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last updated on December 16, 2009

AFTERMARKET AUTO PARTS

Auto Manufacturers are seeking to eliminate competition through the use of design patents, increasing costs for consumers without providing any additional benefit.

NAMIC STRONGLY SUPPORTS allowing competition in the auto parts market through legislation such as HR 3059 and S 1368, the Access to Repair Parts Act, to protect consumer choice in replacement auto repair parts.

BACKGROUND

Prior to the development of a competitive repair-parts market in the 1970s and 1980s, auto manufacturers had no competition for parts to repair a vehicle after a crash.

Consumers who needed to repair their vehicles had to obtain replacement parts from original equipment manufacturers (OEMs), eliminating the choice for lower-priced replacement parts, often referred to as aftermarket parts, crash parts, or generic parts. After the development of a more competitive market, results have increased customer choice, lowered costs, and lowered OEM prices for parts.

With the use of aftermarket parts, American consumers have benefited greatly from lower repair costs, and consequently, lower insurance costs, as a result of a competitive repair-parts market. Typically, these parts are 26 percent to 50 percent less expensive than those issued by manufacturers.

Automobile manufacturers have worked to keep aftermarket parts off the market by obtaining design patents, eliminating competition through the enforcement of these patents on specific replacement collision parts. Competition in the auto repair market saves consumers more than $1.5 billion each year, an amount that has grown since the development of a competitive repair-parts market in the United States. This could be reversed by the design patent laws and use of these parts would then be considered an act of infringement.

A legal case impacting the importation of aftermarket parts, Ford v Keystone, was on appeal through the United States Courts of Appeals for the Federal Circuit. Ford v Keystone is a case in which Ford is suing the importers of aftermarket parts and was brought in front of the International Trade Commission. Ford appealed because the ITC ruled against them. Before a decision was handed down on the appeal, Ford agreed to a confidential settlement extending through September 30, 2011. Because this is a temporary agreement only between Ford and a select few companies, a legislative fix is still the preferred option.

In the 111th Congress, NAMIC has worked closely with the Quality Parts Coalition, as the Chairman of the Board of Directors of the coalition, encouraging introduction and adoption of legislation. On June 25, 2009, Rep. Zoe Lofgren, D-Calif., introduced HR 3059, the Access to Repair Parts Act, in the U.S. House of Representatives and Senator Sheldon Whitehouse, D-RI, introduced identical legislation in the Senate, S 1368. This “repair clause” legislation would amend current patent law and preserve competition in the automotive replacement parts market, providing options for budget-conscious consumers and helping to keep businesses afloat in these tough economic times. The bill was the subject of a hearing held in March, 2010 by the House Judiciary Committee.

CONTACT INFORMATION

For more information, please contact Kathy Mitchell, federal affairs director, at (202) 580-6744 or kmitchell@namic.org.