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Eliminating Competitive Auto Body Parts Would Harm Consumers, NAMIC Tells Patent Office

(WASHINGTON) – June 16, 2008 - The latest attempt to eliminate competitive auto repair parts from the marketplace could substantially drive up prices for consumers, according to the National Association of Mutual Insurance Companies (NAMIC). In testimony delivered to the U.S. Patent and Trademark Office today, NAMIC joined with other property/casualty insurance trade associations in expressing strong concerns about litigation that would use patent laws to prohibit competitive auto repair parts.

“We are concerned that ongoing legal proceedings involving a novel application of design patent rights would harm our members’ policyholders by increasing auto repair costs, which would necessitate higher insurance costs,” wrote NAMIC in the testimony. “We believe these legal proceedings could establish precedent that could virtually eliminate competitive aftermarket repair parts from the marketplace.”

The issue is the case Ford v. Keystone, now pending in the U.S. Court of Appeals for the Federal Circuit. If successful, sheet metal or plastic exterior body parts – referred to as aftermarket parts, crash parts, or generic parts – could be eliminated from the marketplace. If only body parts produced by original equipment manufacturers could be used, repairs costs, and ultimately insurance costs, could increase, NAMIC explained.

“It would eliminate a low-cost option and necessitate that all repairs utilize more expensive OEM parts,” the testimony said. “It has been estimated that competitive aftermarket parts are currently priced 34 percent to 83 percent lower than the comparable OEM parts.”

Because of the higher repair costs, a damaged vehicle would more likely be considered a total loss, forcing more policyholders to replace rather than repair their vehicles, NAMIC wrote. Also, the lack of competition of aftermarket parts would lead to more delays and inconvenience for consumers because the supply of parts and repair times would be entirely controlled by OEMs.

The testimony was delivered to the USPTO during a Town Hall Meeting to consider policy issues and implications related to design patent protection for individual replacement auto parts.

NAMIC has filed briefs with the International Trade Commission and the Federal Circuit Court, asserting that the development of a non-OEM market for repair parts has benefited the public. In the Federal Circuit brief, NAMIC also argued that the parts at issue are not the proper subject matter for design patent protection. Because the Federal Circuit has previously found that exterior auto component parts are functional rather than ornamental, these parts are not design patentable subject matter.

For further information, contact
Nancy Grover
Director - Media Relations
(202) 628-1558 Tel
(202) 628-1601 Fax
ngrover@namic.org

Posted: Monday, June 16, 2008 12:00:00 AM. Modified: Tuesday, June 17, 2008 1:35:38 PM.

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