The U.S. House of Representatives Judiciary Committee's Subcommittee on Courts, the Internet, and Intellectual Property held a hearing on "Design Law: Are Special Provisions Needed to Protect Unique Industries?" Rep. Howard Berman, D-Calif., is chairman of the subcommittee.

Testimony was heard from the fashion and automotive industries. The intellectual property issue has been of interest to both the mechanical and collision divisions as it relates to parts. It has been a much-discussed issue on Capitol Hill and in state capitols relative to the Right to Repair legislation and what is strictly automotive service information versus what is of intellectual property (IP) concern to the automakers.

The collision industry observed Ford Motor Co.'s complaint filed in December 2005 with the U.S. International Trade Commission (ITC) against Keystone Automotive Industries and five other nonoriginal equipment manufacturer (OEM) part manufacturers and distributors. Ford asked the ITC to issue a "permanent general exclusion order banning entry into the United States of all parts that infringe the design patents and that are imported into the U.S., sold for importation in the U.S. or sold within the U.S." Ford also sought a permanent order directing the respondents to cease and desist from selling, marketing, advertising, distributing and offering for sale imported automotive parts that infringe design patents.

In December 2006, the ITC administrative law judge issued an initial determination upholding seven of Ford's design patents and declaring the remaining three design patents to be invalid. Keystone requested the ITC to reconsider the administrative law judge's decision. The ITC did not take action on the request.

At the subcommittee hearing, Rep. William Delahunt, D-Mass., presented a statement concerning his legislation, the Design Piracy Prohibition Act. He introduced this bill with a fellow Judiciary Committee member, Rep. Robert Goodlatte, R-Va. The Piracy Act would strengthen intellectual property laws. Delahunt quoted a report by the U.S. Chamber of Commerce that "counterfeiting and piracy cost U.S. businesses $225 billion in revenue each year."

William T. Fryer III, professor of law, University of Baltimore School of Law, commented in testimony, "It is clear that a successful company and national economy must encourage product design ... There is serious concern about product piracy, and to stop it there needs to be immediate and simplified protection systems to provide a level of protection in an efficient way. Where there is need for registration, the administrative procedures need to be relatively simple for users and the registration office and the process should be relatively quick."

There were two witnesses speaking directly on point with regard to the automotive industry: Carl L. Olsen, on behalf of the Alliance of Automobile Manufacturers, and Jack Gillis, on behalf of the Consumer Federation of America (CFA). Gillis also serves as head of the Certified Automotive Parts Association (CAPA).

Olsen made several key points in the hearing: "Designing a new vehicle is not cheap. It requires a team of well-trained, talented designers working in competition and proposing a large number of creative solutions. Each part - from headlamps to door handles - receives tender, loving care. This methodology assists management to make rational decisions on the final appearance of a new vehicle. It costs hundreds of millions of dollars to create unique, distinctive exterior designs for vehicles."

In evaluating some aftermarket parts distributors and manufacturers' efforts to alter current intellectual property law, Olsen added, "Those seeking to weaken American IP protection do not create their own designs. They exist only to make exact copies of parts of designs they did not create."

Gillis, testifying for the Consumer Federation of the America, said: "The lack of competition for repair parts will result in several problems for consumers. For example, high repair costs will lead to more vehicles being 'totaled' because the price of repairing the damage exceeds the value of the vehicle. High repair costs will lead to higher insurance premiums. Furthermore, when faced with expensive repairs and a limited budget, consumers may forego important car repairs such as replacing a headlight or a broken side mirror - items essential for safe driving. Unless Congress addresses the automakers' use of design patents on their crash parts, the American public will be faced with mounting repair bills, more 'totaled' vehicles, increasing insurance costs, and deferring necessary repairs affecting safety."

The CFA has supported Right to Repair legislation, which also seeks to acquire OEM intellectual property. In October of 2007, CFA signed a letter with other consumer organizations supporting Right to Repair legislation.

Gillis offered to the Committee the following resolve: "The solution to this increasingly unfair, unacceptable, and unnecessary mess is for Congress to adopt a 'repair clause' in the design law that would preserve the consumer's access to a competitive marketplace for quality alternative crash parts. Such a repair clause would establish a very narrow, practical exception to the design patent law so that if a car company does not receive a design patent on a replacement part, independent companies could still make and distribute competing parts for the sole purpose of repairing the vehicle. Such a very narrow practical exception to the design patent law would not interfere with an automaker's right to prevent competing car companies from using their patented vehicle and part designs."

Legislation to overhaul the U.S. patent system has passed the House of Representatives and now sits in the Senate Judiciary Committee. The issue, access of automaker intellectual property rights, may arise again during the Senate debate of this bill.

To review the entire hearing testimony, please go to the Automotive Service Association's legislative Web site, www.TakingTheHill.com.

Bob Redding is the Automotive Service Association's Washington, D.C., representative. He is a member of several federal and state advisory committees involved in the automotive industry. For more information about the legislative activities of ASA, visit www.TakingTheHill.com.

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