infringe on patents. I predict this would actually have a devestating effect on parts availability because it will result in a lot of suppliers exiting the market. California legislators should focus on eliminating software and business method patents.
Wed, Feb 22, 2012 : 12:59 p.m.
This article (opinion) was enough to gain my interest, but nothing more. Who is behind the legislation? What are the policy arguments? What are Michigan congresspersons doing? Why 30 months? Maybe you could do a little research and supplement the article. I wish I had the time.
Mon, Apr 9, 2012 : 10:02 p.m.
If Issa is behind a bill you can be sure it's worth researching since he's notorious for pushing bills that benefit his friends (and often himself even though he very, very rich). It would be nice if the AA.com did a little research for us but that's out of the question as we all know. If the research were to expose a Republican like Issa then Tony would kill off that path.
Wed, Feb 22, 2012 : 12:23 p.m.
The patent system is a complete fraud since they eliminated the requirements to demonstrate working models and liberalized 'new and unique' concepts. Robert Hooke developed Hooke's Coupling (universal joint) back in the 1600s, yet, today, we have nearly 1000 patents on it - each claiming newness and uniqueness. The same with hybrid technology. Just how much newness and uniqueness can one claim for an IC engine, electric motor and controller? One University of Nebraska professor has applied for a patent on an anti-gravity machine. He hasn't built one, but he thinks his theory will work and is patentable. Under today's patent rules, the entire periodic table would be patented by various discoverers over the centuries. Priestley might still hold the patent for oxygen through various restatements (like Pfizer does), and we'd have to pay a premium to use it.
Wed, Feb 22, 2012 : 12:04 p.m.
The problem: Automobile repairs a very expensive, in part because the parts maufacturers have a monopoly on the design. The proposed solution: Severely limit the design patents so that competitors, probably in China, will be able to make cheap auto parts. Isn't this a situation that screams for a compromise. The parts manufacturers have been too greedy in exploiting their patents, which makes everyone's insurance rates go up. Law makers fight back by trying to break the monopoly. We don't want to hand over another industry to China but we cannot tolerate a monopoly when it stops benefiting society and begins to hurt the public. Find a solution somewhere in betweem.
Wed, Feb 22, 2012 : 2:55 p.m.
"The proposed solution: Severely limit the design patents so that competitors, probably in China, will be able to make cheap auto parts." I don't know if you've ever done repairs or maintenance on your own vehicles before, but I can say with experience (as many others can as well), replacement parts from China are ...(pick an adjective). Sure, they are cheap, but that's all they are. I'd much rather spend an extra 5-10% on an American made part over the reliability, or lack-therof that I have gotten from replacement parts/performance parts from China. Especially anything you see on eBay that appears to be a knock-off of an actual large name manufacturer. Run hard and run fast in the other direction. Giving short term patents isn't the correct action, but a monopoly isn't 100% fair either.