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PROMOTING AUTOMOTIVE REPAIR, TRADE, 

AND SALES (PARTS) ACT 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

INTELLECTUAL PROPERTY, 

COMPETITION, AND THE INTERNET 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

ON

H.R. 3889 

AUGUST 1, 2012 

Serial No. 112–144 

Printed for the use of the Committee on the Judiciary 

( 

Available via the World Wide Web: http://judiciary.house.gov 

(II) 

COMMITTEE ON THE JUDICIARY 

LAMAR SMITH, Texas, Chairman 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

HOWARD COBLE, North Carolina 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

DANIEL E. LUNGREN, California 

STEVE CHABOT, Ohio 

DARRELL E. ISSA, California 

MIKE PENCE, Indiana 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TIM GRIFFIN, Arkansas 

TOM MARINO, Pennsylvania 

TREY GOWDY, South Carolina 

DENNIS ROSS, Florida 

SANDY ADAMS, Florida 

BEN QUAYLE, Arizona 

MARK AMODEI, Nevada 

JOHN CONYERS, JR., Michigan 

HOWARD L. BERMAN, California 

JERROLD NADLER, New York 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

MELVIN L. WATT, North Carolina 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

PEDRO R. PIERLUISI, Puerto Rico 

MIKE QUIGLEY, Illinois 

JUDY CHU, California 

TED DEUTCH, Florida 

LINDA T. SA ́ NCHEZ, California 

JARED POLIS, Colorado 

RICHARD HERTLING, Staff Director and Chief Counsel 

PERRY APELBAUM, Minority Staff Director and Chief Counsel 

SUBCOMMITTEE ON INTELLECTUAL PROPERTY, COMPETITION, AND THE INTERNET

BOB GOODLATTE, Virginia, Chairman 

BEN QUAYLE, Arizona, Vice-Chairman 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

HOWARD COBLE, North Carolina 

STEVE CHABOT, Ohio 

DARRELL E. ISSA, California 

MIKE PENCE, Indiana 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TIM GRIFFIN, Arkansas 

TOM MARINO, Pennsylvania 

SANDY ADAMS, Florida 

MARK AMODEI, Nevada 

MELVIN L. WATT, North Carolina 

JOHN CONYERS, JR., Michigan 

HOWARD L. BERMAN, California 

JUDY CHU, California 

TED DEUTCH, Florida 

LINDA T. SA ́ NCHEZ, California 

JERROLD NADLER, New York 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

BLAINE MERRITT, Chief Counsel 

STEPHANIE MOORE, Minority Counsel 

(III) 

C O N T E N T S 

AUGUST 1, 2012 

Page 

THE BILL 

H.R. 3889, the ‘‘Promoting Automotive Repair, Trade, and Sales (PARTS) 

Act’’ ........................................................................................................................ 3

OPENING STATEMENTS 

The Honorable Bob Goodlatte, a Representative in Congress from the State 

of Virginia, and Chairman, Subcommittee on Intellectual Property, Competition, and the Internet .................................................................................... 1 

The Honorable Melvin L. Watt, a Representative in Congress from the State 

of North Carolina, and Ranking Member, Subcommittee on Intellectual 

Property, Competition, and the Internet ............................................................ 7 

The Honorable Darrell E. Issa, a Representative in Congress from the State 

of California, and Member, Subcommittee on Intellectual Property, Competition, and the Internet .................................................................................... 9 

The Honorable Zoe Lofgren, a Representative in Congress from the State 

of California, and Member, Subcommittee on Intellectual Property, Competition, and the Internet .................................................................................... 10 

WITNESSES 

W. Neal Menefee, President and Chief Executive Officer, Rockingham Group 

Oral Testimony ..................................................................................................... 12 

Prepared Statement ............................................................................................. 15 

Kelly K. Burris, Shareholder and Chair, Green Technology Practice Group, 

Brinks, Hofer, Gilson & Lione 

Oral Testimony ..................................................................................................... 21 

Prepared Statement ............................................................................................. 23 

Jack Gillis, Director of Public Affairs, Consumer Federation of America (CFA) 

Oral Testimony ..................................................................................................... 30 

Prepared Statement ............................................................................................. 31 

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Material submitted by the Honorable Melvin L. Watt, a Representative in 

Congress from the State of North Carolina, and Ranking Member, Subcommittee on Intellectual Property, Competition, and the Internet 

Letter from the Alliance of Automobile Manufacturers and other organizations ............................................................................................................ 39 

Letter from the International Property Owners Association ........................ 59 

Material submitted by the Honorable Darrell E. Issa, a Representative in 

Congress from the State of California, and Member, Subcommittee on Intellectual Property, Competition, and the Internet ............................................... 49 

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

Response to Questions for the Record from Kelly K. Burris, Shareholder 

and Chair, Green Technology Practice Group, Brinks, Hofer, Gilson & 

Lione ...................................................................................................................... 64 

Page

IV 

Letter from Jack Gillis, Director of Public Affairs, the Consumer Federation 

of America (CFA) .................................................................................................. 66 

Material submitted by Jack Gillis, Director of Public Affairs, the Consumer 

Federation of America (CFA) .............................................................................. 68 

Letter from Aaron M. Lowe, Vice President, Government Affairs, the Automotive Aftermarket Industry Association (AAIA) ............................................. 78 

Letter from Kathy R. Van Kleeck, Sr. Vice President, Government Relations, 

Motorcycle Industry Council ............................................................................... 80 

(1) 

PROMOTING AUTOMOTIVE REPAIR, TRADE, 

AND SALES (PARTS) ACT 

WEDNESDAY, AUGUST 1, 2012 

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON INTELLECTUAL PROPERTY,

COMPETITION, AND THE INTERNET, 

COMMITTEE ON THE JUDICIARY, 

Washington, DC. 

The Subcommittee met, pursuant to call, at 2:37 p.m., in room 

2141, Rayburn Office Building, the Honorable Bob Goodlatte 

(Chairman of the Subcommittee) presiding. 

Present: Representatives Goodlatte, Quayle, Coble, Chabot, Issa, 

Jordan, Poe, Chaffetz, Griffin, Amodei, Watt, Chu, Lofgren, Jackson Lee, and Waters. 

Staff present: (Majority) Blaine Merritt, Subcommittee Chief 

Counsel; Olivia Lee, Clerk; and (Minority) Stephanie Moore, Subcommittee Chief Counsel. 

Mr. GOODLATTE. Good afternoon. This hearing of the Subcommittee on Intellectual Property, Competition, and the Internet 

of the Committee on the Judiciary will come to order. And I will 

begin with my opening statemen. 

Today the Subcommittee will consider the issue of patent design 

protection to determine whether amendments should be made to 

the law to limit protection for component parts of automobiles. 

Chapter 16 of the Patent Act allows an inventor a design patent 

for any new, original, and ornamental design for an article of manufacture. However, the chief limitation on the patentability of designs is that they must be primarily ornamental in character. If the 

design is dictated by the performance of the article, then it is 

judged primarily functional and ineligible for design patent protection. 

Combined with the cost of patenting, this explains why some inventors, including automobile companies, have traditionally filed 

for relatively few design patents. However, auto manufacturers assert that automotive suppliers lose upwards of $12 billion annually 

to counterfeit products. And at least one prominent car company 

invests $100 million or more in the design of each new car line. 

It is understandable that car manufacturers want to reap a return on their investments, and they have attempted this in a variety of ways. For one, in the past, manufacturers have argued for 

Congress to amend the Patent Act or the copyright design statute 

to provide greater protection for designs. 

2 

In addition, there has been a recent increase in the number of 

applications for design patents for individual parts of vehicles. This 

latter approach has raised the ire of those who work in the automotive aftermarket parts industry. Independent garage owners fear 

they will go out of business if the Patent Act is used by the auto 

manufacturers to obtain design patent protection for more and 

more individual parts rather than for the design of the car as a 

whole. Insurers worry that the cost of insuring vehicles will increase for consumers if manufacturers aggressively assert these 

rights because there will be less competition for replacement parts. 

The aftermarket parts industry argues that we cannot afford to 

maintain the legislative status quo on patent designs. It argues the 

auto manufacturers are filing more design patents under current 

law, meaning the independent garages could lose a war of attrition. 

Representative Issa has introduced H.R. 3889, better known as 

the PARTS Act. While the bill does not prevent auto makers from 

patenting designs on replacement parts, it greatly reduces the time 

period during which they may sue competitors for patent infringement from 14 years to 30 months. 

Today the Subcommittee will weigh these competing interests 

and the consequences of establishing the precedent of creating an 

exemption to design patent law. I remain open-minded on this 

issue and look forward to the testimony that we will receive. 

[The bill, H.R. 3889, follows:] 

3 


HR3889-1.eps

112TH COKGRESS H R 3889 2D SESSION 

• • 

To amend title 35, United States Code, to provide for an exception from 

infringement for rertain component parts of motor vehicles. 

1K TIlE IlOUSE OF R,EPR,ESEKTAT1VES 

FEBRU1'u",Y 2, 2012 

lVlr. LSSA (for himself and Ms . .:60E LOFGREN of California) introduced the 

following bill; which was referred to the Committee on the ,Judiciary 

A BILL 

To amend title 35, United State::.; Code, to provide for an 

exception froUl infringement for certaiu component parts 

of motor vehicles. 

1 Be it enacted by the Senate and House of Representa2 ti:1JeS ()f the United States 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the "Promoting Automotive 

5 Repair, Trade, and Sales Act" or the "PARTS Act". 

6 SEC. 2. EXCEPTION FROM INFRINGEMENT FOR CERTAIN 

7 COMPONENT PARTS OF MOTOR VEHICLES. 

8 Section 271 of title 35, United States Code, IS 

9 amended hy adding at the end the follmving new 8nh10 section: 
4 


HR3889-2.eps

2 

1 "(j) (1) ~With respect to a design patent that claims 

2 a component part of a motor vehicle as originally manufac3 tured4 it shall not be an act of infringement of 

5 such design patent to make or offer to sell within 

6 the rnited States, or import into the United States, 

7 allY article of manufadure that is similar or the 

8 same in appearance to the component part that is 

9 claimed in such design patent if the purpose of sueh 

10 article of manufacture is for the repair of a motor 

11 vehicle so as to restore such vehicle to its appear12 anee as originally rnanufaetured; and 

13 "(B) after the e:}q)iration of a period of 30 

14 months beginning 011 the first day on which any 

15 sueh component part is first offered to the public for 

16 sale as part of a motor vehicle in any country, it 

17 shall not he an act of infringement of such design 

18 patent to use or sell \vithin the ruited States any 

19 artide of manufacture that is slmliar or the same in 

20 appearance to the component part that is claimed in 

21 such design patent if the purpose of such article of 

22 manufacture is for the repair of a motor vehicle so 

23 as to restore such vehicle to its appearance as origi24 nally manufactured. 

25 "(2) For pUl1)oses of this subsedion-

.HR 3889 IH 
5 


HR3889-3.eps

1 "(A) the term 'motor vehicle' has the meamng 

2 given that term in section 32101(7) of title 49; 

3 "(B) the term 'make' includes any testing of an 

4 article of manufacture; and 

5 "(e) the term 'offer to sell' includes any mar6 keting of an article of manufacture to prospective 

7 purcllasers or users and any pre-sale distribution of 

8 the artiele of rnanufactur-e.". 

9 SEC. 3. CONFORMING AMENDMENT. 

10 8eetion 2R$) of title :i5, United States Code, IS 

11 amended12 (1) In the first paragraph, by striking "Who13 ever" and inserting the follovving: 

14 "(a) TN GENlmAI,.-vVhoever": 

15 (2) in the second paragraph, by striking "Noth16 ing" and inserting the following: 

17 "(b) RELr'lTIOXSHIP TO OTHER REMEDIES.-Noth18 ing": and 

19 (3) by adding at the end the folltl\vinl!'; 

20 "(c) INAPPLICABILITY.-This section shall not apply 

21 to allY person vvho applies a patented design, or colorable 

22 imitation thereof, described in subsection (a) to auy article 

23 of manufacture if that act would not be considered an act 

24 of infringement under section 271(j)" . 

• HR 3889 IH 
6 


HR3889-4.eps

4 

SEC. 4. EFFECTIVE DATE. 

2 Tllese amendments made by this Act shall take effect 

3 upon the e~'Piration of the ~)O-day period beginning on the 

4 date of the enactment of this Act and shall apply to any 

5 patent issued, or application for patent filed, before, on, 

6 or after that effective date. 

o 

.HR 3889 IH 
7 

Mr. GOODLATTE. And it is now my pleasure to recognize the 

Ranking Member, the gentleman from North Carolina, Mr. Watt. 

Mr. WATT. Thank you, Mr. Chairman. And I managed to mess 

up my microphone here. Either it is an ornament, or a design, 

or—— [Laughter.] 

Functional issue. But regardless, I have to hold it up because I 

broke it. So, I see how he was such an efficient automobile thief. 

[Laughter.] 

Mr. ISSA. You know, from anyone else, I might think you were 

disparaging the Member. [Laughter.] 

Mr. WATT. That is an inside joke, you all. 

Well, I thank the Chairman for holding the hearing. Today 

marks at least the fourth consecutive Congress that we have considered the scope of design protection under our patent laws. Design patents protect the new, unique, and ornamental designs of industrial and consumer products. Design patents differ from utility 

patents. While utility patents provide exclusive rights over new 

and useful inventions, design patents provide a fundamentally different protection. In laymen’s terms, design patents protect the 

style and look of consumer products. 

Like all patents, they reward creativity by conferring upon the 

creator the exclusive right to market or otherwise control commercialization of his or her design for a 14-year period. This reward allows the creator to achieve a return on his or her investment, and 

incentivizes further design innovation. 

The Department of Justice and the Federal Trade Commission 

have noted that intellectual property and antitrust laws are ‘‘complementary bodies of law that work together to bring innovation to 

consumers.’’ 

The exclusive rights granted to intellectual property holders are 

not presumed by the enforcement agencies to create monopolies because consumers may have alternatives or other substitutes in the 

market. 

The PARTS Act, the subject of today’s hearing, in effect limits 

the auto makers’ exclusive right to their design to, at most, 30 

months, depending upon when the 30-month clock begins, perhaps 

even less time to enjoy the exclusivity of a design patent. 

The proponents and opponents of the proposed modifications to 

the protections afforded to automobile aftermarket parts under current law have fundamentally different views of the market dynamics in the replacement parts industries. 

Supporters, and I am sure we will hear from Mr. Issa and Ms. 

Lofgren shortly, so they will correct me if I am misinterpreting 

what they are saying. Supporters of the bill tend to believe that 

automobile manufacturers’ ability to assert their design patent 

rights in the aftermarket may establish a monopoly in that secondary market. 

Under this view, the original equipment manufacturer may corner the secondary market for the 14-year life of the patent by excluding all others, exacting high licensing fees, and providing limited choices to the consumer. It is estimated that consumers keep 

their cars between 9 and 11 years, so the 14-year patent term engulfs the entire period during which there would be any demand 

for replacement parts. 

8 

Most supporters would have automobile manufacturers recoup 

their investment in the primary market when they first sell their 

vehicles, leaving the secondary market more competitive. 

The opponents, on the other hand, argue that they invest massive sums of money into research and development, and are entitled to the rewards that the patent system provides. Especially in 

light of advancements in technology that now allow and facilitate 

immediate copying of patented designs and reproduction at lower 

costs often outside the United States. Automobile manufacturers 

maintain that these free riders, as they call them, will retard innovation while providing consumers with substandard quality, substandard parts. 

The equities involved on both sides of this issue are seemingly 

compelling, yet necessarily self-interested. I think what is missing 

from this debate is input from the government, both from a domestic and international perspective. 

Recently in February of this year, the Department of Justice announced that it had uncovered international price fixings in the 

aftermarket industry for auto lights, which could be covered by design patents. The indictments and guilty pleas give rise to some 

speculation whether consumers are victims of anti-competitive 

practices within the aftermarket industry generally, and whether 

the alleged cost savings that would result from opening the market 

to none original equipment manufacturers’ parts will ever reach 

the consumer. 

I am also mindful of ongoing efforts to enact legislation to implement the Patent Law Treaty and the Geneva Act of the Hague 

Agreement regarding design patents. Both were signed during the 

Clinton Administration and ratified during the Bush Administration. 

The proposed Hague Agreement Implementation Act makes two 

substantive changes in United States’ designed patent law, including extending the patent term for designs from 14 to 15 years after 

the grant. Director Kappos is on record urging the Congress to 

move quickly to implement these treaties. 

Therefore, it concerns me that this bill may take us in the opposite direction, limiting rather than strengthening the design protections of a U.S. industry. So while I come to this issue with an open 

mind, I believe that in addition to hearing from the affected stakeholders, it would be useful at some point to hear the government 

officials who deal with these issues on an ongoing basis. 

And with that, Mr. Chairman, I yield back. I have not taken a 

position one way or another, but that is what hearings are for. 

Mr. GOODLATTE. I thank the gentleman. In part, to allow the 

gentleman to defend his reputation and, more importantly, to allow 

the gentleman, who is the author of the legislation that is the subject of the hearing, I will recognize Mr. Issa for an opening statement for 5 minutes. And then after that, I will recognize the gentlewoman from California, Ms. Lofgren, for an opening statement. 

And then we will ask that all other opening statements be made 

a part of the record. 

So without further ado, the gentleman from California is recognized for 5 minutes. 

9 

Mr. ISSA. Thank you, Mr. Chairman. As in the Constitution to 

say ‘‘To promote the progress of science and useful arts by securing 

for a limited times to authors and inventors the exclusive right to 

their respective writings and discoveries.’’ 

I have read that so many times before I came to Congress while 

I was inventing, while I was patenting both utility patents and design patents. And I like most people who have design patents knew 

that, in fact, my design patents were ornamental. They were limited. That anyone could take a box that contained one of my security products and take off a few ornamental lines that were put on 

that represented both a patentable item and perhaps even a trade 

dress in time. But they could produce the same box. It just would 

not be the same, but the screws would line up. Nuts and bolts 

would match. The PC board could fit exactly the way it was. In 

other words, in form, fit, and function, they could totally produce 

a replacement part. And in some cases, people did. 

That is what we are talking about here today. We are talking 

about a recognition that first, as my colleague so aptly said as he 

was stating both sides of the issue, and I appreciate that. From our 

side, this is narrow. This is limited. It relates only to the outside 

of an automobile. It is necessitated only by what appears to be, in 

my opinion, expansion beyond the intent of these ornamental patents to try to create effectively a 14-year utility patent on the entire automobile. 

Now that is not new. The auto companies have formally tried to 

do that in the past, and I am a complete supporter that a part 

which is confusingly similar, a part that bears the trade name of 

the manufacturer, a part that would imply a given level of quality 

predictability or originalness, should, in fact, not be what we allow 

the aftermarket to produce. 

But when you consider the balance the Constitution intended, 

which included the, if you will, a long-established for sale concept, 

when I buy an automobile and then somebody bangs it up in the 

parking lot, I own that fender. I can repair that fender to an inferior level and nobody has a gripe. Why is it I cannot buy a form, 

fit, and function identical part and buy it on a competitive market? 

The answer is sometimes you can, sometimes you cannot. It depends on who is suing whom. Who has gone to the ITC to enforce 

in a way that was not enforced for the first 100 years of the auto 

company this replacement parts right. 

That is the reason that bumpers, fenders, side mirrors, and door 

panels are, in fact, the subject of this legislation. Now I will tell 

you, Mr. Chairman, the aftermarket parts manufacturers would 

like this to be shorter or flat to not at all. We tried to balance that, 

and there is no magic number. We found a number that seemed to 

allow the auto companies a launch period. And by the way, this 

would be a launch period in which if every model year they 

changed their fender, they would enjoy yet a new exclusive period. 

But we tried to have it short enough that in a relatively short 

period of time, as accidents happen, collisions, rust out, and other 

damage, that they would be able to buy a replacement part on a 

competitive market. Even if they could not buy one in a competitive 

market in some cases, the auto companies would tend to price their 

10 

product based on a hypothetical competitive market. We believe 

that that limits the antitrust characteristic of parts pricing. 

Additionally, a healthy aftermarket means that when you get to 

end of life, when that 10-year period is over and the patent is still 

in effect, but the auto company, in the case of a small production 

or, let us say, a Saturn, no longer wants to produce those products 

or they are no longer available, there is a healthy aftermarket to 

provide that. 

People in Europe already enjoy some of these considerations and 

for good reason. The consumer has a balance, and one of those balances is a reasonable expectation that a competitive market exists. 

A high competitive market exists for the automobile, but without 

legislation like this, over time, in the ITC particularly, I believe 

that there will be an erosion of the competitive market and the 

availability of alternatives when that car is hit in the parking lot 

or hit on the highway. 

And so, Mr. Chairman, I appreciate the unusual opportunity to 

be able to introduce the bill and an opening statement. I look forward to working with people on both sides of the aisle, such as 

Congressman Lofgren and others, to ensure that we make sure 

that this is limited, narrow, and dealing only with the likely parts 

that get hurt on an automobile in everyday wear and tear in which 

we would much rather have a competitive replacement part available than have a consumer unable to fix that part properly, and yet 

unable to afford a replacement part. 

I thank the Chairman and yield back. 

Mr. GOODLATTE. I thank the gentleman. The gentlewoman from 

California, Ms. Lofgren, is recognized for an opening statement. 

Ms. LOFGREN. Thank you, Mr. Chairman. And I am happy to be 

a co-sponsor of this bill with my friend, Congressman Issa. In a 

previous Congress, I had a bill that took a slightly different approach. Basically, that approach protected the design from being 

copied by competing car companies, but also allowed for the independent production of parts when they were used solely as replacement repair parts. And, as I think Mr. Issa has noted, that bill, although I thought a good approach, was not successful, did not become a law. 

It is worth noting that several European countries and Australia 

have actually enacted a repair clause provision in their laws. And 

I think we can take a look at what has happened there and see 

that there is real benefit to consumers, and I do not think real 

damage to automobile manufacturers, which none of want to do. 

This bill that Congressman Issa and I are promoting is a different approach. It limits the protection period to allow for competition when it comes to the aftermarket scene. And why would we 

do this? 

Well, the Consumer Federation of America, the Center for Auto 

Safety, the Consumers Union, and the policy and advocacy arm of 

Consumer Reports, are all in favor of this bill. And I think the reason why is that competition will lower costs for consumers. Now 

that is important in a time when the economy is tough. But it is 

also important in some other ways. 

Right now, the elimination of competition from independent 

brand crash repair parts is estimated to cost automobile owners 

11 

about a billion dollars a year. That is a lot of money. Because of 

the high cost, there are individuals who actually do not do the kind 

of repairs that they ought to do. And that increases the safety risk 

to motors. 

I agree with Mr. Issa that the time frame put in the bill was our 

best guess. You could argue for more. You could argue for less. But 

I think that this is calculated to provide for some relief for consumers when it comes to repair of automobiles while protecting 

completely the design when we have the sale of automobiles. And 

that is part of the genius of the American auto industry. 

I will not go on at great length, Mr. Chairman. I am appreciative 

that we are having this hearing, and I am hopeful that we can actually move this bill because I think it will help promote safety. It 

will promote competition. And it will also save consumers a great 

deal of money while preserving the patent protection that auto 

manufacturers deserve for their design when they sell automobiles. 

And with that, Mr. Chairman, I would yield back. 

Mr. GOODLATTE. I thank the gentlewoman. And without objection, other Members’ opening statements will be made a part of the 

record. 

We have a distinguished panel of witnesses today. And as is the 

custom of this Subcommittee, before we begin, I would like to 

swear in the witnesses. If you all would please stand. 

[Witnesses sworn.] 

Mr. GOODLATTE. Thank you, and please be seated. 

Each of the witnesses’ written statements will be made a part of 

the record in its entirety. And I ask each witness to summarize 

their testimony in 5 minutes or less. To help you stay within that 

time, there is a timing light on your table. When the light switches 

from green to yellow, you will have 1 minute to conclude your testimony. When the light turns red, it signals that the witness’ 5 minutes have expired. 

Our first witness is a constituent and friend of mine, Mr. Neal 

Menefee, President and CEO of Rockingham Group Insurance 

Company in Harrisonburg, Virginia. He will be testifying on behalf 

of the National Association of Mutual Insurance Companies and 

the Quality Parts Coalition. 

Prior to joining Rockingham, Mr. Menefee spent 15 years with 

Exxon Company USA in their marketing and corporate planning 

departments. He also serves on a number of boards for various 

business, civic, and charitable organizations. He received a B.S. in 

Electrical Engineering with distinction from Virginia Tech, and his 

MBA from the University of Pittsburgh. 

Our next witness is Kelly Burris, shareholder of the Ann Arbor 

law firm Brinks, Hofer, Gilson, and Lione. She chairs the Brinks’ 

Green Technology Practice Group and focuses on the preparation 

and prosecution of U.S. and foreign patent applications in the mechanical, material science, and electrical arts. 

Before practicing law, Ms. Burris spent more than 11 years in 

the aerospace industry with McDonnell Douglas and Boeing. A patent holder in the area of fiber optics, she has taught IP law and 

published widely in the field. Ms. Burris received her B.S. in Aeronautical Engineering from Western Michigan University, her M.S. 

12 

in Material Science and Engineering from Washington University, 

and her J.D. from St. Louis University. 

Our final witness is Jack Gillis, Director of Public Affairs with 

the Consumer Federation of America, the Nation’s largest consumer advocacy organization. This is the third time he has testified 

before us on the subject of automotive design patents. 

Mr. Gillis is the author, co-author, and editor of more than 60 

books, including The Car Book, The Car Repair Book, and The 

Armchair Mechanic. In addition, he has served as a contributing 

consumer correspondent for the Today Show. 

Mr. Gillis received his B.A. in English from the University of 

Notre Dame and his MBA in Marketing and Consumer Behavior 

from the George Washington University. 

I want to welcome you all, and we will begin. And a special welcome to Mr. Menefee. You may want to turn that microphone on 

and keep it close. 

TESTIMONY OF W. NEAL MENEFEE, PRESIDENT AND 

CHIEF EXECUTIVE OFFICER, ROCKINGHAM GROUP 

Mr. MENEFEE. The green light, thank you. Good afternoon, 

Chairman Goodlatte, Ranking Member Watt, and other esteemed 

Subcommittee Members. I am Neal Menefee, the President and 

CEO of the Rockingham Group Insurance Companies whose home 

office is in Harrisonburg, Virginia. The group currently underwrites and markets property and casualty insurance products, including auto in Virginia and Pennsylvania. And we have annual 

revenues in excess of $40 million. 

On behalf of the National Association of Mutual Insurance Companies, the Property Casualty Insurers Association of America, and 

the Quality Parts Coalition, I would like to thank the Subcommittee for its attention to this very important issue. 

To begin, I would start by asking you to consider whether you 

or a family member has ever been in an auto accident or had to 

repair your car. I am sorry to hear that if that is the case, but 

whether you knew it or not, you have benefitted from competition 

in the collision repair parts marketplace, competition that has existed for decades between car companies and alternative suppliers 

of such parts. 

To be clear, we are talking about collision repair parts, which are 

the cosmetic exterior parts of an automobile, such as fenders, quarter panels, bumper covers, and grills. Generally speaking, these are 

not structural or safety-related parts. 

Although the car companies have already captured two-third of 

the market for collision repair parts, the competition that alternative suppliers provide is still very important to consumers. Alternatively supplied collision repair parts typically are 26 to 50 percent less expensive than the car company parts. But even if a more 

expensive car company part is used, the mere existence of competition puts downward pressure on car company prices. 

The estimated total benefit to consumers from the availability of 

competitive alternatives is upwards of $2.4 billion per year. It is a 

great example of the free market at work for the benefit of consumers. 

13 

Unfortunately, some car companies appear to want to disrupt 

this well-functioning market and expand their already-dominant 

share. Beginning around 2003, they began obtaining 14-year design 

patents, not just on the overall design, but also under individual 

collision repair parts, and then enforcing those patents against alternative suppliers. This is a significant departure from the car 

companies’ past behavior. 

I would point out that the purpose of such collision parts is to 

restore the vehicle’s original pre-accident appearance. Naturally, 

that is what consumers demand, and it is what insurance policies 

provide for. State insurance laws require that alternatively supplied collision repair parts be of like kind and quality in form, fit, 

and finish to car company parts. Today, alternative suppliers are 

in the untenable position of complying with State law and meeting 

consumer demand, while simultaneously facing allegations of design patent infringement by the car companies. These patents are 

simply being used to eliminate competition and facilitate a monopoly on cosmetic replacement parts to the detriment of consumers. 

Ultimately, the impact of such a monopoly would fall directly on 

consumers, first in the form of higher insurance premiums, and 

secondly, on consumers that pay for their own repairs out of pocket. Moreover, they might choose to forego repairs all together, leading to more rapid deterioration in the appreciation of their vehicles. 

Higher repair costs also meant that there is an increased likelihood of a vehicle being declared a total loss, compelling consumers 

to replace it, pay off a loan that may exceed its value, and seek financing for the purchase of replacement. In tough economic times 

like today, these kinds of added costs hurt consumers that much 

more, especially as autos age and depreciate. 

The PARTS Act carefully balances the car companies’ intellectual 

property rights with the need to protect consumers by preserving 

competition. It would change from 14 to two and a half years the 

monopoly period during which car companies could block competitors from selling alternative collision repair parts. 

We recognize that the overall design of a car plays a significant 

role in a consumer’s choice when buying a new car, and in the very 

competitive for new auto sales, car companies invest a lot in the 

overall design of a vehicle, that unique owning and driving experience that we all see advertised on television. 

The PARTS Act would not deter car companies from obtaining 

and enforcing design patents on their collision parts against other 

car companies. Therefore, the PARTS Act does nothing to change 

the incentive of the car companies to innovate as they continue to 

design their cars to compete against each other. 

We respect the investment made by car companies in intellectual 

property, but when a consumer buys a car for $35,000 in the showroom, puts the title in his pocket, and drives it off the lot, it is his 

property. And he has compensated the car company for the manufacture and for the overall design of the car. American consumers 

should not be surprised and forced to pay a monopoly price on a 

collision part whenever it has been damaged in an unexpected accident and needs repair. 

The PARTS Act addresses the problem in a properly balanced 

manner similar to how Europe and Australia have confronted idenVerDate Aug 31 2005 10:06 Nov 29, 2012 Jkt 000000 PO 00000 Frm 00017 Fmt 6633 Sfmt 6601 H:\WORK\IP\080112\75385.000 HJUD1 PsN: DOUGA
14 

tical concerns regarding the preservation and competition of things 

like collision repair parts. 

The cost of car ownership is already significant, and Americans 

are increasingly dollar conscious in these tough economic times. 

The PARTS Act does not mandate the use of alternative collision 

parts, nor does it have government facilitating new entry into the 

marketplace. Rather, the legislation would simply preserve the traditional competition in the sale repair part. That is what consumers deserve. 

Again, thank you for the opportunity to speak here today, and I 

look forward to answering any questions that you may have. 

[The prepared statement of Mr. Menefee follows:] 

15 


WNM-1.eps

Testimony of 

W. Neal Menefee 

President and CEO of Rockingham Gronp 

on behalf of 

National Association of Mntnal Insnrance Companies (NAMIC) 

and 

Property Casualty Insurers Association of America (PCI) 

and 

Qnality Parts Coalition (QPC) 

House Judiciary Subcommittee on Intellectual Property 

Hearing on 

H.R. 3889, the "Promoting Automotive Repair, Trade, and Sales Act" 

Augnst 1, 2012 

Introduction: 

Chairman Goodlatte, Ranking Member Watt, and other esteemed Subcommittee members, I am 

Neal Menefee, the President and CEO of the Rockingham Group of insurance companies, whose 

home office is in Harrisonburg, Virginia. The parent company of the group is Rockingham 

Mutual Insurance Company, whose oldest predecessor company has been in business since 1869. 

The group currently underwrites and markets property and casualty insurance products, including 

auto, in Virginia and Pennsylvania with annual revenues in excess of $40 million. 

Our company is proud to be a member of both the National Association of Mutual Insurance 

Companies (NAMIC) and the Property Casualty Insurers Association of America (PCI), and I 

am pleased to be here to testify on their behalf. 

The National Association of Mutual Insurance Companies (NAMIC), is the largest and most 

diverse national property/casualty insurance trade and political advocacy association in the 

United States. Its 1,400 member companies write all lines of prop ertyl casualty insurance 

business and include small, single-state, regional, and national carriers accounting for 50 percent 

of the automobilel homeowners market and 31 percent of the business insurance market. 

PCI is composed of more than 1,000 member companies, representing a broad cross-section of 

insurers. PCI members write over $175 billion in annual premium and 37.4 percent of the 

nation's property casualty insurance. PCI represents 43.5 percent of the US automobile insurance 

market, 30.6 percent of the homeowners market, 35.3 percent of the commercial property and 

liability market, and 41.8 percent of the private workers compensation market. 

NAMIC and PCI are both members of the Quality Parts Coalition (QPC), which represents the 

interests ofthe antomotive conision parts industry. the insurance industry, seniors. and consumers. 
16 


WNM-2.eps

We commend you for holding this important hearing and thank you and your staff for this 

opportunity to testify in strong support ofH.R. 3889, the Promoting Automotive Repair, Trade, 

and Sales Act, the PARTS Act. Also, we applaud Representatives Tssa and Lofgren for their 

bipartisan leadership in sponsoring the PARTS Act. 

Background and Benefits of Competition in the Automotive Collision Repair Parts Market: 

By way of background, I would start by asking you to consider whether you or a family member 

has ever been in an auto accident, perhaps a fender bender? Most of us have been and while I 

hate to see anyone experience an auto accident, if you have then whether you knew it or not, you 

benefitted from competition in the collision repair parts marketplace; competition that has 

existed for decades between car companies and alternative suppliers of such parts. 

To be clear, we are talking about collision repair parts, which are the cosmetic, exterior parts of 

an automobile that typically can be damaged in fender bender types of auto accidents. This might 

include fenders, quarter panels, bumper covers, grilles, and other similar parts. Generally 

speaking, these parts are not structural or safety-related parts designed to be part of a vehicle's 

collision management system, like reinforcement bars or bumper brackets.! 

It is worth noting that the car companies already have captured two-thirds of the market for 

collision repair parts, while alternative suppliers have about fourteen percent. 2 However, despite 

the alternative suppliers' relatively small market share, the competition they provide is still very 

important to consumers. That's because alternatively-supplied collision repair parts typically are 

26% to 50% less expensive than the car company parts. But even if a more expensive car 

company part is used, the existence of competition has been shown to cause car companies to 

lower their collision part prices by an average of about 8%. 3 The estimated total benefit to 

consumers from the availability of competitive alternatives is approximately $1.5 billion4 to $2.4 

billion' per year. It's a great example of the tree market at work for the benetlt of consumers. 

Design Patents Are Being Used to Eliminate Competition: 

1 "Status Report:' Insurance Institute for Highway Saldy. Vol. 35, No.2, Feb. 19,2000. See also, Insurance 

Instutute of Highway Safety, Statement Before the Properly-Casualty Insurance CommiUee of Ihe Nalional 

Conference of State Legislators. "Institute Research on Cosmetic Crash Parts,'! July 7. 2005. In fact. the Insurance 

Institute for Highv.'ay Safety (""Institute"), through crash testing and craslnvorthiness e'valuations, consistently has 

found that, generally speaking. cosmetic. exterior parts --serve no safety or stmctural function ... [t]hey merely 

cover a car like a skin." Moreover. the Institute has fmUld that whether a cosmetic collision repair part is a car 

company part or an alternatively supplied part "is irrelevant to crashworthiness " Id 

2 Recycled parls comprise thc rcmaindcr or thc markct. 

3 Consumer Benefits from a Competitive Aftermarket for Crash Parts .. R.W. Boulten, MiCRA Consulting & 

Research Associales. Inc .. 200S 

·' ld. 

-'; Analysis of the Impact of Banning Aftermarket Parts, Property and Casualty Insurers Association of America. 

January 19,2010 

2 
17 


WNM-3.eps

Clearly. conSUl11ers benefit from thl']':lWC1 costs created by thl: COl11jK'1; t;on providl'<i by 

alternative suppliers of collision repair pails Howe~er, Mll11e caf COI11panies appear to hav~ 

formulaled a new busines~ Siratesy 10 eliminate competition and expand their alrelldy dominant 

share of the market by obtaining 14_year desi~1l patents OI1lhcir collision pans and enforc,n£ 

Ihem against alt"mativt ~ppJiers. Beginning around 2003. stwral car companies began to 

dramatically im;rcasc the number of design pau:nts Ihey were obtaining On individual component 

collision paris orthe aUlOmobiles thl'}l manufaClUre. Obtaining design patents on these individual 

pam is 8 significant departure from the car companies' past behaviOf. when they may have 

obtained 14-year design patents on th,~ overall design of their cars. but did not place milch. if 

any. cmphasis on the intcrchan!\cablc conlp<)l1l>nt collision parts. Below is a chan on the 

cUlllUlat;\'e number of cl'1lsh pan design p~te s owned by a number of the major car companies 

As you will S<."t, s.ome of the companies noll' have hundred~ and hundreds of such 14-year design 

patents 011 a wide variety of collision pans. 

Cumu lath'e Numbe rs of Co tiision Re)lair Part Ol'Sign Palents Ownetl By 

I\l:ajor Car Companil'S 

__ Chry~ler _ford _ GM _Honda _ Nlssan --Tovota 

700 

"'" 

"'" , • i

llOO 

It' '3 "'" 

• /./ '00 ",#" )00 

, 

~ ~ m m m ~ ~ ~ m m ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 

The number of design patents awarded to It\e major car c.ompanies on collision repair parts 1laslncreased 

dramatically 5ince the 19905, aftet Congress said NO to ~r strategy to eoaa legislation providing 

copyright prot~n for repalr parts. Note 1: The term ' collision repaIr parts" indudes bezels, bumper 

covers, deCk lids, ODOr shells, feMerS, fascias, fronVrear gri ~, heaaer panels, headlan1PS, hlQnmounted brake IlQhts, hoods, pickl,/p tied" pickup box side;, quarter par.els, radiator suP\XlltS, side 

mari<erl;, sCle mouldillQS, tailgates, t1l1larn\l5, and wh~ houses as defined by the Ce<tifled Automotive 

Parts Association at htlD:llwww.caPilcenifled.o~{whatparts.asp. Note 2: figures shown are 

(Un1ulative. for 2012, those fic;tures h;lVI! been "annualized" and are based on the number of design 

patents granted thl'OU9h July 20, 2012. 

) 
18 


WNM-4.eps

In December 2005, Ford Global Technologies (Ford) took the unprecedented action of filing a 

Section 337 case at the International Trade Commission (ITC) against companies in the 

alternative parts industry for allegedly infringing design patents held by Ford on fourteen 

exterior component parts for the Ford F-150 (model years 2004-2007). On December 4, 2006, 

the Administrative Law Judge held that seven of the design patents were valid, judged them to 

have been infringed, and issued an exclusion order on those parts 6 The exclusion order went 

into place on AUb'llst 6, 2007, and - until a legal settlement was reached in April of 2009 -

competition was effectively eliminated in the United States for seven Ford F-150 exterior 

collision repair parts. Therefore, for almost 2 years, the car company was the one and only 

source for the purchase of those seven parts. 

We would point out that the purpose of such parts is only to restore the vehicle's originaJ, preaccident appearance. Naturally, that is what consumers demand and what insurance policies 

provide; therefore, these are "must match" parts. There is no room for innovation by alternative 

suppliers so as to avoid allegations of infringement. In fact, many state insurance laws require 

that alternatively supplied collision repair parts be of "like kind and quality" in "form, fit, and 

tinish" to car company parts. But after Ford's unprecedented actions at the lTC, alternative 

suppliers are in the untenable position of complying with state law and meeting consumer 

demand while, simultaneously, facing allegations of design patent infringement by the car 

companies. Fourteen-year design patents, when applied to these parts in the aftermarket, serve 

only to restrict or eliminate competition and facilitate a monopoly on cosmetic replacement parts. 

In addition, on May 2, 2008, Ford filed yet another Section 337 complaint at the lTC, alleging 

design patent infringement for eight parts for the Ford Mustang (model year 2005). Not 

insignificantly, the legal defense costs for alternative suppliers in both the F-ISO and Mustang 

cases were enormous and mounting. While the ITC's decision in the Ford F-150 case was 

pending on appeal at the Federal Circuit, and the ITC ALI hearings were about to commence in 

the Ford Mustang case, Ford reached a settlement with one alternative supplier. 

While many of the settlement's details remain confidential, publicly available infonnation 

suggests that the settlement is very limited in nature. It's only between Ford and one aJternative 

parts distributor, and it only lasts until March 2015. As such, nothing in the settlement prevents 

any of the other car companies from filing a complaint at the ITC today and continuing to 

eliminate competition. Nothing in the settlement prevents Ford from marching right back to the 

ITC as soon as the settlement expires in 2015 and continuing its effort to eliminate competition. 

Therefore, despite the temporary settlement between Ford and one alternative supplier, we 

cannot sit and simply cross our fingers that the car companies will simply ignore future 

opportunities to exploit new design patents on component parts and wipe out competition. Faced 

with these realities, Congress must act now, before it is too late. 

The Harmful Effects of Eliminating Competition on Collision Repair Parts: 

The impact of eliminating competition in the collision repair parts market would fall directly on 

consumers. If competition is eliminated, the insurance industry estimates that $2.4 billion would 

'Lower blUnper valance (2WD), lower bumper valance (~WD), side view mirror (LHIRH), honey comb grille, head 

lamp (LHlRH). tail lamp styleside ((LHIRH), and tail lamp flareside (LHIRH) 

4 
19 


WNM-5.eps

be added to insured automobile repair costs every year. Ultimately, the higher costs of those 

repairs would be passed on to consumers in the fonn of higher insurance premiums7 Nor would 

the effect of eliminating competition on collision repair parts be limited to consumers' auto 

insurance costs. Consumers that pay for their own repairs out of pocket would bear these costs 

directly, or might choose to forgo repairs, leading to more rapid deterioration and depreciation of 

their vehicles. Higher repair costs also means that there is an increased likelihood of a vehicle 

being declared a total loss, compelling consumers to replace the vehicle, payoff a loan that may 

exceed the value of the vehicle, and seek financing for the purchase of a replacement vehicle, all 

of which depletes savings. Tn tough economic times like these, these kinds of added costs hurt 

consumers that much more, especially as autos age and depreciate. The impact of all of these 

factors would be much greater on those low- or fixed-income consumers who can least afford it. 

The PARTS Act is Good Public Policy, Carefully Balancing Intellectual Property Rights 

and Preservation of Competition: 

In February of this year, Representatives Issa and Lofgren8 introduced the PARTS Act in order 

to address the clear and present danger posed by car companies' use of design patents to 

eliminate competitive choice in the aftermarket for collision repair parts. The PARTS Act 

carefully balances the car companies' intellectual property rights with the need to protect 

consumers by preserving competition. 

Specifically, when a part is being used "for the purpose of repair of a motor vehicle so as to 

restore [it] to its appearance as originally manufactured" the PARTS Act would effectively 

reduce from 14 years to 2.5 years the monopoly period during which the sale of alternative 

collision repair parts or the lise of such parts would constitute an act of infringement of a car 

company's 14-year design patent. That said, under the PARTS Act, it would never be an act of 

infringement to make, test, market, or engage in pre-sale distribution. 

We recognize that the overall design ofa car can playa significant role in a consumers' choice 

when buying a new car and, in the very competitive market for new car sales, car companies 

invest a lot in their overall design of a vehicle as a result. While protecting competition in the 

market for collision parts, the PARTS Act would do nothing to deter car companies from 

obtaining 14-year design patents on their collision parts and enforcing them for up to 14 years 

against other car companies to prevent them from copying each another's vehicle designs in the 

new car sales market. Therefore, the PARTS Act does nothing to change the incentive of the car 

companies to innovate as they continue to design their cars to compete against each other. 

We respect the investment made by the car companies in intellectual property when designing 

their cars to create a distinctive owning and driving experience, but when a consumer buys a car 

for $35,000 in the showroom, puts the title in his pocket, and drives it of I the lot, it is his 

property, and he has compensated the car company for the overall design and manufacture of the 

- Analysis or the Impact or Banning Allcrmar1.ct Parts, Property and Casualty Insurers Association of America. 

January 19.2010. 

'The PARTS Act is similar to legislation that Rep. Lofb'Te11 introduced in the lll'h COnb'fess. H.R 3059. the 

"Access to Repair Parts Act" 
20 

Mr. GOODLATTE. Thank you, Mr. Menefee. 

Ms. Burris, welcome. 


WNM-6.eps
21 

TESTIMONY OF KELLY K. BURRIS, SHAREHOLDER AND CHAIR, 

GREEN TECHNOLOGY PRACTICE GROUP, BRINKS, HOFER, 

GILSON & LIONE 

Ms. BURRIS. Chairman Goodlatte, Ranking Member Watt, and 

distinguished Members of the Subcommittee, thank you for the opportunity to be here today. It really is my pleasure, and it feels like 

an honor. 

I am here today in opposition to the bill from a very high level 

because I am afraid that this type of legislation could set a very 

dangerous precedent and put us on the slippery slope. 

If we carve out an exception for component parts for motor vehicles—it is not just automotive, and I will get to that. If we carve 

out this exception, who will be next? What industry will come to 

you next alleging that the parts are too expensive, my computer is 

too expensive, and asking for their exception to infringement as 

well? So that is my very high-level legal concern, as is many of the 

people in the room today. 

Secondly, and I think more importantly, as a design engineer 

myself, I think legislation of this nature really does stifle the innovation process. The patent system is there, as Mr. Issa, you have 

recognized and, Ranking Member Watt, you have recognized, to 

provide an incentive to us to be creative and to be innovative. That 

is the quid pro quo. As Abraham Lincoln put it, it is the fuel of 

interest that feeds the fire of ingenuity. When you remove that incentive, how can we expect the creativity and the innovation to 

continue? 

Along the lines of that innovation and creativity, if we look at 

some of the facts, we have in the United States there are 21 design 

centers, often called studios, where just the outside of the car is 

being designed. Those design studios are in the States of California, actually many in California, in Ohio, and there are studios 

in Michigan as well. 

These studios, in my written testimony we had 30,000 jobs, but 

some recent numbers just came in from GM. There are over 40,000 

good paying white-collar jobs for these automotive designers, industrial designers, working on just the appearance of the car. So I 

think legislation of this nature has a tendency to devalue what it 

is they are doing, and especially on the heels of the America Invents Act that was just put into law less than a year ago to help 

promote innovation in our country. To have legislation of this nature come on the heels of the AIA I think is going in the opposite 

direction. 

I would also like to mention that you really cannot look at design 

patents in a vacuum or in a bubble. As Mr. Issa, you have recognized, there is also trademark or trade dress protection in product 

configurations. As long as the consumer can associate that look and 

feel with the source of the goods. There is also utility patent protection on these parts as well. Oftentimes now they are fastened to 

the inner body. So in order for this bill to really work, you are 

going to have to look at possibly making changes to the Lanham 

Act and also utility patent infringement. 

Now turning to the language of the bill itself, it does not say 

automobiles. It says ‘‘motor vehicles.’’ Motor vehicles are defined 

under Title 49 as any vehicle that is driven or drawn by mechanVerDate Aug 31 2005 10:06 Nov 29, 2012 Jkt 000000 PO 00000 Frm 00025 Fmt 6633 Sfmt 6601 H:\WORK\IP\080112\75385.000 HJUD1 PsN: DOUGA
22 

ical power, manufactured for use on our streets, roads, and highways. So that means it is not just automobiles. It is motorcycles. 

It is scooters. It is mopeds. It is farming equipment. It is tractors. 

It is trailers. 

Looking at motorcycles alone, Harley-Davidson owns 151 design 

patents on the components of their motorcycles. I do not know 

about you guys, but I would not want the biker community coming 

after me on this one. [Laughter.] 

And there is even a—are we good, John? There is a gentleman 

here from Caterpillar that is here for the same reason, because 

they have new vehicles that they are protecting with design patents that they feel are threatened by this legislation. 

The 30-month period that is in the legislation as well is not 30 

months from the issue date of the patent. It is 30 months from the 

date of the offer for sale. You never have a design patent the day 

you offer it for sale. Pendency of design patents at the Patent Office is over 1 year, so at best you are talking about maybe a 1-year 

term for design patent holders. 

Let us see. I am running out of time, but I would also like to say 

that this bill is retroactive. So if you had a design patent 5 years 

ago, 10 years ago, guess what? It is done. It is gone. You do not 

have it anymore. So it reaches back. 

And I also think there are alternatives for consumers. There are 

originally equipment manufactured parts that have been refurbished that are available. There are parts that do not look exactly 

the same, but are interchangeable. And these parts can be repaired, and I look forward to that discussion here today. 

Thank you for the time. 

[The prepared statement of Ms. Burris follows:] 

23 


KKB-1.eps

WRITTEN STATEMENT OF KELLY K. BURRIS 

Brinks Hofer Gilson & Liane 

COMMITTEE ON THE JUDICIARY 

SUBCOMMITTEE ON INTELLECTUAL PROPERTY, COMPETITION AND THE INTERNET 

Hearing on: H.R. 3889, the "Promoting Automotive Repair, Trade, and Sales Act" ("PARTS Act") 

BRINKS 

HOFER 

GILSON 

&LIONE 

Wednesday, August 1, 2012 - 2:30 p.m. 

2141 Rayburn House Office Building 
24 


KKB-2.eps

Chairman Goodlatte, Ranking Member Watt, and members of the Subcommittee, thank 

you for the opportunity to be here. My name is Kelly Burris, and I am a patent attorney in 

private practice with Brinks Hofer Gilson & Lione, an adjunct professor of intellectual property 

law at Thomas M. Cooley Law School, and previously a design engineer in the aerospace 

industry for over eleven years. I appreciate the opportunity to share my views on H.R. 3889, the 

Promoting Automotive Repair, Trade and Sales Act (PARTS Act). 

While I have tried to focus my testimony on issues that were not previously considered 

and discussed in the 2.010 hearing on design patents, I want to be clear that I share the concerns 

expressed then that this type of legislation would lead us down a slippery slope. If an exception 

for automotive repair parts is made, what will be next, and when will it stop? More importantly, 

I believe that innovation in automotive design, and potentially the entire industrial design 

community, will be stifled by legislation of this nature. 

As a patent practitioner, and formerly a design engineer myself, I am all too 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 hundreds if not millions of dollars are 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? 

Instead of a quid pro quo, this legislation amounts to a quid pro nihil, or something for 

nothing for design patent applicants. Auto manufacturers consistently lead the world in R&D 

spending, to the tune of $18-2.0 billion a year. Design protection encourages innovation and 

creates jobs in the United States. In fact, fourteen different Original Equipment Manufacturers 

(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 twenty-one separate design facilities in three states 

(Michigan, Ohio and California) that account for roughly 30,000 jobs. Being from Michigan and 

the Detroit area, and growing up in a blue-collar family that always instilled the values of 

working hard to create your own success, I find this legislation to be moving in the wrong 

direction at the exact time that the auto industry is one of the few bright spots in the economy. 

2. 
25 


KKB-3.eps

First, design patents are only one form of patents, and patents are only one form of 

intellectual property under our laws. There are three types of patents available under our 

current system: design patents, the intended target of the proposed legislation, which cover the 

ornamental appearance of an article of manufacture; utility patents, which generally protect 

how something works or how it is constructed; and plant patents, which protect asexually 

reproduced plants. These different types of patent protection are not exclusive of one another. 

A patentee may obtain both design patent protection and utility patent protection on the same 

part, where one covers the part's appearance and the other covers its utility. 

Moreover, trademark protection is also available for certain designs, provided the 

design is a source identifier. For example, take the Jeep") grille, which is covered by both design 

patents and trademarks, and quite possibly utility patents. Similar to the overlap with design 

and utility patent protection, design patent protection and trademark protection are also not 

exclusive of one another. In other words, even if the design patent cannot be infringed, the 

trademark could be. 

As another example, the way in which these exterior parts are fastened to the 

underlying structure is also often covered by utility patents. In fact, it is very common to 

engineer unique connection systems for wear replaceable items so that the design cannot be 

copied as easily. In essence, the repair parts that are the subject of the proposed legislation 

could be covered by a design patent, a utility patent, and a trademark, in some instances. As a 

result, from a legal perspective, the proposed legislation may not accomplish its objective 

without additional legislation to change both the Lanham Act (Title 15 - our trademark statute) 

and also utility patent infringement under our patent laws. From a practical perspective, the 

proposed legislation will not accomplish its objective because I think most consumers can agree 

that there is serious doubt that our insurance premiums will actually be reduced, which I will 

address in further detail below. 

And on the topic of trademarks or trade dress, non-OEM parts will likely 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 

1 b!!!ULDews.consumerreports.org!cars!2!llf)lQliford-tests-show-aft~.rmark.!'L~l?lac_ement: 

R a rts-ca n -R resent -safety-ri s k. htm I 

3 
26 


KKB-4.eps

designed." 2 And when I asked my students about this proposed legislation, that was one of the 

first responses, that their personal experience involved inferior replacement parts, and that they 

know now to ask for OEM parts. 

What sub-standard non-OEM parts translates to for the brand owners, such as Ford, 

Chrysler, and GM, is a tarnishment of their image because the replacement part is presumed to 

be made by the OEM once the vehicle is back on the road. When the plastic is crazing or the 

chrome is rusting, consumers will likely think that the OEM does not make quality vehicles. And 

when the air bag does not deploy because a cheap imitation bumper beam was used in a repair, 

consumers will also conclude that the OEM does not make safe vehicles. Although the Lanham 

Act can protect some parts as I mentioned above, Under the Lanham Act, this erosion of their 

famous brands may be difficult to prove, especially if evaluated on the replacement part level. 

All the more need to maintain design patent protection for the parts that will keep us safe in our 

vehicles and maintain the quality that we as consumers have paid for and come to expect. 

On the face of the proposed bill itself, I see at least one practical issue and a broader 

sweep than what might be intended. First, the language refers to "a period of 30 months 

beginning on the first day on which any such component part is first offered to the public for 

sale ... in any country." In other words, the patentee has 30 months from this offer for sale in 

which a third party would be liable for infringement of their design patent. The problem with 

this language is that there is no issued design patent at the time of the offer for sale. In almost 

every instance, patent applications are filed just before the public disclosure, for example, on 

the eve of a big auto show or meetings with potential customers, or even suppliers. This is 

because changes to the design are constantly being made, and the designs are iterated and 

refined right up until the "release" date, or when the design is finally locked down. It is only 

after this date that the patent applications are filed in order to cover the actual final production 

design. 

The average pendency for design patent applications in the USPTO (United States Patent 

and Trademark Office) currently stands at over one year 3

, and for these particular designs in the 

classes of, for example, D26 -lighting, and D12 - transportation, the average is about one and a 

half years. So in effect, the proposed 30 months is actually about 12 months in the best-case 

scenario. I say best case because even when the part or vehicle is offered for sale, the vehicle 

does not actually get delivered and will not hit the road for months afterwards. The language of 

the bill broadly defines the "offer for sale" as "any marketing of an article of manufacture to 

'Id. 

3 http://wv...W.u~pto.gov/web/office5/ac/ido/oeip/taf/design.htm 

4 
27 


KKB-5.eps

prospective purchasers or users and any pre-sale distribution of the article of manufacture." 

The bottom line is that with every new vehicle introduction, the part will be "offered for sale" 

but the design patent will not issue until after the expiration of the proposed 3D-month period. 

A patent cannot be enforced until it issues, and so what this amounts to is no patent term 

whatsoever for these design patents. In a nutshell, a patent applicant spends thousands of 

dollars and pays the government their fees, only to have nothing to show for it but a plaque on 

the wall. Where is the fairness in that? 

The broader sweep I refer to above is with respect to the "motor vehicle" language, 

which is defined in section 32101(7) of title 49 as "a vehicle driven or drawn by mechanical 

power and manufactured primarily for use on public streets, roads, and highways, but does not 

include a vehicle operated only on a rail line." Accordingly, this language would also include 

motorcycles, mopeds, and motor scooters, among others. Harley Davidson alone currently 

holds 151 design patents for various features of its motorcycles. And a closer look into all of the 

"motor vehicles" would reveal a number of industries with designers that would be equally 

impacted by this proposed legislation. Not only is there the danger that this legislation will open 

the door for other service industries to demand equal rights and their exception to design 

patent infringement, but it will also immediately pull in other motor vehicle design communities 

besides automotive. 

I have heard more than once that design patents "just" cover the appearance, or what 

the article of manufacture looks like, as opposed to the utility or function of the article as 

provided by utility patents, as if utility or function were more important or more highly valued. 

True, utility patents can provide broader coverage through the language of the patent's claims; 

however, this does not correlate to more engineering and/or design effort on the front end to 

create that utility or function. Nor should the broader claim scope of utility patents diminish the 

value of industrial design. Industrial design is the bridge between engineering and the end 

consumer, and without it, I believe we would be living in a very dull and impractical world. 

Although the law dictates that a design must be "primarily ornamental," there are 

functional features of the design patents at issue. Take for example a hood with changing 

contour and lateral steps. The hood includes these features for structural stiffness, 

aerodynamics, and to accommodate engine components under the hood. The aerodynamic 

contour and lateral steps are functional, but the overall design is aesthetic or ornamental. 

Because there are alternative designs for this hood, the design is not solely dictated by its 

function, and thus it is protectable under our design patent laws. However, the aerodynamic 

contour and/or the lateral steps may not be enough to overcome the "non-obviousness" 

5 
28 


KKB-6.eps

requirement under Title 35, Section 103, in order to provide utility patent protection. 

Therefore, a design patent fills the void and provides protection for the engineering and design 

effort put into this hood so that it cannot be unfairly copied. What I am saying is that design 

patents offer a unique form of protection for innovative and "eye-pleasing" products that 

otherwise would not be available. If the ability to obtain these design patents is pilfered, I'm 

afraid we will find ourselves back to the day of the K-Car. 

The proponents of this bill claim that consumers "need options." Well, consumers have 

many options without a wholesale taking of the rights of our industrial designers. First, there 

are alternative designs currently on the market that can be used instead of the OEM parts. Take 

for example, the SEMA (Specialty Equipment Market Association) community. "SEMA members 

make, buy, sell and use all kinds of specialty parts and accessories to make vehicles more 

attractive, more unique, more convenient, faster, safer, more fun and even like-new again4

." 

These aftermarket parts can be offered to the consumer as repair alternatives to the OEM parts, 

therefore providing that "consumer choice" everyone is looking for. So what if their vehicle 

doesn't look exactly like the originally manufactured version? As to the matter of symmetrical 

parts on the vehicle such as headlights or taillights, when only one is damaged in an accident, 

why can't they be provided in pairs and the non-damaged version salvaged for another repair? 

More fundamentally, non-OEM suppliers should not be allowed to take the easy road 

and copy the patented design, and should instead be required to develop a "design around," 

just like every other industry. Take for example windshield wipers. The non-OEM suppliers and 

distributors routinely review OEM patents (and also non-OEM patents) to make sure that their 

replacement wiper blades do not infringe any patent claims. And this involves both design 

patents and utility patents. Still, their non-OEM replacement wiper blades are less expensive 

than the OEM blades. Why should there be a different standard for component parts covered 

by design patents under the proposed bill? Of course if a company is allowed to copy the design 

without expending any design effort, it will be cheaper - - where is the fairness in that? 

Another option for the consumer is to repair or refurbish their damaged parts. There is 

a legal doctrine commonly referred to as repair/reconstruction5

. In a nutshell, the purchaser of 

a patented article has the right to use, repair, modify, discard, and resell, subject to conditions 

of the sale. However, the rights do not include the right to reconstruct the entire patented 

article. I understand that repairing the damaged part may not be possible in every collision; 

4 www.sema,org/about-sema 

5 Husky Injection Molding Systems Ltd. v. R&D Tool & Engineering Co., 291 F.3d 780 (Fed. Cir. 

2002) 

6 
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KKB-7.eps

however, it is an option that should not be ignored. And perhaps there could even be incentives 

to conduct such repairs more frequently in order to reduce the amount of landfill waste to 

support our environmental initiatives. 

And under the administration's proposed National Network for Manufacturing 

Innovation (NNMI)6, additive manufacturing is a newer technology that is receiving attention 

and could potentially be used to repair damaged parts. This technology is often referred to as 

"3D printing" and generally builds up objects by adding materials in very thin layers. As new 

U.S. manufacturing jobs are created in this technology, repair of automotive parts could be an 

industry that would feed that job growth. 

The insurance industry says this bill will lower costs for consumers, but that has not 

been true in other countries that have passed similar provisions. A study conducted shortly 

after the enactment of the "Designs Act of 2003" in Australia concluded that the "provision was 

yet to have a significant effect on industry and consumers." 7 Moreover, the legislation overseas 

is not retroactive and only applies to new designs registered on or after the date of enactment, 

whereas the proposed PARTS legislation unfairly applies before, on, or after the date of 

enactment. And in Europe, the European Union is currently in discussions about how and how 

long to protect automotive repair parts, which are protected in various countries, including 

Germany. 

The automotive industry is making a comeback, due in great part to the innovative and 

award-winning designs coming out of the OEMs. As one of my students put it, this legislation is 

like "a punch in the gut" at this time in our recovery. 

Abraham Lincoln elegantly said: "The patent system added the fuel of interest to the 

fire of genius." And as my late grandfather, a tool and die maker for the Fords, would have said: 

"The insurance industry - do they pack their lunch or walk to work?" 

Thank you again for the opportunity to comment on the proposed PARTS legislation, 

and I look forward to answering any questions. 

6 http://www.manufacturing.gov/amp/nnmi.html 

7 Attachment 1-Australian Government Review of "Spare Parts" Provision in the Designs Act 

2003, conducted December 2005 

7 
30 

Mr. GOODLATTE. Thank you, Ms. Burris. 

Mr. Gillis, welcome. 

TESTIMONY OF JACK GILLIS, DIRECTOR OF PUBLIC AFFAIRS, 

CONSUMER FEDERATION OF AMERICA (CFA) 

Mr. GILLIS. Chairman Goodlatte, Ranking Member Watt, and 

Members of the Committee—— 

Mr. GOODLATTE. You have the same affliction. Turn that microphone on. 

Mr. GILLIS. Thank you very much for the opportunity. I am here 

today in addition to being a representative of the Consumer Federation of America, also the Advocates for Highway and Auto Safety, the Center for Auto Safety, Consumers Union, which is the policy and research arm of Consumer Reports and Public Citizen. And 

we particularly appreciate the invitation to be here today. 

What I would like the Committee to consider is any one of these 

experiences. You back into a pole. You sideswipe your car. You suddenly have someone stop in front of you, and you hit them. Hopefully this will not result in injuries. What it will result in is thousands of dollars of costs in terms of repairing your car. 

Why do these fender benders cost so much? One reason is because the parts are so expensive. Ford charges the same amount 

for a fender as Dell charges for a computer and a flat screen TV. 

You can get a two-door refrigerator from Sears for the same price 

as a grill from Toyota. And guess what? That two-door refrigerator, 

those doors are already painted and installed. You would have to 

pay someone to install the part on your car. 

And what is really significant is that these products, because of 

competition, have not only improved in quality, but they have also 

been reduced in price. Remember that in the early 1990’s, the car 

companies came to you and asked for special design copyright protection on these replacement parts, and you emphatically said no. 

They have ignored your admonition, and there has been an enormous spike in the number of design patents by companies like 

Honda, Toyota, and Ford. Now unless there is something special 

about a fender on a Ford for 2009 that was not special on that 

same Ford in 2002, I think you would agree that this is not some 

newfound design patent protection issue, but a newfound business 

strategy. 

For Ford, Honda, and Toyota, and GM to come before you today 

and say that suddenly these parts are patentable when for years 

and years they were not is at the very least disingenuous and at 

the most extraordinarily costly for the American consumer. This is 

a business strategy, not a legitimate use of our important U.S. patent laws. 

The competition these car companies are trying to kill lowers 

prices, provides choice, and improves quality. If the automakers 

succeed in using design patents to eliminate competition, it will not 

only result in higher repair costs, but higher auto insurance premiums. 

On the safety side, not only was Congresswoman Lofgren correct 

in our concern about consumers not repairing parts of the car because they are so expensive, but let us talk about the safety of the 

parts themselves. I would like to refer to the very organization 

31 

mentioned in one of the testimonies submitted by the car companies. This is from the Insurance Institute for Highway Safety. 

‘‘IIHS did address the issue of safety and determined that both in 

low speed damage tests and high speed safety crash tests that alternative parts are certified to be the same, in fact performed nearly identically.’’ And I would like to submit for the record a copy of 

the IHS status report, which describes these findings. 

The most tragic irony of the lack of competition is what I call the 

auto makers’ double whammy. Not only can they charge whatever 

they want for the parts we need to fix our cars, but when they 

charge so much that the car is totaled, our only recourse is to go 

back to them and buy another one of their products. The bottom 

line is that if auto makers succeed in eliminating competition, the 

cost to consumers will be enormous. 

We applaud Representative Issa and Lofgren for introducing 

3889. It is important to note that this is not a perfect solution. Representative Lofgren, as she mentioned, 2 years ago proposed a truly 

elegant solution: allow the car companies to patent their parts and 

keep their designs from being copied by other car companies, but 

allow the independent production of those parts when used solely 

to repair a car. At that time, powerful car company and manufacturing lobbyists crushed her efforts to protect consumers. 

In the fact of this intense lobbying to protect the use of design 

patents to prevent competition, H.R. 3889 represents a compromise. It is a step forward in helping us prevent us from being 

forced to pay unfair prices for the cars we need. 

Probably the most telling testimony submitted by the car companies was their suggestion that when one headlight or taillight gets 

damaged, consumers should be encouraged to buy both. Of course 

the car companies want us to replace perfectly good parts with 

their replacements. They would make millions. This is also why 

they are using the patent laws to thwart competition. Everyone is 

entitled to make a fair profit, but the car companies suggesting 

that we replace perfectly good and very expensive parts is way over 

the top. 

So CFA, the Advocates for Highway and Auto Safety, the Center 

for Auto Safety, Consumers Union, and Public Citizen believe that 

consumers need competitive crash parts. On behalf of these groups, 

I strongly urge Congress to adopt a repair clause to the design patent laws in order to ensure a competitive market with fairly-priced 

alternatives to expensive car company brand parts. 

Thank you very much, Mr. Chairman. 

[The prepared statement of Mr. Gillis follows:] 

Prepared Statement of Jack Gillis, Director of Public Affairs, 

Consumer Federation of America (CFA) 

Chairman Goodlatte, Ranking Member Watt, and Members of the Subcommittee, 

my name is Jack Gillis, and I am Director of Public Affairs for the Consumer Federation of America. In addition to the Consumer Federation of America, I also am 

testifying today on behalf of Advocates for Highway and Auto Safety, the Center for 

Auto Safety, Consumers Union, the policy and advocacy arm of Consumer Reports, 

and Public Citizen. We are grateful for your invitation to appear today on an issue 

of tremendous importance to millions of Americans—the maintenance and repair of 

automobiles. 

Consider any of the following experiences, which happen to thousands of Americans each year: you back into a pole at a shopping mall; someone in front of you 

32 

stops suddenly and your bumpers collide; or, you inadvertently sideswipe your car 

in a cramped parking lot. Fortunately, few of these ‘‘fender-benders’’ result in injuries, but they often result in shocking repair bills. 

Why are these repair bills so high? One reason is the cost of the parts for the 

needed repairs. For example, Ford charges the same price for a fender as Dell 

charges for a high speed computer and flat screen monitor. A simple grill for your 

car costs the same as a combination flat screen TV/DVD player. An unpainted door 

from Toyota costs the same as a Sears refrigerator. And, the refrigerator comes with 

two doors, already painted and installed! You’ll typically have to pay someone over 

$500 to paint and install the Toyota door. General Motors charges the same price 

for a rubber bumper cover as Garmin charges for a full color GPS, programmed with 

directions and maps to anywhere in the United States. The fact is, computers, TVs, 

refrigerators, and GPS systems are cheaper and better today than five years ago for 

one reason—‘‘competition’’. 

In the early 1990s, the car companies came to Congress and asked for special design copyright protection on these replacement parts and Congress said no. Our concern today is that the car companies are now using design patents, not for the important and legitimate protection of the overall design of their vehicles, but to prevent competition when it comes to getting the parts we need to repair our vehicles. 

Over the past several years, there has been an enormous spike in the number of 

design patents on crash parts, which companies like Honda, Toyota, and Ford have 

received on their external crash parts. (See chart below.) Historically, while car companies have understandably received design patents on the overall design of a car, 

only recently have they begun to get patents on the individual replacement crash 

parts. 

The number of design patents awarded to the major car companies on collision repair parts has increased dramatically since the 1990s, after Congress said NO to their strategy to enact legislation providing 

copyright protection for repair parts. Note 1: The term ‘‘collision repair parts’’ includes bezels, bumper covers, deck lids, door shells, fenders, fascias, front/rear grilles, header panels, headlamps, high-mounted brake 

lights, hoods, pickup beds, pickup box sides, quarter panels, radiator supports, side markers, side mouldings, tailgates, taillamps, and wheel houses as defined by the Certified Automotive Parts Association at 

www.capacertified.org Note 2: Figures shown are cumulative. For 2012, those figures have been 

‘‘annualized’’ and are based on the number of design patents granted through July 20, 2012. 

In May of 2008, Ford filed a section 337 complaint at the International Trade 

Commission (ITC) against manufacturers and U.S. distributors of auto exterior repair parts on the 2005 Ford Mustang. This complaint followed on the heels of the 

previous section 337 complaint filed by Ford relating to the Ford F–150, which resulted in the effective elimination of a competitive choice for seven exterior Ford F– 

150 repair parts. As a result of a court settlement in April 2009, which ended legal 


Gillis.eps
33 

1 Analysis of the Impact of Banning Aftermarket Parts, Property and Casualty Insurers Association of America, January 19, 2010. 

actions on the Ford F–150 and Mustang, today the millions of F–150 and Mustang 

owners in the U.S. have limited alternative options for quality replacement collision 

parts. The settlement awarded one aftermarket competitor with a temporary, exclusive license to distribute aftermarket Ford parts. This comes at further detriment 

to the consumer, who will shoulder the added cost of the royalty in the increased 

prices of parts. This settlement is limited and temporary in nature between one car 

company and one distributor leaving consumers open to whims and exploits of the 

car companies. 

This type of design patent enforcement action that began with the Ford F–150 

emerged as a new business strategy for automakers. As automakers continue to 

ramp up their design patents on crash parts, the possibility of many additional design patent enforcement actions being brought at the ITC (or federal courts) continues to be very real. The cost of defending such cases is enormous. Even defending 

just a small number of such cases could easily drive competitors out of business altogether, regardless of whether they ultimately were to win on the merits. 

What is particularly disturbing about the action taken by the car companies is 

that they are only selectively putting design patents on those parts where competition, albeit limited, is available. 

QUALITY AND SAFETY MUST BE TANTAMOUNT FOR ALL PARTS

The consumer organizations supporting this effort do so with the insistence that 

all parts, whether they be service parts sold by the car companies or parts made 

and sold by independent companies, must not compromise the integrity or safety of 

the vehicle. Not only do consumers have the right to competition, but they have the 

right to safe and high quality competitive parts. 

SO WHAT DOES THIS MEAN FOR CONSUMERS?

For over 25 years, consumers have benefited from competition, albeit limited, between car company brand replacement parts and independently branded parts. Such 

competition, where it exists, lowers prices, provides choice, and improves quality. In 

fact, many independent brand parts have lifetime warranties, something the car 

company parts lack. Unfortunately, however, car companies still have a 73% market 

share, competitive suppliers have 12%, and the remainder comes from recycled 

parts. Without congressional intervention this barely competitive marketplace for 

collision repair parts will allow automakers to hijack design patent laws to capture 

the entire market. Who are the victims if Congress does not intervene? The thousands of Americans who experience low speed collisions each year. 

It’s no surprise the car companies don’t want competition. Not only does the mere 

presence of competition reduce the price of car company brand replacement crash 

parts, but competitive replacement crash parts are typically 34%—83% 1 less expensive. 

ELIMINATION OF COMPETITION WILL INCREASE THE COST OF REPAIRS

Right now, the elimination of competition from independent brand crash repair 

parts would cost automobile owners more than $1 billion a year. 

The lack of competition for repair parts will seriously harm consumers. Already 

high accident repair costs will skyrocket. Right now, in low speed crash tests conducted by the highly respected Insurance Institute for Highway Safety, the cost of 

a simple 5 mph bump into a pole can cost thousands of dollars to fix. Why does it 

cost so much to repair these vehicles? Because the car companies are able to charge 

monopolistic prices because of lack of competition. 

ELIMINATING COMPETITION WILL INCREASE INSURANCE PREMIUMS FOR CONSUMERS. 

If the automakers succeed in using design patents to eliminate competition for 

crash parts, it will not only result in higher repair costs, but also higher auto insurance premiums. When collision repair crash parts cost more, insurers will have no 

choice but to pass those cost increases on to their policy holders in the form of higher rates. In addition, in the face of already rising insurance premiums, many consumers are opting for higher deductibles. That means that more of these exorbitant 

crash repair costs will be coming directly out of consumers’ pockets. This will have 

a disproportionate impact on low and fixed income consumers. 

34 

ELIMINATING COMPETITION IN CRASH PARTS COULD DIMINISH SAFETY. 

On the safety side, tragically, as the cost of needed repair parts rises, many consumers will be forced to forgo or delay needed repairs, leaving them with a vehicle 

that may not offer needed safety. Delaying or ignoring the replacement of a head 

light, side mirror, or brake light could have serious safety implications. Consumers 

with low incomes, seniors on fixed incomes and those consumers who pay for crash 

repairs out of their own pockets may not be able to afford needed repairs. 

ELIMINATING COMPETITION WILL RESULT IN MORE ‘‘TOTALS’’. 

Higher repair costs due to less competition among the parts needed to repair our 

cars will force insurers to ‘‘total’’ more vehicles because the cost of repairing otherwise repairable vehicles no longer makes economic sense. Consumers lose when a 

vehicle is totaled. First of all, consumers who owe more on the car than it is worth 

will be left with debt payments for a loan on a non-existent car. In addition, total 

losses not only hurt the body shop industry by providing fewer vehicles to repair, 

but a needlessly ‘totaled’ vehicle can also harm the environment. 

ELIMINATING COMPETITION PROTECTS THE AUTOMAKERS ‘‘DOUBLE WHAMMY’’. 

The most tragic irony in the lack of competition is what I call the automakers’ 

‘‘double whammy.’’ Not only will the lack of competition allow car companies to 

charge whatever they want for the parts we need to fix our cars, but when they 

charge so much that the car is ‘totaled,’ our only recourse is to go back to them and 

buy another one of their products. 

The bottom line: If automakers succeed in eliminating competition, the cost to the 

consumers will be enormous. 

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. 

CONGRESS CAN PRESERVE CONSUMER ACCESS TO AFFORDABLE, COMPETITIVE AND

QUALITY CRASH PARTS BY ADOPTING A ‘‘REPAIR CLAUSE’’ IN THE DESIGN PATENT LAW. 

HR 3889 is not a perfect solution. Allowing the car companies to place patents 

on parts for the purposes of preventing competition is just as wrong for 30 months 

as it is for 14 years. Shortening the time period by which you allow monopolistic 

market behavior does not make that market behavior acceptable. Two years ago 

Congresswoman Lofgren proposed a truly elegant solution to the problem: Allow the 

car companies the right to patent parts for the purposes of protecting their designs 

from being copied by competing car companies, but also allow the independent production of such parts when they are used solely as replacement repair parts. At that 

time powerful car company and manufacturing lobbyists crushed Representative 

Lofgren’s efforts to protect consumers from car companies’ monopolies on replacement repair parts. In the face of this intense lobbying to protect the use of design 

patents to prevent competition, HR3889 represents a compromise. We appreciate 

the efforts of Representatives Issa and Lofgren for introducing HR3889 as a step 

forward in protecting the American consumer from being forced to pay unfair prices 

for the parts we need to fix our vehicles. It is now time for congressional leadership 

to embrace HR3889 and open the market to competitively priced, high-quality alternatives to the expensive car company brand parts. By providing a ‘‘repair clause’’ 

in the design patent law, Congress will be providing consumer choice and protecting 

an open and competitive market, while enabling the car companies to retain the design patent protection on the overall vehicle. 

HR3889 is an important step in the eliminating the increasingly unfair, unacceptable, and unnecessary practice of using design patents to prevent competition. By 

establishing this ‘‘repair clause’’ in the design patent law Congress will be preserving 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 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—and rightly should not—interfere with an automaker’s right to prevent competing car companies from using their 

patented vehicle and part designs. 

Design does play an important role in consumers’ original choice of a car. However, after the purchase, consumers need the maximum number of repair choices 

possible. When we plunk down our hard-earned dollars for a new car, we are doing 

just that, buying a car, not a lifetime indenture to the car company to buy their 

35 

parts. It is simply not fair for consumers to be forced to pay monopolistic prices for 

needed crash repair parts. 

Other markets have successfully addressed and solved this problem. Nine European countries and Australia have enacted what is called a ‘‘repair clause’’ law, 

whereby the making and use of a matching exterior auto parts to repair an automobile is not an act of infringement, even though the original part is design protected. The adoption of such a law, EU-wide, is now under active consideration. 

American consumers deserve no less. 

Consumer Federation of America, Advocates for Highway and Auto Safety, the 

Center for Auto Safety, Consumers Union, the policy and advocacy arm of Consumer 

Reports and Public Citizen believe that a competitive crash parts marketplace, 

which has been evolving over the past few decades, has served consumers. On behalf of these groups, I strongly urge Congress to adopt a repair clause to the design 

patent law and pass HR 3889. American consumers will thank you for ensuring a 

competitive market resulting in high quality, fairly priced alternatives to expensive 

car company brand parts. Again, thank you for providing me the opportunity to discuss this important issue with you today. 

Mr. GOODLATTE. Thank you, Mr. Gillis. I will recognize myself to 

begin the questions. And my first question I will direct to all three 

of you. 

Nine European countries and Australia, as has been noted by the 

gentlewoman from California, exempt crash parts from design law 

infringement. Have these laws worked well or not, Mr. Menefee? 

Mr. MENEFEE. From our understanding, they have worked well 

in terms of allowing the competition for after-market parts to function in an appropriate fashion as outlined in what this bill would 

provide. 

Mr. GOODLATTE. Thank you. Ms. Burris? 

Ms. BURRIS. I think you will find in my written statement that 

I did obtain a report from one of my associates in Australia. A 

study was conducted, albeit shortly after the enactment of that law, 

that found that it had no impact on the insurance premiums. So 

I think in that case, it was really too early to tell. I do not know 

if there is a more recent report, but I would encourage us to keep 

our eye on what is happening over there. 

I have also found out that in Europe, although the current law 

in the European community design itself is that you cannot get a 

design patent on a repair part, they are currently discussing that 

issue and trying to decide what parts and for how long they can 

have protection. So the European community is looking at that. 

Each individual country has its own laws, but when you get a 

European registration, there is one law that applies to all of those. 

And there are many countries that do allow design protection just 

like we do. Thank you. 

Mr. GOODLATTE. Mr. Gillis? 

Mr. GILLIS. Mr. Chairman, as I said in my comments, this is an 

elegant solution to the problem. It is fair. It is reasonable. And not 

only that, it has done nothing to—— 

Mr. GOODLATTE. Well, tell us about what you know about what 

is going on in these other countries. 

Mr. GILLIS. Okay. What is going on in the other countries is basically the manufacturer of an independent part is allowed to 

produce that part, even if there is a design patent on it, if that part 

is only being used to repair the car. In other words, you cannot 

make a whole bunch of these parts and replicate the vehicle. But 

36 

if a consumer wants to buy an alternative part, then that gives 

the—— 

Mr. GOODLATTE. I gotcha. Let me ask Ms. Burris a question. You 

expressed a concern about the precedent that we might be taking 

here with regard to patent law, and I certainly respect that concern. But I also see a trend here. Why is that for decades, car manufacturers for the most part did not try to use design patents to 

patent these parts in this very competitive marketplace and crash 

repair has developed? What is the reason for that trend? That 

trend concerns me as well. 

Ms. BURRIS. Yeah, I have seen the trend myself. I think there 

are a number of things that contribute to that. I think one of them 

is the car companies had realized that their parts were being copied. 

When you sit down with your client and you have a new product 

that is being launched, you get in a meeting and you sit down and 

you go, okay, what is patentable, what is not, what do we want to 

protect? And one of the questions that you always ask is, okay, 

which parts are replacement parts that someone is going to try to 

copy on our design? And you decide then, okay, these are the parts 

that—— 

Mr. GOODLATTE. All right, but this is not new. 

Ms. BURRIS. I understand that. 

Mr. GOODLATTE. People have been backing their cars into poles 

or colliding with somebody else on the highway for 100 years. And 

companies have been engaged in manufacturing parts that will fit 

to replace that when the vehicles are damaged that are not the 

manufacturer of the original part for a long time. I do not know 

how far back it goes. 

And yet now we seem to have a trend, and I understand that not 

all car manufacturers are doing it. Some are and some are not. 

Some are doing it more than others. So I would really like to have 

an explanation other than protectionism, if you will—— 

Ms. BURRIS. Okay, sure. 

Mr. GOODLATTE [continuing]. Why this trend is occurring. 

Ms. BURRIS. Okay. There are a couple more things for you to consider, okay? First of all, the copying of the designs has become 

more widespread, and it is very easy to copy a design now versus 

about 10 years ago. There are digital scanners you are probably familiar with. There are a lot of ways to do it with lasers, optical sensors that you can run along, literally photocopy a part, feed that 

digital information into your computer design system, into your 

CAD tube. That information then gets directly sent to the manufacturing equipment, and, voila, a mold is made within literally a day 

of scanning that part. 

So the technology now makes it very easy to copy these parts. I 

think—— 

Mr. GOODLATTE. But are you saying that this is a new industry 

that has developed because of the ease with which you can copy the 

parts, or is this aftermarket parts industry that has existed for a 

long time has established a place in the market, and they are feeling threatened by this new trend to use design patents to exclude 

them from the market? 

37 

Ms. BURRIS. Yeah. My understanding from discussions with the 

folks at GM and at Ford, albeit limited, and I am happy to go back 

and talk to the other manufacturers as well, is that they are chasing a problem. They are chasing people, pulling their parts, 

digitally scanning them, and then copying them. 

Mr. GOODLATTE. Well, obviously they have been copying them for 

years. If you are going to make a part—— 

Ms. BURRIS. Not to this level. 

Mr. GOODLATTE. You have got to fit on the car that was damaged. And so they had to make something that was a close facsimile of what was originally damaged. And I do not believe this 

is new. 

Mr. Menefee, can you tell us from your experience, in paying for 

these repairs, is this a new trend that we are seeing a more vibrant 

aftermarket industry, or has the industry been operating for a long 

time making parts for almost any vehicle that is damaged? 

Mr. MENEFEE. Mr. Chairman, the aftermarket parts industry has 

been active for a number of years, decades, as you have mentioned. 

And we have been utilizing aftermarket parts in terms of repairs 

through the insurance for that period of time. And I certainly have 

no specific knowledge of significant change other than development 

of technology, which applies to manufacturers, whether it is the car 

manufacturers themselves or aftermarket suppliers. Certainly the 

nature of manufacturing has changed considerably in recent years, 

so there may be a factor there that, in fact, makes them more efficient. 

I also think the statements suggest that the quality of this is 

quite good because of the development of that technology. In terms 

of I would say today our ability to buy aftermarket parts that are 

high quality and meet the test of like, kind, and quality and form, 

fit, and function is probably today than it has ever been. 

Mr. GOODLATTE. Is that a relatively new development or is it 

something that has been evolving over a long period of time? 

Mr. MENEFEE. It is something that has been evolving over a good 

number of years. 

Mr. GOODLATTE. Mr. Gillis? 

Mr. GILLIS. Mr. Chairman, these parts have been in the market 

for at least 40 years. They have been very successful, not as successful as we would like to see them because still today the car 

companies have a monopoly on about 70 percent of the parts that 

we need to get our cars repaired. But they have been around for 

a long, long time. And it is clear that as the car companies make 

less and less money selling cars, they need to find other places to 

get their income from, and they are getting it from these parts. As I said, imagine paying $400 for a simple piece of stamped 

sheet metal. That is outrageous. There are headlights that cost 

$1,500. There are bumpers that cost $900. Why? Because there is 

no competition, and that is hurting us as consumers. 

Mr. GOODLATTE. Ms. Burris, I will give you an opportunity to respond to both of their critics there, if you would like, and then my 

time has expired. 

Ms. BURRIS. Yeah. I think the other point I wanted to make earlier was that I think that part of that uptick that you see, and I 

think we have all recognized that automotive design, especially in 

38 

recent years, has really taken off. There are some outstanding designs coming out of not just the big three in Detroit, but out of 

Honda and Toyota. I mean, the outward appearance of a car—I 

mean, look at the Ford Flex, for example, and the Toyota Prius. We 

are away from—I am going to do it. Chrysler is not here. Away 

from the day of the K car. There has been this—— 

Mr. GOODLATTE. But we are also well away from those big—— 

Mr. ISSA. Where is the ’57 Chevy when you need it? 

Mr. GOODLATTE. That is what I was looking for. 

Ms. BURRIS. Yeah. Hey, there you go. 

Mr. GOODLATTE. Those big fins on the backs of cars. But I take 

your point. 

Ms. BURRIS. Yeah. But regarding the cost of the parts, I think 

that, you know, being an engineer, I know what it takes to design 

these parts, and I know what it takes to do the materials testing, 

and to survive. I think the refrigerator and computer examples 

really are not fair. Those are not designed to be outside in 120 degree temperatures in the ice and in the snow and not rust. They 

are not designed to hit a wall at 65 miles an hour without the condiments flying out either. That is an unfair comparison. 

Mr. GOODLATTE. But think of those magnets that people attach 

to them. 

The gentleman from North Carolina, Mr. Watt, is recognized for 

5 minutes. 

Mr. WATT. Thank you, Mr. Chairman. I am not taking sides on 

the question you asked. But the comments I have gotten from a 

number of people is that these suits picked up when foreign manufacturers of after parts, mostly in Taiwan, started copying the components verbatim. 

And so anyway, I am not on one side or the other of this. I am 

just trying to figure out where I should come down. 

Mr. Chairman, I ask unanimous consent to submit for the record 

a letter that is addressed to me and you dated today’s date from 

Alliance of Automobile Manufacturers and various and sundry 

other organizations that they would like to have put in the record. 

Mr. GOODLATTE. Without objection, it will be made a part of the 

record. 

[The information referred to follows:] 

39 


75385A-1.eps

e AUTO ALLIAN C E Amtflcan Aolomolil't- Policy (ooncil 

-!_ "" III 

~ • 0 0 IIookanlntemational ,...\ . Manufacturers GlobalAutomakers AutomobileOe.JleII 

I liD Truck & Engine 

Manufacturers 

1uly31 . 2012 

Auocl, Uon ' :m ~ .. ~ 

The Honorable Rooert Goodlnue 

Chainnan 

Subcommittee on ntelle~ l.lal Property. 

Corllpclition, Bud lhe n!~mer 

)3·352 Rnyburn HO\lseOffice Buildin~ 

Uniwd SlaleS ~10ll!iC of Represemali vl!S 

WashinglOIl. DC 20515 

llu~ HonOr1!ble Mel Wan 

Rankin!j. II.'lember 

Subcommin~'e on ntelk~hl.lll Property, 

Competition. and the liUemcl 

)3·352 Rayburn House Office Building 

United Siaies HQUStl ofRcpresemalivcs 

Washington. IX 20515 

Dear Chainnan Goodlslle and Ranking Member WanThe undersignlJd coalition of o~ginal equipment manufacturers (OEMs). labor unions, 

intdlec:l\laJ property organization s and broad-baS\'d business associations respectfully write 10 

regiSleTour Slrong opposition to ILR. 388(). th¢ Promoting AUlOmoti~e Repair, Trade and Sales 

(PARTS) Act, which would cxemptthe creation, sales and/or importation of ~r1ain copycat 

compcmenl aulomubile repair parts ffilm infringing U,S design palenl5. 

As you know, design prmection encourages innovadon and crcatesjobs. In fact. vimmHy 

all major OEMs - regardless of wht'fe they are headquartered globally - maimain design cenll.'IS 

in the U.S thnt employ highly illed workel5to create vehicles thnt will appeal to American 

consumeo We arc at a Io.m to understand why Congress would endanger these jobs by 

effectively devaluing the design proc .. ss in this country 

Design pateln! protect the designer against unfair competition from IlMple or companieS 

who copy without invcsting in the process or making an clTon to innovatc. Removing design 

protcctioo promOtes unfair copying to the dcuiment of U.S -based designers, manufaeturel5. 

worker$. and dealer$. It1s a license for ··free ridcrs- 10 depril'e innova tors orany reward for the 

commereial risk tht has b~en taken and potentia! employment of workers needed. Not only 

does the l't\ RTS Act deny businesSti the ability to rillhtfully protect their intellectual propeny 

(IP), it promotes piracy amQng aJllllolJal indu5 rie~ . 

The logic of design protection applies to visible pans as it does to the emire mOlCr 

\·ehicle. While the above mentioned " free riders·· typically focus Qn only a limill'd numbef" or 

vehicle pnns, those p~ns Icnd to be highly visible exterior body pam such as bumpen:. f8.di~tor 

grilles. doors and lights, TIll;! desillfl of these partS mah'S a vita! eontribution 10 the safely, 

identity and appeaTll.nce orthe vehicle that is so imponanl for its commercial success. In 

additiUll, the appearance oflhtse pans is the culmination Qf significant elTon of th~ particular 
40 


75385A-2.eps

inventor(s)/designer(s) in creating a vehicle design that resonates in the market place. OEMs 

invest billions each year to develop and patent these current designs, so to retroactively reduce 

patent protection to a just few years upends the business decisions supporting this important 

segment of the U.S. economy. As a result, the PARTS Act would put American consumers, 

dealers, distributors, manufacturers, and suppliers at risk. 

Manufacturers ofunlicensed automobile parts have to meet only one basic threshold, to 

produce a copy that passes off as an original part. Those who produce such parts incur no costs 

attributable to original design, research and development and most importantly, product safety 

testing. Accordingly, the manufacturer of the original product for whom such unlicensed 

replacement parts are made does not know how these parts will perform with the rest of the 

vehicle and how their use will impact the quality and integrity of the original product. 

Automotive collision repairers are very concerned about the quality of replacement crash parts. 

Permitting this intellectual property infringement also exposes consumers to significant safety, 

performance or durability risks without their knowledge 

Finally, the underlying premise for the PARTS Act is that competition requires copying. 

It doesn't. It's common for aftermarket companies to produce an interchangeable part that 

doesn't copy the exterior appearance of the OEM article. Tn fact, the US. aftermarket is replete 

with headlights, taillights, grilles, and bumpers that don't copy OEM designs but are 

interchangeable. Generic designs are a form of fair competition. They employ designers that 

create original designs, they provide consumers with greater repair choices, and they protect the 

public from mistakenly buying a generic part when they intended the purchase of an OEM 

replacement. The PARTS Act is a solution in search of a problem 

For these reasons, the U.S Supreme Court repeatedly has denied attempts to overturn 

these important lP rights. Legislatively denying these rights would not only overturn decades of 

judicial precedent, it would also violate TP rights that are protected under the World Trade 

Organization agreement on Trade-Related Aspects ofTntellectual Property Rights. At a time 

when the US. should be seeking enhanced consumer safety through stronger enforcement of our 

TP laws, Congress should not enact legislation that would eliminate or weaken TP protections. 

IP rights are explicitly recognized in the US. Constitution, by the US. Supreme Court, in 

our international trade agreements, and by our trading partners. The PARTS Act would overturn 

US. legal precedent, endangering American consumers, and threatening US. jobs and 

investment. 

We strongly oppose H.R. 3889 and urge you to do so as well. 

Alliance of Automobile Manufacturers 

American Automotive Policy Council 

American International Automobile Dealers 

Automotive Service Association 

Motorcycle Industry Council 

Global Automakers 

National Association of Manufacturers 

National Association of Minority Automobile Dealers 

National Automobile Dealers Association 

Truck and Engine Manufacturers Association 

United Auto Workers 
41 

Mr. WATT. Mr. Gillis, Mr. Menefee—well, all of you, let me first 

say I think all of you made exceptionally good witnesses. And this 

is a difficult issue it seems to me. Usually I know where I am leaning, and I do not know where I am leaning here. I mean, my sympathies are with the consumer. 

But let me put myself in the position of the consumer. I buy a 

new car. I drive it off the lot, and somebody bashes it a block from 

the dealership. Why should I not be able to get my insurance company or anybody to replace that automobile with an original part 

from the manufacturer? 

I understand the cost considerations, and I am the owner. But 

I want my car to look and be up to the specifications just like I 

bought it. Why is that not a reasonable request? And why is it a 

legitimate argument counter to that to say, well, somebody else can 

make the same part when somebody has a design patent on that 

part? Those two questions I guess are the opposite sides of the 

same coin. Am I missing something here? 

Mr. Menefee, Mr. Gillis, you can address it from the insurance 

company side. I know the insurance company would like for me to 

go and buy the cheapest part available. It reduces their costs, but 

am I not as a consumer, as a customer entitled to have my brand 

new motorcycle be a brand new motorcycle? What do you say about 

that? 

Mr. MENEFEE. Yes, sir, Congressman. Several questions there. I 

will try to answer each of them as I go. 

Your first question in terms of what do we owe to you as an insurance customer under most of our contracts—— 

Mr. WATT. Okay, I gotcha. Okay. 

Mr. MENEFEE. We owe you a return—— 

Mr. WATT. You owe me something that appears to be the same. 

Mr. MENEFEE. Yes, sir, that is what our contract says, and then 

we charge accordingly. 

Mr. WATT. Okay. All right, but that is under the contract. Maybe 

Mr. Gillis is in a better position to argue this because he does have 

a financial interest in it. The insurance companies always have a 

financial interest in it. 

Mr. MENEFEE. Well, Congressman, if I could just follow up to say 

our financial interest is our consumer. They are our customers and 

ultimately our—— 

Mr. WATT. But if your customer wants an identical car to the one 

he just drove off the lot, is your customer’s interest not in conflict 

with your financial interest? 

Mr. MENEFEE. No, sir. Our interest and our customers’ interests 

are very much aligned. We want our customer to be safe and 

happy, and in that case we think the contract provides for that. 

The contract says we can—— 

Mr. WATT. Go ahead, Mr. Gillis. 

Mr. GILLIS. Well, first of all, Representative Watt, we do not really see this exactly as an insurance issue. It is much more of a consumer issue from the perspective of giving me—— 

Mr. WATT. Okay. That is why I put myself in the consumer’s position. 

Mr. GILLIS. Right, the consumer. For example, you drive down 

the street and you decide you need a new muffler. Well, you can 

42 

go to Chrysler and pay $900 for that muffler or you can do to 

Midas and get one for $189. That is a great choice. Now if you really want that Chrysler muffler and you want to pay $900, you have 

got that choice. 

With a fender, it is the same thing. You may not want to pay $400 for a fender. You may want an alternative choice that is 

maybe a third the price. And all we are saying is let us let that 

choice exist. Let us give me that choice. 

Now if I want to buy an insurance policy—— 

Mr. WATT. Even if somebody has got a patent on it, you are saying—I mean, you know. We could extend that analysis to just about 

any product, I would think. 

Mr. GILLIS. Well, we have a great deal of respect for patent law. 

Patent law is very, very important. But it is not being used in a 

legitimate fashion. As Chairman Goodlatte said, why all of a sudden are—— 

Mr. WATT. Okay, but you say legitimate fashion. Is it legitimate 

for somebody to scan my patented part and reproduce it the very 

next day? I mean, we do not allow that under our patent laws. 

Mr. GILLIS. Right now that would be illegal, and that is what we 

hope this piece of legislation would allow. So solely for the purposes 

of—— 

Mr. WATT. Well, if you want to facilitate somebody being able to 

scan that part and produce it the very next day after it is driven 

off the lot? 

Mr. GILLIS. Solely for the purposes of making a repairable part 

choice available to me, but not for the purposes of allowing General 

Motors to copy Ford’s design or Ford to copy Honda’s design. 

Mr. WATT. So if you are not an automobile dealer, you can copy 

somebody’s design, but if you are Ford or General Motors, you cannot copy each other’s design. 

Mr. GILLIS. That is right. If you were copying these parts to reproduce the General Motors car, that should be, and we respect the 

fact that that should not be allowed. But if the sole purpose is to 

give me a choice as a consumer, to have some choices in the market, like I do in a drug store when I can choose, you know, CVS 

brand aspirin, or like I do in a repair shop, or I can get a DieHard 

battery. 

Mr. WATT. But you cannot go into a drug store and buy a CVS 

brand aspirin while somebody else has the patent on that aspirin? 

Mr. GILLIS. Right, and we can have a whole—— 

Mr. WATT. You know, there are limits to this. 

Mr. GILLIS. Well, we could have a whole hearing on the drug 

companies’ use of patents and potential abuse of patents. But the 

bottom line is, Representative Watt, car companies really need to 

acknowledge the fact that, as the Chairman said, why are they 

suddenly doing this? Why is this car patented today? 

The representative from the car company said, you know, there 

are outstanding designs on the market today. Well, those parts 

have been around for 40 years, and they are not preventing outstanding designs. 

Mr. WATT. All right. I guess hearings have very important purposes. They either clarify the situation or they confuse you more. 

And this one—— 

43 

Mr. GILLIS. Sorry. 

Mr. WATT. This one has left me extremely confused, you know, 

because it is very difficult to know which side of this issue to be 

on. I understand exactly what you are saying, but as the Intellectual Property Subcommittee person, I do not know how exactly we 

put this into our current framework. And the fact that somebody 

made a high quality knockoff does not seem to me to be a sufficient 

justification for allowing them to market that knockoff if it is a patented item. You know, that is what I am having trouble with. 

Mr. Chairman, I am sure we will debate this and hear a lot more 

about it. So I will yield back my time. 

Mr. GOODLATTE. I thank the gentleman. 

The gentleman from Nevada, Mr. Amodei, is recognized for 5 

minutes. 

Mr. AMODEI. Thanks, Mr. Chairman. In the testimony here, we 

have heard talk about crash parts. What percent of the market is 

crash parts? I am assuming we are talking about new vehicles 

here, which means there is not a lot of folks restoring them. So I 

am guessing if I have a 3-year-old vehicle and need a fender, it is 

because it is subject to a crash. Anybody want to tell me what percent of the market is crash parts, exterior only? Nobody wants to? 

Mr. MENEFEE. Congressman, the industry data that we have 

would suggest 15 to 20 percent of the collision repair parts come 

through the aftermarket at the present time. 

Mr. AMODEI. No, I mean crash parts generally. We had heard 

talked about an elegant solution from Mr. Gillis that would say 

crash parts only. I am assuming that is a large chunk of the market if it was crash parts only. 

Mr. GILLIS. Well, there are two types of parts on the market. 

There are—— 

Mr. AMODEI. I understand that. The question is what percentage 

if you know. It is okay to say you do not. 

Mr. GILLIS. It is about a $16 billion market. 

Mr. AMODEI. Okay. So we do not know what percent of the market we are talking about. That is something if somebody could get 

that later on, I would appreciate it. 

Mr. GILLIS. Sure. 

Mr. AMODEI. Second, Ms. Burris, Mr.—sorry. I probably should 

not be driving. Mr. Menefee indicated that when somebody buys a 

car from one of your clients, that they had been compensated for 

all their R&D, all that other sort of stuff that you kind of intimated. What is your response to that? Do manufacturers have any 

interest in any R&D after I pay $35,000 to whatever company for 

my car? 

Ms. BURRIS. I do not think that they have been fully compensated for their R&D when they sell that car. 

Mr. AMODEI. Well, if they have not been, then would this bill encourage them to increase the price so they are getting—I mean, if 

you no longer have a back end on the parts, I would assume that 

everybody is going to be affected equally in the manufacturing and 

that they are going to increase the price of their cars if they do not 

get something on the parts. Is that a bogus statement? How do you 

get compensated for R&D generally? 

44 

Ms. BURRIS. Yeah. If it is okay, I would like to go back to GM, 

Chrysler, and Ford and ask them. I can get the information back. 

Mr. AMODEI. That would be great. 

Ms. BURRIS. I am the patent attorney. I do not work at the automotive companies. 

Mr. AMODEI. Okay. 

Ms. BURRIS. But I would be happy to get that information and 

put it back in the record. 

Mr. AMODEI. That is fine. Mr. Menefee, if this bill passes, are 

auto premiums going down for all of Mr. Gillis’ consumers? 

Mr. MENEFEE. Well, I think the position we have laid out is a 

concern about premiums going up. 

Mr. AMODEI. So is the answer to my question no? 

Mr. MENEFEE. I would not expect premiums to go down as a result. We are preserving the competitive environment we have historically had, which I think would suggest that premiums would, 

in terms of the result here, would be to keep that part of the premium relatively the same as compared to—— 

Mr. AMODEI. Mr. Gillis, how does that work for consumers? Is 

that a good answer for your consumers, auto insurance premiums? 

Mr. GILLIS. It is not a great answer, no. 

Mr. AMODEI. Okay. Thank you. I appreciate that. 

Mr. GILLIS. But let me just say this. There are choices that consumers can make both in terms of parts and in terms of auto premiums. Some consumers actually choose insurance premiums that 

give them only car company brand parts. Now those tend to be 

more expensive. 

Mr. AMODEI. Yep. 

Mr. GILLIS. But those consumers are willing to pay that. Most 

consumers are shopping around for the least expensive insurance 

they can get, and this is one of the ways that insurance companies 

can reduce costs. 

Mr. AMODEI. And I appreciate that. Finally, there was testimony 

about launch period, best guess, some relief for consumers. If I 

might, I think it was you, Mr. Menefee, that talked about launch 

period and best guess. Can you put a little more meat on that 

framework in terms of why 30 months works as opposed to 14 

years or no period? 

Mr. MENEFEE. Well, I think the evolution of the bill as proposed 

has resulted in a 30-month number being a relative compromise, 

that that is reasonable to all parties concerned, at least in terms 

of the discussion and the debate so far. 

I am sure you could argue on either side of whether—and I 

would also indicate it is not inconsistent with what at least what 

our company’s practice has been, has generally been to use OEM 

parts during the first 2 years that a new vehicle is owned by the 

consumer. And I think all things considered, 30 months is a reasonable compromise. 

Mr. AMODEI. And I appreciate that. But to tell you why I asked 

the question, because I get the consumer part, and I get the cost 

of insurance. And I also get the R&D part. So what I am looking 

for, and it is like, well, good luck finding that because you are the 

only one looking for it, maybe is, though, is what is the investment 

in R&D? What is reasonable how to treat that in the context of proVerDate Aug 31 2005 10:06 Nov 29, 2012 Jkt 000000 PO 00000 Frm 00048 Fmt 6633 Sfmt 6601 H:\WORK\IP\080112\75385.000 HJUD1 PsN: DOUGA
45 

viding consumers choice and also keeping their insurance premiums as low as possible? 

So when I hear terms like ‘‘best guess’’ or ‘‘launch period,’’ it is 

like, ‘‘well, okay, what is the basis of that statement?’’ And I am 

sure there is some. So if anybody can follow that up later on, that 

would be great. 

With that, I want to thank the panel for your candor, and yield 

back, Mr. Chairman. 

Mr. GOODLATTE. I thank the gentleman. The gentlewoman from 

California is recognized for 5 minutes, Ms. Lofgren. 

Ms. LOFGREN. Thank you, Mr. Chairman. I am sorry that Mr. 

Watt had to leave, although I certainly respect that all of us have 

many things to do at once, so I am not critical of that. But I think 

it is important to go back to the Constitution, as Congressman Issa 

has, and to reflect on what the Congress is asked to do. We are 

asked to promote the progress of science in the useful arts by securing for limited times the exclusive right. 

Now when the Constitution was adopted, the Congress chose 14 

years as a patent terms. It is entirely up to us to decide what is 

the appropriate time of protection to promote the useful arts. And 

that is not in any way adverse to our obligations or even our history as a country. And I just think it is important to reiterate that 

point. 

Now in terms of safety, there has been some concern expressed 

by Ms. Burris, the parts that were not provided by the original 

manufacturer would be less safe. Mr. Menefee, you are actually, as 

I understand it, a member of the board of the Insurance Institute 

for Highway Safety. I think is that not the group that gave us the 

crash dummies? Can you address the issue of safety directly as to 

these non-original manufacturing parts? How can we know that 

they would be safe? 

Mr. MENEFEE. Yes, ma’am. Congresswoman, first of all, I am an 

engineer. I started out my career in heavy manufacturing doing 

product design and product manufacturing. I have a good appreciation for what is involved with that. I also have a good appreciation 

for what is related to being able to do that and manufacture parts 

that are of high quality and meet the standards that they need to 

meet. 

And as a board member of the Insurance Institute for Highway 

Safety, I have been around these questions of quality a lot. This 

is not a new issue. The Insurance Institute has addressed it over, 

I believe, the past decade or more in terms of the question to do 

aftermarket parts meet the test when it comes to quality and safety. 

IIHS has conducted tests and concluded that the source of a car’s 

cosmetic car parts is irrelevant to crash worthiness and safety. And 

I would make the distinction there in terms of cosmetic parts as 

compared to the structural parts. 

And, in fact, there is very substantial information and the issue 

has been well vetted that safety with aftermarket parts is not an 

issue. That is, I think, very well established. 

Ms. LOFGREN. Now I am interested, and, you know, we all are 

impacted by our own personal experience. So I will tell a story on 

my daughter, who came a couple of years ago and borrowed my car, 

46 

and unfortunately had a small accident with my car. And it did not 

look that badly damaged, but the insurance company said, no, just 

total it because it will cost more to fix it than it is worth. And I 

am just sort of replicating that because it was totally fixable, and 

I would be happy to have had it fixed. I did not want to go out and 

buy a new car. 

I am interested in the impact that something like this bill might 

have on the number of vehicles that are simply totaled that could 

otherwise be repaired and are totally usable. Do you have any idea 

what that might be, Mr. Menefee? 

Mr. MENEFEE. I would not hazard a guess as to exactly what the 

percentage would be, but certainly it would have an impact. In 

most cases, auto insurers look at damages approaching 75 to 80 

percent as being something that we could consider a total loss and 

then replace the vehicle or settle up with you to replace the vehicle 

as compared to trying to repair it. 

Certainly the elimination or diminution of aftermarket auto 

parts would raise the repair costs, which then would suggest a 

higher percentage of vehicles being put into that category. And just 

generally, that is a concern not just for insured customers, but for 

non-insured customers as well, of which there are many who have 

to pay for those repairs out of their pocket as compared to relying 

on the insurer to do so. 

Ms. LOFGREN. Well, I certainly understand that this is a new 

concept for some. To me, certainly we want to make sure that we 

have a vibrant and successful auto industry sector in this country. 

I voted and I was happy to vote on the so-called auto bailout, and 

I was glad that the auto companies came through, and they are on 

their feet, and they are competing. It is great. 

But right now, when a consumer goes out and buys a car, they 

are not just buying a car, they are buying indentured servitude to 

the manufacturer for the life of the car. And most people do not realize that. I mean, you are buying the design and the performance 

and everything else, but if the patent term is 19 years and the car 

usually lasts 10, I mean, you really are stuck in a way that most 

consumers do not intend. 

And my belief is that the competition that the auto companies 

have is performance and design among other new vehicles. It is not 

to get their claws into the consumer if they have an accident 15 

years later. And I think Mr. Issa’s bill helps create the competition 

that will save money, preserve safety, and I think also help create 

a more vibrant aftermarket industry in the United States. 

And with that, I would yield back, Mr. Chairman. 

Mr. GOODLATTE. The time of the gentlewoman has expired, and 

the gentleman from California, Mr. Issa, is recognized for 5 minutes. 

Mr. ISSA. Thank you, Mr. Chairman. Ms. Burris, you said a few 

things that I think I, no surprise, might take a little exception to. 

Now you are a patent attorney, so the quality of these parts, the 

NRE, the non-recurring expenses, those are not areas of your expertise, are they? 

Ms. BURRIS. My expertise, no. As a consumer, of my concern, yes. 

Mr. ISSA. So as a consumer, you would ask how it is that the 

auto companies can make a million Toyota Camrys on a dye, and 

47 

then when they have to make a million and one to sell it as an 

aftermarket part, they cannot compete with somebody who had to 

make a brand new dye just to make aftermarket parts. Is it not 

true that from a standpoint of cost, the tooling cost to just make 

aftermarket parts actually puts the repair parts person behind, not 

in front? Well, let me rephrase that. I already said you do not know 

about the cost of these things, so let us go on to something else. 

You know about patent law. Okay. Do I own the patented product when I buy it? Do I own that fender, that front right fender, 

on my Lexus? 

Ms. BURRIS. Absolutely. Subject to any terms and conditions of 

the purchase of a patented product, you own that patented product. 

You can repair it. You can—— 

Mr. ISSA. Okay. Well, the patent law is the patent law. The 

terms and conditions do not modify the patent law. You cannot add 

to the patent law by having an implied contract. I know people 

have tried to do it. 

So let us go through this a little bit. Mr. Gillis’ car, his Lexus, 

gets ruined, but the front right fender is okay, and it is in a junkyard. Is it okay for me to take it off that and put it on my car? 

His patented front right fender survived the crash, right? So I 

could buy that. Okay. 

Ms. BURRIS. Sure. 

Mr. ISSA. For sale doctrine, right? It is the patent transferor. He 

can sell it. I can buy it. I put it on my car. Okay. And I can take 

that fender that got crunched, and I can bend it back out, and I 

can make it exactly the same as it was, and I have not violated the 

patent because I own that, right? 

Okay. Now if I simply fabricate a fender myself to do the job that 

the first fender did, did I violate the patent law? 

Ms. BURRIS. Yes. 

Mr. ISSA. Oh, okay. So you are saying that, in fact, even though 

I have this fender that I am going to scrap, I do not have the ability to duplicate a replacement part. 

Ms. BURRIS. You do not, but the practical matter is the car company is not concerned with the mom and pop shops. They make 

their own—— 

Mr. ISSA. Right, they are just concerned about making this profit 

by having this exclusive. So let us go through this. I own this right, 

and you are telling me—and Mr. Watt, if he were still here, maybe 

this would make him less confused. I own this right. I own this 

part. But if the part is dinged, I can cut out the dinged part and 

I can weld in a new part. I can unbend it. I can move it back into 

the shape it was. That is all okay. 

I can take 80 percent, 50 percent, 60 percent, 90 percent of the 

metal, cut it away, and weld in new metal. I am okay, right? Can 

I take 99 percent and just take the little spot where the screw fit 

into the part and the rest of it? And can I fabricate it back on to 

that one part? 

Ms. BURRIS. Sure, you can. 

Mr. ISSA. Okay. So what you are really saying is this about the 

money the auto companies want by having it exclusive, and that 

is all well and good. But what they are really saying is even though 

I bought and paid for this part, they do not want me to do it. 

48 

Well, let us go through this whole point. I am trying to make a 

form, fit, and function replacement part from scratch. The design 

patent is limited to ornamental, correct? 

Ms. BURRIS. Correct. 

Mr. ISSA. So I am entitled to make a part which has form, fit, 

and function perfectly, and I have not violated the patent because 

the patent is limited to ornamental, right? 

Ms. BURRIS. Yeah. The design patent covers the ornamental features of the part, correct. 

Mr. ISSA. Okay. So what you are saying is the ornamental feature is the only part that I am taking. So it is a crease. It is a line. 

It is something of no value for form, fit, and function, right? 

Ms. BURRIS. I am not sure I followed you. It is the overall design 

that is protected. It is not—— 

Mr. ISSA. No, it is not the overall design. A design patent on a 

particular fender is limited to its ornamental value. It cannot be 

form, fit, or function. Otherwise, that would be a utility patent, 

right? 

Ms. BURRIS. That is correct in terms of its coverage. 

Mr. ISSA. Okay. So, Mr. Menefee, you mentioned something I 

think that I was a little confusing before, and I want to make sure 

I get it clear. The reason you said that it would not necessarily result in lower costs is because so far this practice of patenting, and 

suing, and stopping the importation or manufacture of parts is not 

widespread. Is that not true? 

Mr. MENEFEE. Yes, sir. 

Mr. ISSA. So it is actually something that did not go on for the 

first 100 plus year of the auto manufacturing business that is beginning to go on that is driving up the price of these and making 

aftermarket products not available. 

Mr. MENEFEE. That is correct. Our concern is that the current 

time and a prospective basis. 

Mr. ISSA. Okay. Well, quickly, I would like to ask unanimous 

consent that the Coalition for Auto Repair Equity, the CARE statement of July 27, 2012 be placed in the record. 

Mr. GOODLATTE. Without objection, so ordered. 

[The information referred to follows:] 

49 


75385B-1.eps

VIA EMAIL 

July 27, 2012 

THE COALITION FOR AUTO REPAIR EQUALITY (CAHE) 

105 Oronoco Street, Suite 115, Alexandria, Virginia 22314 

The Honorable Bob Goodlatte, Chairman 

The Honorable Melvin Watt, Ranking Minority Member 

Distinguished Members of the Subcommittee on Intellectual Property, Competition and the Internet 

Washington, D.C. 20515 

RE: PLEASE SUPPORT PARTS ACT 

Distinguished Members: 

The Coalition for Auto Repair Equality (CARE) is a national, nonprofit organization that represents 

nationally recognized companies in the automotive aftermarket (independent repair ind ustry), among 

them; NAPA, CARQUEST, AutoZone, Advance Auto Parts, O'Reilly Auto Parts and BridgestoneFirestone Retail Operations. There are nearly FIVE MILLION people nationwide who are employed in 

the automotive aftermarket in nearly 500 000 Businesses large and small. 

As CARE's Executive Director, I am writing on behalf of its member companies in SUPPORT of HR 3889, 

the PARTS Act, sponsored by Representatives Darrellissa (R-CA) and Zoe Lofgren (D-CA), 

The aftermarket encompasses businesses that sell parts and accessories to neighborhood garages that 

diagnose and repair vehicles. A large segment ofthe aftermarket is comprised of the Collision Industry. 

These are the paint and body shops that rely on aftermarket manufacturers for parts like bumpers and 

hoods, also known as collision parts. 

The aftermarket offers motoring consumers affordable choices for repairs and replacement parts, 

essential in today's economy, A January 3, 2012, CONSUMER REPORTS (CR) poll found approximately 

40 percent of car owners are POSTPONING having major repairs or maintenance on their primary 

vehicles. Among those surveyed, the types of Non-Warranty work most commonly postponed were 

minor manufacturer-recommended scheduled service (22 percent) followed by 'wear' items (17 

percent) and body or other EXTERIOR damage I1S percent). The respondents stated that a major 

repair bill costing an average of about $2,000 would become a serious finanCial burden. 
50 

Mr. ISSA. And I would like to just note for the record for those 

who may not go back quite as far as an old guy like me does that 

Carol Shelby, died May 10, 2012, was born in 1923. Roy 

Wishowski, who was a friend and customer of mine, was born in 

1915, died in 1997. In the 1970’s, early 70’s, I was buying from a 

well-established Casey Whitney catalogue. Repair parts for Kaiser 

Willeys and for so many parts, particularly from automobile companies who were no longer making these parts, including Volkswagen 

of America that would not make parts. 

This industry has been well-established for my entire life, and I 

think the important part is that, in fact, we are talking about a 

narrow bill to prevent a new expansion that endangers the consumer’s ability to afford repair parts. And I yield back. 


75385B-2.eps
51 

Mr. GOODLATTE. The gentleman’s time has expired. The gentleman from Texas, Mr. Poe, is recognized for 5 minutes. 

Mr. POE. Thank you, Mr. Chairman. I am one who actually has 

been a customer of a junkyard. I am not sure you have ever been 

to a junkyard, Mr. Issa, but maybe you have been. If you have, that 

is great. 

Mr. ISSA. I will show you the picture of my 1963 VW bus, and 

it is all junkyard parts, my friend. 

Mr. POE. I frequent the place in southeast Texas for several reasons, and I do not know that on my ’98 Wrangler I have an original 

part on it. And many of them have come from replacement parts 

that have been found at a junkyard. 

But be that as it may, I would like to start with the insurance 

first. Having been dropped by most insurance companies in Texas 

at least once over the years—— [Laughter.] 

Driving that ’98 Jeep Wrangler with the six-inch lift. I want to 

ask you some questions. The manufacturer sets a price on a bumper. First of all, I would like to ask the lady that represents the 

manufacturers, why do these bumpers or parts cost so much? Mr. 

Gillis says his folks can sell them for a third of the price and still 

make a profit. You sell them for, you know, 3 times that. Why are 

they so much? Are you gouging the consumer? 

Ms. BURRIS. Are they really that much? I mean, I think that it 

is a relative look. I mean, once someone comes along and copies a 

part, they do not have to do any R&D—— 

Mr. POE. No, just answer my question. Wait a minute. 

Ms. BURRIS. I do not know that they are—— 

Mr. POE. Just a minute. I reclaim my time. First of all, the original manufactured part is more generally, is it not, than the replacement part that his guys sell? 

Ms. BURRIS. Yes. 

Mr. POE. Okay. Why is it so expensive? The lady from California, 

Ms. Lofgren said, just replace the part. The insurance guy says, 

hey, that is too much money. We will just get you a new car. Why 

do the parts seem to be so expensive from the manufacturer? That 

is my question. 

Ms. BURRIS. Yeah. It is a valid question. I think in a lot of cases, 

the parts that you are buying from the original equipment manufacturer are higher quality. They are better materials. They are 

going to last longer. 

I asked my students this question in class last week. I showed 

them the bill. I did not tell them how I felt about it. How do guys 

feel about this? And one of the students said, well, he goes, I just 

put a new bumper on my F-150. He goes, and within a year it rusted, and I went back and said, hey, why is it rusting? And I found 

out it is a non-OEM part. Now I know to ask for OEM parts. 

Now I am not saying that is the case every single time. There 

may be a part that has the same materials, same structural characteristics. But I think there is concern that these parts—I mean, 

if we are going to do this, you want to make sure those parts are 

the same parts, and they have the same materials, the same durability out in the environment, the same structural integrity. 

Mr. POE. Excuse me, I just have a little bit of time. Mr. Gillis 

says it is generally the same part. We are not talking about a part 

52 

that is not the same part. We are talking about a part that is made 

an aftermarket part. It is the same general part made out of the 

same material, maybe made in Taiwan instead of Pittsburgh. 

Ms. BURRIS. I am a jeep person myself. I was like, hey, you are 

my kind of guy. I have a jeep, and the front radiator had to be repaired. I did not know it was a non-OEM part. Paint chipped off 

of that thing in 2 years, and it looked like crap. And I went, hey, 

what is wrong with this radiator? Well, it was cheaper. We got you 

the cheaper part. 

Mr. POE. All right. You have your patent law over a set number 

of years. How long do you keep parts? So I have got a new jeep. 

Let us say I bought a new jeep, which would not happen. But let 

us say I bought a new one. How long does Jeep keep the parts for 

that vehicle? 

Ms. BURRIS. I personally do not know that, and I will have to go 

back and ask. 

Mr. POE. Or Toyota or GM? Do you know any of them? 

Ms. BURRIS. I do not, but I am happy to gather that. 

Mr. POE. I mean, a long time ago they had to keep parts for 20 

years, and that was done away with by Congress, I understand. So 

there is no requirement that you keep a stock of parts for a certain 

vehicle. 

Ms. BURRIS. I am sure each manufacturer has some kind of 

guidelines they use, and I am happy to go gather that information 

and bring it back. But I do not know that right now. 

Mr. POE. All right. And, Mr. Menefee, on the insurance angle, 

people can buy any kind of insurance they want. They can get replacement parts that come from the manufacturer. They can get insurance that just says it is a replacement part. It does not have 

to come from the manufacturer. I mean, people can do that, 

though, through their insurance that they buy. Is that correct? 

Mr. MENEFEE. There is some flexibility, Congressman. However, 

we are a highly regulated industry, so the policy provisions are 

pretty much dictated by the State insurance departments in terms 

of what we do or do not offer in that regard. And, in fact, in most 

States, the requirement—the repairs are like, kind, and quality of 

form, fit, and function. And that is what we honor. 

Mr. POE. So if I showed up with the jeep wanting to get it repaired, I would be allowed to get a part that is equal to the original 

part on that vehicle. 

Mr. MENEFEE. Yes, sir. And, in fact, in our experience, we are 

very careful, and I think in industry this is typically the case, we 

are required to disclose to the customer what type of parts are 

being used to repair that vehicle. And we do get questions sometimes about OEM versus aftermarket parts. And as soon as we explain the manufacturing and quality control process that most of 

us in the business use to control those aftermarket parts, the customer is very satisfied and, in fact, is usually focused on the cost 

effectiveness. They want a good repair at a fair price. 

Mr. POE. Last question, if I may, Mr. Chairman. 

Mr. GOODLATTE. Without objection, the gentleman is recognized 

for one additional minute. 

Mr. POE. Safety. I would like to hear what you all three think 

about aftermarket parts—not the junkyard part, but aftermarket 

53 

parts and original parts, whether generally if you get the same 

part, it is going to be just as safe or not. Just each one of your answers. It is either is or it is not, in your opinion. Mr. Menefee, let 

us start with the insurance. 

Mr. MENEFEE. If the aftermarket part has been manufactured 

under the quality control and certification conditions that we would 

say it should be, there is no doubt in my mind in terms of my background as an engineer and my experience with the Insurance Institute, that aftermarket parts are equally safe and equivalent to 

original equipment parts. 

Mr. POE. Ms. Burris? 

Ms. BURRIS. As an engineer as well, I would agree with that, 

that if they are designed to the same specifications, the same materials, that they are going to have the same safety, same quality. 

It is not just on a part basis alone, though. You know, those 

parts interact with one another. It is a vehicle system. So one part 

triggers a reaction in another part. And so it is not just the part 

itself. It is how it interacts with the parts around it. 

But, you know, if it is designed to the same specs, sure, it is 

going to perform the same. 

Mr. POE. Mr. Gillis? 

Mr. GILLIS. There are programs available that actually confirm 

the fact that these parts are virtually identical. And many insurance companies take advantage of those programs to protect consumers from two things: poor quality parts and overpriced parts. 

The real question is the quality of car company brand parts. That 

is something that the Committee may also want to look at because, 

let us face it, in 2010, there were more cars recalled by the car 

companies for quality and safety problems than there were even 

sold. So they do not have a lock on quality, and it is important to 

remember. Let us not use that as an excuse not to use competitive 

parts. 

Mr. POE. And then, Ms. Burris, if you would get the Committee 

that information regarding how long generally a manufacturer 

keeps in stock or available parts for a specific model, we would appreciate that. 

I yield back. 

Mr. GOODLATTE. I thank the gentleman. The gentleman from 

North Carolina, Mr. Coble, is recognized for 5 minutes. 

Mr. COBLE. Thank you, Mr. Chairman. I was here earlier and 

had to leave due to another meeting. 

Mr. Menefee, if this bill is enacted, would it result in a reduction 

of insurance premium rates? And if so, when would the consumer 

embrace that or be aware of it? 

Mr. MENEFEE. No, sir, Congressman, we have taken a position 

and communicated that the intention here is to preserve the competition that currently exists in the marketplace so that we are 

working to pass the bill to avoid a significant increase in the cost 

of parts and insurance premiums. 

Mr. COBLE. Well, would there conversely be a reduction in premium rates? 

Mr. MENEFEE. Our expectation is if the bill is passed, we will 

maintain the current competitive environment we have, and as a 

54 

result, there would be no appreciable change in insurance premiums. 

Mr. COBLE. Anybody else want to weigh in on that? 

Mr. GILLIS. Well, I think that is a good point, Representative. I 

think the issue here is insurance premiums are based on what is 

in the market now. If the car companies are successful in keeping 

that competition out of the marketplace, it is inevitable that if an 

insurance company has to buy five $400 parts to repair a car, they 

are going to charge me more for that insurance. 

Mr. COBLE. Thank you, sir. Ms. Burris, in your testimony, you 

alluded to motorcycles and other types of motor vehicles. Elaborate 

on that again for me. 

Ms. BURRIS. Sure. The language of the bill calls for component 

parts used in motor vehicles. And under our Title 49, the definition 

of motor vehicles says any vehicle that is driven or drawn by mechanical power, manufactured for use on our public streets, roads, 

and highways. So that is more than automobiles. That is a whole 

lot. I mean, it is motorcycles. It is mopeds, motor scooters, farming 

equipment, trailers. It is not just driven by, it is drawn by. 

Mr. COBLE. Lawn mowers maybe? 

Ms. BURRIS. If it is for use on public streets, and roads, and highways. Plows. It is wider and broader than just automobiles. 

Mr. COBLE. All right, thank you. Thank you all for being with us. 

Thank you, Mr. Chairman. 

Mr. GOODLATTE. I thank the gentleman. I want to thank all the 

Members of the panel for a very—I am sorry. We now have two 

new Members who have arrived. So we are going to continue on, 

and we will next recognize the gentlewoman from California, Ms. 

Waters, for 5 minutes. 

Ms. WATERS. Thank you very much, Mr. Chairman. I am sorry 

I was delayed and unable to be here. But I wanted very much to 

be here for a number of reasons. I appreciate the hearing today as 

an opportunity to hear from the various stakeholders regarding the 

Promoting Automotive Repair, Trade, and Sales Act. Indeed, this 

issue is of great importance to many of my constituents as it concerns the maintenance and repair of automobiles where dealers 

contend that the legislation would unduly deprive them of their intellectual property rights, which will lead to revenue and job losses 

given the economic challenges that many auto dealers continue to 

face, under declining sales and limited access to credit. The PARTS 

Act would prove devastating to a single fragile industry. 

Indeed, the PARTS Act raises a fundamental public policy question as it would reduce auto companies’ patent protections from 14 

years to 30 months. The auto companies are also concerned about 

the quality of replacement crash parts. 

Let me ask this. One of the things I have focused on in looking 

at these challenges that continue to arise about these issues is 

what kind of investment and maintenance resources go into protection of the intellectual property rights that is being challenged? I 

do not know. Ms. Burris, let me just ask you. 

Ms. BURRIS. Sure, I would be happy to answer that. 

Ms. WATERS. Yes. 

Ms. BURRIS. There are thousands and thousands of dollars spent 

on patent applications. There is the time that the attorney spends 

55 

preparing the specification, the claims. And in this case for design 

patents, the claim is the drawing, so there are professional drawings prepared to show the article manufacture from a number of 

different views. You pay your filing fees with the USPTO. 

Design patents are a little unique in that once you pay your 

issue fee when it is ready to be issued, you do not have to pay 

maintenance after that, like utility patents. 

So the investment per design patent for an applicant is on the order of, it is thousands of dollars, $3,000 to $4,000 per patent. 

And, again, you were not here earlier when we talked about this 

bill. The language of the bill is retroactive, so if you got your patent 

5, 6, 7 years ago and you paid all that money, you have nothing 

to show for it. 

And also the language of the bill, it is not 30 months from the 

issue date of the design patent. The current term for a design patent is 14 years from the issue date. The language of the bill does 

not say 30 months from the issue date. It says 30 months from the 

date of the offer for sale. 

So what happens, the reality is when we work with our clients, 

they are getting ready to go to a big auto show or to go see a customer. A design has been refined all the way up until that date. 

I have been there, done that, 11 at night changing designs right 

before launch. And so you file your patent application the night before you offer it for sale. Well, it takes over a year for you to get 

your patent through the Patent Office because—it just takes a 

while to get it. The delay is over a year. 

So really it is not 30 months of patent term. It is closer to a year 

or a year and a half at best of a patent term. 

Ms. WATERS. Well, Mr. Chairman, I thank you for allowing me 

a few minutes here having come in late. I just have to say that 

probably some of my consumer activist friends, and I am known as 

a consumer person, but I am old-fashioned in that I believe that 

if you discover and develop that you have a right to reap the benefits from it for a reasonable period of time. And you can always develop a better mousetrap, but do not take mine. 

Mr. Gillis is trying to get my attention. 

Mr. GILLIS. Congresswoman Waters, our dear friend. 

Ms. WATERS. Yes. 

Mr. GILLIS. Think about what you just heard. It costs $3,000 to $4,000 to file a patent that allows the manufacturer to force me to 

pay $400 for a particular part for 14 years. All they have to do is 

sell 5 parts, and they have covered the cost of their patent as you 

just heard. And then they protected themselves from me being able 

to go out into the marketplace and have a choice. 

That is what this is about, and we need your help, and we need 

you to stand up for consumers and support this effort. 

Ms. WATERS. Well, I do not want to repeat myself, but I stand 

firm in my belief. And it sounds a little bit unusual for me, but the 

fact of the matter is whether you are a small company, or a big 

company, or an individual, if you are smart enough and if you are 

inventive enough to, you know, come up with something that you 

can patent, I want you to enjoy the benefits of it. 

And one good thing about it is, like I said, the next person can 

invent a better mousetrap, or they can go for whatever they can 

56 

produce. But I just do not like the idea of investing in a patent, 

and then all of a sudden it is not yours after a short period of time. 

It just does not seem right to me. So you can keep talking to me, 

Mr. Gillis, but that is where I am right now. Thank you. 

Mr. GOODLATTE. I thank the gentlewoman. The gentlewoman 

from Texas, Ms. Jackson Lee, is recognized for 5 minutes. 

Ms. JACKSON LEE. Thank you very much, Mr. Chairman. I know 

that this bill has changed in the hearing on the underlying bill, 

and it had some changes to it. And I think, however, the basic 

premise is one that we should look at very, very closely. And I 

think all the witnesses will know that what you hear from many 

of your constituents is costing as it relates to fixing cars, whether 

they are of recent vintage or older vintage. And I assume it is partly because of that famous word ‘‘parts.’’ 

So let me just start and go across the board and ask each—and 

if you could have succinct answers. If you do not know, you do not 

know. And thank you all for being witnesses here today. 

Will the auto industry support this bill in any form? Could I 

start with Mr. Menefee and go on to Mr. Burris, and then Mr. 

Gillis. Mr. Menefee? 

Mr. MENEFEE. I am sorry, Congresswoman. So the question is? 

Ms. JACKSON LEE. Will the auto industry support this bill in any 

form if it would be modified. And I know you are opposing the 

premise, I guess, of dealing with parts and ignoring the patents 

and the design issues. 

Mr. MENEFEE. Well, my response there would be we respect intellectual property and patent rights. Clearly we do believe that 

this bill strikes a compromise in terms of the protection that should 

be offered there and still affords consumers what they deserve in 

terms of competition in the aftermarket parts area in terms of collision repairs on their vehicles. So we support the bill because of 

that. 

Ms. JACKSON LEE. And if we modified it more with respect to 

concerns that will be raised by consumers, your view would be you 

would have to look at it. If we did more for consumers. 

Mr. MENEFEE. Well, we think the bill does quite a bit for consumers as it is currently structured. 

Ms. JACKSON LEE. All right. Ms. Burris? 

Ms. BURRIS. I will give you a real succinct answer, and that 

would be a negative, Ghost Rider. We would not support this bill. 

The design patent laws provide for 14 years, and that is what we 

should have. So we do not support this bill in any form. 

Ms. JACKSON LEE. I appreciate that. And, of course, Mr. Gillis? 

Mr. GILLIS. There is clearly way, way too much money at stake 

for the car companies for them to ever support the consumer-oriented bill that is before them today. 

Ms. JACKSON LEE. And why do we not pursue that a little bit 

more, Mr. Gillis, on this question of money and juxtaposed against 

what benefits come to the consumers because of the approach that 

we are looking at. 

Mr. GILLIS. Well, there are two things. First and foremost, most 

of us are in pretty desperate financial condition. And I would like 

to set the record straight that Representative Issa called me a 

Lexus person. I have got 4 kids, so I am more of a Hyundai person. 

57 

And most of us are scrimping and saving as much as we possibly 

can. 

When it comes to backing into a pole and having it cost us $2,000 

or $3,000 to get our car fixed, our fear is, one, consumers are simply not going to be able to afford to have that car fixed. It will degrade the value of the car driving around with an accident. And 

worse, maybe they will not replace some of the important safety 

features. 

So there are a lot of problems associated with the lack of competition and the fact that that lack of competition dramatically increases the cost of repair. 

Ms. JACKSON LEE. And I am glad you mentioned the Hyundai or 

other import thereof. And the concept is that the $2,000 to $3,000 

comes from buying the part that comes from or is allegedly necessary for that vehicle. And is that part made in the United States 

or overseas? And I know there are some plants here. And there is 

a question of whether or not we are promoting domestic production 

by this legislation or are we just furthering the move of manufacturing overseas. 

Mr. GILLIS. I appreciate that question, and I am glad you raised 

it because there is this constant undercurrent by the car companies 

that this is somehow trashing American business and hurting 

American production. I would like to submit for the record the fact 

that two of the most popular built American cars—the Ford Focus 

2012 and the Chevy Cruze, the 2011 version of the Cruze—63 percent of the suppliers that Ford has chosen for the Ford Focus are 

foreign manufacturers. Fifty percent of the suppliers that Chevy 

has chosen for the Chevy Cruze are foreign suppliers. 

So this is not a foreign versus domestic issue. This is a fairness 

issue, and consumers have the right to choice in the marketplace. 

And that is what this bill would give them. 

Ms. JACKSON LEE. How would you answer Ms. Burris’ question 

about the 14 years and her inability to support this legislation 

based on the patent design issue? 

Mr. GILLIS. Well, quite frankly, we believe that this bill here is 

a compromise. And we originally supported Congresswoman 

Lofgren’s very, very elegant solution because these patents are 

being used not to protect legitimate work or legitimate designs of 

individual small parts. But these patents, as you can see by their 

dramatic increase over the last 3 or 4 years, are being used as a 

competitive tool. 

It is great to have patents. It is great to have design protection. 

But it is really unfair to consumers if that is being used solely to 

protect markets. And that is why the Consumer Federation of 

America, Consumers Union, Public Citizen, the Advocates for Highway and Auto Safety, who are here today, are against this bill. I 

mean, excuse me, for this bill, against the 14-year practice. 

Ms. JACKSON LEE. We have been there before. Mr. Chairman, I 

just want to put on the record one statement—I thank the Ranking 

Member—and that is to express my dismay having helped bail out 

the auto industry about a year or two ago for a 50 percent utilization of foreign parts versus domestic parts, which could enhance 

the manufacturing sector in the United States. And I know that we 

58 

are not the Trade Committee, but maybe we can begin to understand that more and enhance legislation accordingly. 

With that, Mr. Chairman, I would be happy to yield back. 

Ms. WATERS. Mr. Chairman? 

Mr. GOODLATTE. I thank the gentlewoman. The gentlewoman 

from California? 

Ms. WATERS. Could I get unanimous consent for 30 seconds to 

just raise a question, and I will talk with my husband about it a 

little bit tonight. But he tells me that the labor costs—— 

Mr. GOODLATTE. Without objection, the gentlewoman is recognized for 1 minute. 

Ms. WATERS. Thank you. That the labor costs and the repair of 

these automobiles is much higher than the parts. Is that true? 

Mr. GILLIS. No, I do not think so. It is about a 50/50 percent. 

About 50 percent of the costs of the repair goes into labor, and 

about 50 percent of the costs of the repair goes into the parts. 

Ms. WATERS. Okay. I am going to go back and check all of my 

repair bills—— 

Mr. GILLIS. Yes. 

Ms. WATERS [continuing]. And compare the costs for the parts 

and the costs for the labor. Yield back the balance of my time. 

Mr. GOODLATTE. I want to again thank all of the witnesses for 

their excellent testimony and for a very lively discussion. 

And before I adjourn the hearing, I want to recognize the gentleman from North Carolina for another unanimous consent request. 

Mr. WATT. I ask unanimous consent to put the letter of the Intellectual Property Owners Association, dated July 31, 2012, addressed to me and you into the record. 

Mr. GOODLATTE. Without objection, so ordered. 

[The information referred to follows:] 

59 


75385C-1.eps

Julyjl. 2012 

H e 1[""!)!'lIbl" RoOtn Goodlal!C 

Chainnan 

Sub<;oounin« on 1Il1ell«luall'ropo:ny_ 

Compeli1ion. and Ih~ Inlerne! 

B_352 Raybon' [louse Omce Buildinll 

Uniloo SI~tes ou~~ ufReprCS<'lllalivci 

Wa5hi'\!!l0ll, DC 20S I~ 

The lI onorable Mel Wall 

Ranking Member 

_.- -~"'­

~­

Sui>cOlllmiuO'e "" lnleileclual Property. 

Compt1itioo, and the Iniernci 

B_)52 Rayburn tl ~ omce Building 

United Siales Iloo.>e af Represe11131kcs 

Washin!\lOll, DC 20515 

[)earChairman Goodlalle and Rankin!! M'mlb~, Waw 

IOlclle.."Iual I'ropcny Owners- ASS(H::i3Iion (11'0) ..... ril~ 10 ~prt'Ss ils strong 

OpposltiOJll1l H R J8SQ, Ihe "PromOlinll /luIOllI\)1i'e Rcp~ir, Trade. and Sales AC1," ur 

" J'ARTS ACI," inlroducold on February 2, 2012 

11'0 i! a trade associalion represtn linl! companies and individuals in III industries 

and fidd~ oflechoology w~own. or are inlen'Sled in inteTJeclual Properly rislus lPO's 

membership indlldc~ mOfe Ihan 200 companie, and more than I :2 ,000 individuals who 

are in"oh·..d in (he assoeil(il)n eilhH(hl1l\.,gh (heir eoo,p~ni~i or.5 in, ~tor, aut~,law 

lirm. or Rnom~y m .. ~nbf,r s 

IPO opposes II R. 3889 for IWO primary ff&Of\S. First. il would vinually 

eliminate desiS!' patenl pmlec1ioo fill" (he automobile indusl1)' IC1Irl. lruck"" and other 

motorwhidesl, ",·eaken'n\! inc~,,(h es for innovall"" and elin'inating U S 'nanufa<:lUring 

jol15. Second. the bill .... oold ~Cl a harmful precedenl for all U S inlellectual property 

ri!lh~ 

II R 38S9 would ~110w an}'one to IMl.ke. (es~ otT", lo sell,wvenise. or imron any 

~nicl~ ofmam,r~ure IhK( 5:1imila' in uppearance (0 (he cllmpon~nI pan of an original 

equipmenl 'nanufaclurn (OEM) e,'w ifsuch activilY wQUld inf"Mgt a desilP' p;llell~ as 

loul! IS Ihepu~ "'as III rCSIOfC a "chide 10 ils origi nal appearance With regard 10 use 

or SII le or mOCOJl""ehid~ OO(nponenl parts. Ihe bill woold rWuce design pal""l owners' 

period ofexdus;vilY from 14 years 10 JO moulhs or less. This mcans Ihal design pale'li 

o .... ·ners .... ho in'-cs,ed lime and resource!) in desiIP' woold ~ unlikdy to recoup lh l~r 

in,'eslment costs beFore tlC herscould u5e or sell (heir motor vehicle c\lmpon~m pans 10 

restore avehicle 10 jn orij!i nal appearance 

It is beyond dispule lhal frt.'Sh. creMlve slyl ingsc,, ~ as a huge induC<'lllt'fll III 

cOOlsumers 10 buy aulomobiles and !lIhe.. "lOlor "~hides The dC"dopmenl ofa 

successful m\ltDf ~ehide design i~ dilTlCul( and c;<pc:n3i~e It is a multi-slep process thai 

indudes c,ealing. leslin\!< mo'ke!in\!< and ~;.e llins an original desil!J1 "l\.c palenl sys,em 

was desigllW \0 reward such crealivil), and risk laking Copying ~istjnl! desigJls. on lhe 

''''~_><W._''JO) '"'_ .... 0<>000. ,~.'.,." ... _4. ""l-JlI1"'JO)' ~. '"' ...... _ 

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------.-... -

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-.- -'-
60 


75385C-2.eps

INTELLECTUAL PROPERTY OWNERS ASSOCIATION 

other hand, is neither difficult nor expensive. Copying in industries is occurring today 

Virtual 3-D scanning and replicating equipment, for example, has made it very simple to 

clone OEM parts. A 2011 U.S. Department of Commerce report stated that 

"[c]ounterfeiting continues to be a major issue for the automotive parts industry, 

particularly for the aftermarket sector." 1 The report cited a Frost & Sullivan estimate 

that "auto suppliers will lose an estimated $45 billion worldwide in 20 II to 

counterfeiting'" H.R. 3889 would benefit the copiers: a group that does not invest in 

creating new designs, but merely copies the work of design patent owners at low cost 

Investment in innovation creates U. S_ jobs_ According to a 2012 U.S. Department 

of Commerce Report, "[i]n total, 40.0 million jobs, or 27.7 percent of all jobs, were 

directly or indirectly attributable to the most IP-intensive industries."" The study also 

found that "IP-intensive industries accounted for about $506 trillion in value added, or 

34.8 percent of U.S. gross domestic product (GDP), in 2010.,,4 The 2011 U.S. 

Department of Commerce study, specific to the automotive industry, stressed that "[t]he 

U.S_ auto industry is a key component of the nation's manufacturing base. In a typical 

year, it accounts fortive percent ofGDP ... and about 674,000 U.S. employees in 

2010 .... ,,5 H.R. 3889 would retard growth and decrease U.S. jobs in the industry by 

exempting copies from design patent liability. 

Moreover, H.R. 3889 would set a bad precedent for all intellectual property rights 

by exempting a particular industry or class of patentable designs from protection_ IPO 

believes the law should attempt to treat intellectual property rights in all industries the 

same. Many industries produce products that are subj ect to repair and replacement, 

including: razors and razor blades, pens and pen refills, drills and drill bits, printers and 

ink cartridges, cell phones and batteries, computers, cables and peripheral devices, and 

medical equipment and supplies. H.R. 3889 would encourage copiers in every industry 

to seek their own exceptions, slowly eroding U.S patent laws. If a patent is 

unenforceable, the inventor is left with less incentive to innovate and no incentive to tile 

future patents. Patents disclose inventions to the public at an early date and encourage 

others to create improvements and alternatives. Design patents, like other patents, are 

granted only for works that are new and not obvious, and less likely to be created in the 

absence of patent incentives 

I U.S. Deparlmenl of ConIDlerce. On lhe Road" U.S. Automotive Parts InduSlI) Annual Assessment 

S. Department of Commerce, On the Road U.S Automotive Parts Industry Annual Assessment 

(2011). aVailable at ;11UXc!Z1I~Q~fiQYi§J~.u:;l~0JJEilJ=-~~.p~f 

- 2-
61 

Mr. GOODLATTE. And without objection, all Members will have 5 

legislative days to submit to the Chair additional written questions 

for the witnesses, which we will forward and ask the witnesses to 

respond to as promptly as they can so that their answers may be 

made a part of the record. 

And without objection, all Members will have 5 legislative days 

to submit any additional materials for inclusion in the record. 


75385C-3.eps
62 

With that, I thank the witnesses and declare this hearing to be 

adjourned. 

[Whereupon, at 4:19 p.m., the Subcommittee was adjourned.] 

(63) 

A P P E N D I X 

MATERIAL SUBMITTED FOR THE HEARING RECORD

64 

Response to Questions for the Record from Kelly K. Burris, Shareholder 

and Chair, Green Technology Practice Group, Brinks, Hofer, Gilson & 

Lione 


75385D-1.eps
65 

f 


75385D-2.eps

RESPONSE: 

Yes. The definition of "motor vehicles" under 49 US.c. 30102(a)(6) "means a 

vehicle driven or drawn by mechanical power and manufactured primarily for use on 

public streets, roads, and highways, but does not include a vehicle operated only on a rail 

line." This broad language would obviously include heavy duty and/or commercial 

vehicles, if they are used on public streets, roads, and highways. 

3) Do you feel that passage of the PARTS Act could lead to other industry groups 

seeking additional IP exemptions? 

RESPONSE: 

Yes. This is the most significant problem with the proposed PARTS Act, because if 

an exception is made for design patents for automotive collision repair parts, the door is 

now open for other industries to ask for their exemption as well. Not only for design 

patents, but for other forms of patents, and even more significantly, other forms of 

intellectual property. How far are we willing to go until our patent system is eroded to 

the point where we have removed the incentive to be creative? 
66 

Letter from Jack Gillis, Director of Public Affairs, 

the Consumer Federation of America (CFA) 


75385E1.eps
67 

f 


75385E2.eps

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68 

Material submitted by Jack Gillis, Director of Public Affairs, 

the Consumer Federation of America (CFA) 


75385F1-1.eps
69 


75385F1-2.eps

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70 


75385F2-1.eps

ARE AFTERMARKET 

PARTS AS SAFE AS 

ORISINAL EQUIPMEIIT? 

Th.r. tilt q\le$lion 1lWl)'~(lnSUllIO:'rs ask It the (Ollision 

ftP<lirshop.AAernwl:e1 parts are usier 0II1he wantl. 

001 debate hiS swirled !Of )'tars O\'t/ wflelhtr these 

thinl-porty cornplll'ltllts rtCO~iblt to onts '[<light 

from .ulOmlkers. For thing5 lite fendefl, griJles, 

iIld bumper ro'~rs. the iswts /.Ie 

mlinl)' cosmttic - fit. fIlish. 0Ild 

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a. tilt etitutt 
71 


75385F2-2.eps

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72 


75385F2-3.eps

BUMPERS CAN MATCH 

ORIGINAL EQUIPMENT 

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73 


75385F2-4.eps

INDIANA CITY TAKES 

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76 


75385F2-7.eps

CRASH DEATHS CONTINUE TO DECLINE IN US AMID RECESSION 

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77 

f 


75385F2-8.eps

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78 

Letter from Aaron M. Lowe, Vice President, Government Affairs, 

the Automotive Aftermarket Industry Association (AAIA) 


75385G-1.eps
79 

f 


75385G-2.eps

I want to emphasize that AAIA strongly supports protections for a company's intellectual 

property. Clearly, any company that develops unique vehicle designs deserves protection that 

will prevent a vehicle manufacturer from copying that design and thus competing with the car 

company for the first sale of that car. We further support patents being granted for any car 

company or parts manufacturers that develops a new process that could help improve the 

functioning of that vehicles. Clearly, that patent must be respected. However, providing 

protections for the ornamental design of a part, whether it is on the outside or inside of the 

vehicle, will only serve to provide the car companies with a monopoly in the aftermarket, 

making them the sole source for replacement parts and thus raise repair prices for consumers. 

Importantly, none of these cost increases will result in any incentive for the vehicle 

manufacturers to be more innovative in the design of their components. The main driver of 

vehicle cosmetic parts design is the design of the entire vehicle. This drive to innovate is based 

on competition in the first sale of the vehicle. Chrysler competes with Ford and General Motors 

and Toyota to develop vehicle designs that will capture the hearts and pocketbooks of the car 

owner. Car companies do not design vehicles or the crash parts to better compete with each 

other in the aftermarket. That competition operates in a totally separate market and is based 

on price and quality since the design of the part is dictated solely by the original design of the 

vehicle. 

HR 3889 would amend title 35 of current U.S. design patent law, reducing from 14 to 2.5 years 

the period during which car companies can enforce their design patents on collision repair parts 

against alternative suppliers. The period for such enforcement would begin upon the first offer 

for sale of the car model containing the design patented part in any country. Following the 

protection period, consumers would have access to a competitive market for collision parts. 

Australia and a number of European countries have already passed similar repair clause laws. 

AAIA believes that this is a reasonable compromise that seeks to protect the intellectual 

property of the vehicle manufacturers while still ensuring that car owners have access to a 

competitive vehicle repair aftermarket. We commend both Representatives Darrell Issa and 

Zoe Lofgren for their authorship of this legislation and urge that the Subcommittee pass it as 

soon as possible to ensure that consumers are protected from a monopoly in this area. 

I want to thank you for holding a hearing on this important issue and we look forward to 

working with the committee to ensure its passage in the very near future. 

Sincerely, 

a-,£-

Aaron M. Lowe 

Vice President 

Government Affairs 
80 

Letter from Kathy R. Van Kleeck, Sr. Vice President, 

Government Relations, Motorcycle Industry Council 


75385H-1.eps

The Honurnble Roben Goodlauc 

Ch~iml.l/l 

SubcCllllnlt1cCOn Inlelleclual PropI'ny. 

COII1I!i'IIUOn. aIld tbe Inlenwt 

B·3~2 Rayburn I'louse omcc Building 

Umled SI:IlCS l'I!>Us.: of R.:pn:s.:n1:Uncii 

WashinSlon. DC 20515 

Dcar Chairman GoodIJllc and R;on~"!JO Member Wm: 

1,,1),3 1,lQ I2 

The HonOr:lble Mol W:U1 

RaHkm!! Member 

Sub<;OmnllileC on Inlellcclual Propcny. 

Compcllllon. and Ihe nlC~ 

B·352 Ra~bum ", omc" Bu,lding 

Unitoo StJIi."S l iouse"f R, p""",n!;l!i"CS 

Washi"l!wn. DC 205 15 

The MOIofC3'tlc Indusu)' ("oune,1 (MIC) '$ ~ nOI·fo .... profi~ n:lli0031 Ir:.dOIl5SOC;:llion rupruscnnng 

m~nufu.:I"n:rli:llld di5trib" Orsofmolon:}"dc~. mOlorc)c/c and ,\TV ~rlS and =SSCmcS and mcmbe", 

of allu:d IQ(k~ 

On behalf of OUr Im'mber rom~n' e!i. /<o tiC opposes I~ . 3K89, whkh would ~cn'pl cn,,,~on. ",",Ie Or 

""porullon of ""nam copied molor Iduel~ com))OllCnI "'pall p;utlI from de,,!!n ~Iem ,nfnngcmcni. 

Curn::ru palenlla" IS mlehd .. -d 10 pro(CCl des,!'.', and on IUm. elleour:Jgc ",nO""IIOn. Desisn palcnll> pmu:e( 

des'gners ag:u n,1 unfrur rornpclil;on fl'()m "'d",dual$ or colnflilllks ,,"" woo ld WJl, dc'S;gns r:lIher Ihan 

rrokc the ,nl C5tnll!Ul ,,' die d.'S.gn pmc<.:ss. ,,'elud,ng Ihe jobs su"""ncd b) such. By clU",nallI1S litis 

ik-s18n pmlcclloo. II R 388<1 promote,; unf3i. (;01111>"111'''" b)' "lIm"ns Ihe rom1ng oforigmal do."5lg"' III 

doc OCUnnCnl ofU S.·b.:\Scd dca,llI'crs. nl~lIufacu" .. :~. d'Slribu(ors. supphcl'5. tkal~~ alld aU Olher 

Amentan empto)CCS Imohcd in (he IJmocss F"rlh~'r, by Ikn~inll companIes ~ obiht~ 10 flroIc.:t Ih~lr 

"lwlicClual propcn) (IP), II 00000n"5 p,m<:) 

Allo""ng~nyone 10 ropy ceruin "'pmrp11rt5 ~mo ... es;m~ 'nccm,,·c for oosincss inl1lStmcnl and risk 

lllkcn (0 OC"£I' ;nno,'all'c product.. Th," ,s i'lIlpl~ not ""IIICln;n!!1ha1 should oopcrmilled, )CI alone 

~1ICourng~d , ,n America. 

MOIl)!" wh,dc p.1ns de gn'~ n1ll only .nl~r:lllO a ,clud~'s ~ppi1Jr:ln ~and hmnd ,dCnUl}·. but mo>;l 

'lnporu."ll~' from a toilsome. stlUldPQ"'~ to the safc(~ uf ~, c ,elude 1',c dC',!!" illld appca""'cc uf(hcsc 

cornpoocnts 'S ~ result of cnormou~ ""..,stlllcnl by mOlor '''h,clcand molor ,cblcl e pans manufacU'",D 

,n the invcn!ionldeiJgn process ovcr '","Ill)' ~"ars Cum;n( p3(cn! la", 50:" c~ 10 prolCC' ~" s ,n"cs(menl. 

H.R . • :n9. by 1t!JW(: i,~Jy n:ducing deSign PaiCil! prolCcllon 10 3Q O1 l) nlh~. nuniftes the p~ of our 

enl "'" palcnl13\\' S~~IC '" 

nus bill gil es m:ll1Uf3Clurcrs of cop,ed mOlo. I'chicle p.lrts free rc'I:I' 10 produce a component pan s,milar 

or lhe samt in ;IfIJlC.lrnnco: 10 !he.rompom:OI pM (h at is cia!,ned ioa !lcS18JI ~I nl ,flhcf'III'IXPSC ,s for Ihc 

JCPQi' of J OIOlor "chicle 1<1 rrslore such '''hicle 10 ils :lpptarn"cc :IS ongioally nl.l!tuf.lC1.ur'I:d 1l1C~ meur 

flO cO!u ~nriburablc loorigi n31 ~csiSl1 . ",scarch:ll1d dc,'<:loprnc .... l;md mOSl ,mporunlly. pmducrS3 ~ly 

lening, J'.\anufOC1urers UftM onS"1lI1 produtl for" hich rh ~cop,c'd rep!:><:cnu:nl p;utS are produced do 

nol kflO"' howlhc"" I'lns ",II perform "h~n ,"l~ !l rnlcd 1010 or added <lnlO the ",olllr wh,ck: and hOI, 

rhelrusc ""II IIllp''''1 Ihe qoalll)' lIIId IOlcllnt) ofll"oC original produa 

MOtorcycle P.~r'l5 and "",c~>sonC'i lI)an"f:>elun:1'S m:umfaclUre afl~nnar\;el I'lrlS for U!IIll!> n:placc",cnl 

con'f"",,,,,,1!; (urorill,nal manufaclure'IJaUS, n,c aftcnnan.c1 'S a thn"ns SClll""'" uflhe "'''I,,'''),ck 

,l\du!III') . Afknnan.cl m:u,ur."lt"lllrc~pn:>duc~ ,"1~l1:hall !l'-"'lIb c parts for usc on O!Ort:rd~5 wuhOUt 

",,1)'I'1g <In cOfl,cdl5l0kn dc~1$IIS n'cse 1l:u1li snd Ih.:or des,!!), n!llrcs.::m f.:l,r aI,d hcald,), con'pcrnion ;mll 
81 

Æ 


75385H-2.eps

give consumers choice. As do origin::!l equipment manufacturers, aftennarkct parts manufacturers employ 

designers that develop original desibTtlS, provide consumers \yith more repair options and contribute jobs 

to the economy. 

Attcmpts to overtum these intellectual property rights have been denied repeatedly by the United States 

Supreme Court. Further, they are explicitly recognized in the U.S. Constitution and are protected under 

thc World Tradc Organization agreemcnt on Tradc-Related Aspccts of Intcllectual Propcrty Rights. 

Congress should not statutorily negate intellectual property rights which by doing so would not only 

overturn decades of judicial precedent, but would undermine vital TP rights and protections. 

In addition to the grave issue of violating IP rights, we believe there are significant concerns regarding 

safcty. performance and durability that would rcsult from allowing this patcnt infringemcnt, both from a 

product manufacturer and consumer standpoint. At a time when Congress has sought to enhance 

consumer saiety, as evidenced by passage of the sweeping Consumer Product Satety Improvement Act of 

2008, Congress should support stronger enforcement of existing IP laws, rather than consider legislation 

that would eliminate or diminish IP protections. Passage ofH.R 3889 would not only have a detrimental 

eHect on consumers. but threatens jobs and investment in our industry. 

We urge you to oppose H.R. 3889. 

Thank you for your consideration of these comments. 

Respectfully submitted: 

Kathy R. Van Klceck 

Sf. Vice President. Government Relations