Rep. Darrell Issa, a Republican from California, has introduced H.R.3889, Promoting Automotive Repair, Trade, and Sales Act, or the PARTS Act, legislation that would cut the design patent production on automotive parts from the current 14 years to 30 months.
The design patent is an intellectual property protection that prevents others from making copies of automotive components like doors, bumper caps and fenders.
Supporters of the legislation include consumer groups and insurance companies that maintain it would save Americans billions of dollars annually as competitive suppliers could sell the parts at a 25% to 50% discount compared to the cost from an original equipment manufacturer (OEM).
While Issa’s bill would seem to be a slam-dunk for consumers, careful consideration reveals it is more of a slam-dunk for insurance companies looking for a way to circumvent state laws requiring the use of factory parts in auto repairs.
Furthermore, the auto industry does have reasonable grounds for opposing the legislation.
Car companies spend literally billions of dollars developing new vehicles. This includes money spent on designing and engineering each component that goes into the vehicle. In addition to then making enough components to build each year’s production, the automaker must produce extra parts for replacements. This entails additional costs for the manufacturer, which must store and inventory the parts. Generally, a manufacturer will have exact OEM replacement parts for at least the duration of the vehicle warranty. An aftermarket manufacturer does not have these costs, giving it an unfair advantage.
The advantage also goes to the aftermarket manufacturer when it comes to quality and accountability. A part from an OEM has to be the exact replacement; has to fit and function identically and be of the same quality and made of the same materials. Aftermarket suppliers don’t have that restriction. While there are aftermarket suppliers that provide components of equal or superior quality, most consumers don’t have the product knowledge needed to make an informed decision. In addition, Issa’s legislation allows foreign manufacturers to copy the parts and export them to the United States.
Issa’s bill is commendably short; it’s easy to see that it opens a Pandora’s box for opportunistic manufacturers and provides no remedies for consumers whose vehicle may have been repaired with a substandard copy or for automakers who might face legal costs over components they did not manufacture. There is no language that requires the aftermarket part to conform to the same standards that would apply to an OEM component; no language to require that the consumer be informed when a non-OEM part is used or remedies should that part fail.
H.R.3889 has been referred to the House Subcommittee on Intellectual Property, Competition and the Internet.