column: Pending PARTS Act Legislation will threaten Michigan's resurging auto industry
I was privileged to serve as an expert witness in Washington, D.C. on Aug. 1, 2012 at a Subcommittee hearing of the House Judiciary Committee on Intellectual Property, Competition and the Internet regarding H.R. 3889, “the Promoting Automotive Repair, Trade, and Sales Act” (“PARTS Act”). Those readers who follow the auto industry may recall my opposition to H.R. 3889 when it was first reintroduced in February 2012.
The PARTS Act, which claims to offer consumer choice and the hope of reduced car insurance premiums, would drastically reduce the term for design patents on automotive repair parts from 14 years to less than 30 months. When asked how much insurance premiums would be reduced during testimony last week, the insurance industry clarified that insurance premiums would not actually be reduced, but that they were trying to reduce rate increases with this bill. Yeah, right.
Auto manufacturers consistently lead the world in R&D spending, to the tune of $18-20 billion a year. Design protection encourages innovation and creates jobs in the United States. In fact, fourteen different OEMs - most of them headquartered outside the U.S. - maintain design centers in the U.S. to create vehicles that will appeal specifically to American consumers. According to the Alliance of Automobile Manufacturers, there are 21 separate design facilities in three states (Michigan, Ohio and California) that account for roughly 40,000 jobs.
Non-OEM parts likely will be lower quality and present safety risks without any controls on their specifications. In fact, testing has shown that non-OEM parts do not perform as they should and do present safety risks. Even the Chief Research Officer for the Insurance Institute for Highway Safety (IIHS) acknowledged that “You can't willy nilly change those parts, because the system won't work the way it was designed.”
If the PARTS Act is passed, sub-standard non-OEM parts also could result in a tarnished image of the brand owners such as Ford, Chrysler, and GM because the replacement part is presumed to be made by the OEM once the vehicle is back on the road. Language in the PARTS bill is not limited to automobiles and instead would apply to all “motor vehicles,” which would include motorcycles, mopeds, motor scooters, tractor-trailers, and farm equipment, among others. Not only is there danger that PARTS will open the door for other service industries to demand equal rights and their exception to design patent infringement, it will also immediately pull in other motor vehicle design communities besides automotive.
As a patent practitioner, and a former design engineer, I am very familiar with the significant time and expense involved in new product development. Years of development and testing, many long nights and weekends away from families, missed vacations, and the thousands if not millions of dollars spent refining the design before production “launch.” These designers earned the right to call those parts their own for the period under which they bargained for under our patent laws: fourteen years. Patents provide an incentive to be creative; why would we expect that creativity to continue when we remove the incentive? If an exception for automotive repair parts is made, what will be next, and when will it stop?
The automotive industry is making a comeback, due in great part to the innovative and award-winning designs coming out of the OEMs. Legislation of this nature would move us in the wrong direction, especially right on the heels of patent reform and the enactment of the America Invents Act (AIA).
Kelly Burris is a patent attorney in the Ann Arbor office of Brinks Hofer Gilson & Lione, an adjunct professor of intellectual property law at Thomas M. Cooley Law School, and previously worked as a design engineer in the aerospace industry . She is a patent holder and a licensed pilot.