Bills recently re-introduced in the U.S. House and Senate to amend the U.S. Patent Act could threaten manufacturers in the automobile and other industries who rely on design patents to protect their designs

Manufacturers of certain goods with aesthetic qualities may currently seek design patent protection for those goods under § 171 of Title 35, U.S. Code. To be patentable, a design must be new, non-obvious, and ornamental. Automobile manufacturers, for example, may seek design patent registration to protect the design of certain automobile parts or components. However, the newly re-introduced bill, “The Access to Repair Parts Act,” threatens this protection and could bar certain claims for design patent infringement if it is signed into law.

Reintroduced in Congress on June 25, 2009, the Access to Repair Parts Act would amend § 271 Title 35, U.S. Code (Patents) by effectively narrowing the definition of design patent infringement so that it would not be an act of infringement to make, use or sell a part that “constitutes a component part of another article of manufacture,” if the purpose of the part is to repair the article and restore it to its original condition. This proposal would most affect manufacturers who produce goods that have component parts that are often replaced and for which there is a thriving market, such as automobile manufacturers. If the Act is signed into law, it appears that anyone who manufactures or sells replacement parts that are substantially similar or even identical to designs protected by a registered design patent could do so with little risk of infringing the patent.

The text of the bill reads in part:

SEC. 2. EXCEPTION FROM INFRINGEMENT FOR CERTAIN COMPONENT PARTS

a) In General- Section 271 of title 35, United States Code, is amended by adding at the end the following new subsection: ‘(j) It shall not be an act of infringement of any design patent to make, use, offer to sell, or sell within the United States or import into the United States any article of manufacture that itself constitutes a component part of another article of manufacture, if the sole purpose of the component part is for the repair of the article of manufacture of which it is a part so as to restore its original appearance.’

(b) Applicability- The amendment made by subsection (a) applies to acts done on or after the date of the enactment of this Act.

Decades of Conflict

The proposed Access to Repair Parts Act is the latest development in a decades-long struggle between the automobile manufacturing industry on one hand, also known as the original equipment manufacturers (OEM), and the generic or replacement automobile parts manufacturing industry on the other, who manufacture substitutes of parts manufactured by the OEM. In the United States, the auto parts manufacturing industry consists of about 4,500 companies with a combined annual revenue of about $225 billion. Increasingly, automobile manufacturers are relying on design patents to protect the designs of automobile components that are not the product of function alone, such as grilles, bumpers, light assemblies, steering wheels, or interior control consoles, to name just a few examples. These types of components are typically of great interest to replacement parts manufacturers, who stand to profit by the manufacture and sale of generic parts designed to replace original automobile parts. Ford Motor Company alone estimates that it loses approximately $400 million per year in sales of replacement automobile parts to companies who sell imported generic parts. Automobile manufacturers continue to seek enforcement against the manufacturers of these parts protected by design patents. They have been successful to a degree.

For example, in two recent International Trade Commission (ITC) cases, Ford, through its related company, Ford Global Technologies, LLC, filed ITC complaints against major replacement parts manufacturer and distributor, Keystone Automotive Industries, Inc. and LKQ Corporation, among other respondents (Inv. No. 337-TA-557). The ITC found the majority of design patents at issue for its Ford F-150 truck and Ford Mustang car valid. The orders were appealed to the Federal Circuit, though the matter has now been settled. The settlement terms made LKQ Corp. the sole distributor of non-OEM copies of Ford parts protected by design patents, with significant royalties paid to Ford for each non-OEM part sold.

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Interesting Potential Exceptions

While the Access to Repair Parts Act would carve out an exception to design patent infringement, it would still appear to permit patentees to enforce their patents in some limited circumstances.

In particular, the Act as written does not appear to limit a patentee’s enforcement rights where the replacement parts are not designed to restore the article of manufacture to its original appearance. In the case of automobile parts, this would appear to leave open an area, albeit narrow, to permit enforcement where the part in question infringes the design patent, but is yet different than the original part in some manner so that it is not designed to restore the automobile to its original appearance. What first comes to mind are replacement automobile parts that are of identical shape to the original part, but are made of strikingly different materials.

For example, consider an automobile hood protected by design patent, originally made of aluminum, but copied in ultra-light carbon fiber material (having a different appearance than aluminum), which was never offered by the OEM and therefore not part of the automobile’s original appearance. This exception could be of interest to automobile manufacturers as there is an extraordinarily large industry for the manufacturing of parts with the purpose of “upgrading” the automobile.

Further, the Act does not make clear what constitutes restoring an article of manufacture to its “original appearance.” In the most narrow sense, for example, this could merely include the outside appearance of the vehicle, excluding all internal parts. It may be worth considering how this portion of the Act fits with the availability of design patents for designs that are concealed in their intended final use.

The general view is that designs that are not visible in their final use may nevertheless be protected by design patents. In an important decision, the Federal Circuit held that to establish the ornamental requirement, a design may not necessarily be visible during its final use, though a design must be visible at some point in its commercial life. In Re Webb, 916 F.2d 1553 (Fed. Cir. 1990). In Webb, the Federal Circuit focused on the “normal and intended use” of the article and measured the time period to run from the time the article is completed or assembled in the manufacturing process to the article’s eventual destruction (presumably after its final use). While the Court excluded from this time period the actual manufacturing process, it noted that articles are designed for sale and display and that those occasions are considered “normal uses.”

It follows that automobile parts found under the hood, or even more concealed and which are not even normally visible to the vehicle’s owner may still be proper subjects for design patents because their appearance may be a matter of concern earlier in the part’s commercial life.

Yet, it is not clear whether the Access to Replacement Parts Act would disallow claims for design patent infringement as to parts that are not immediately visible. For example, the Act excludes patent infringement for articles whose sole purpose is to restore another article of manufacture (e.g. an automobile) to its original appearance. Nevertheless, the Act lacks a definition as to just what makes up an article’s “original appearance.” In the case of automobiles, is “original appearance” limited only to a vehicle’s outside appearance? Under the hood? In some state of disassembly? Until the bill is signed into law, the legal boundaries of what makes up an article’s original appearance cannot be tested.

Given that there has been no judicial consideration of the proposed Access to Replacement Parts Act, it is difficult to predict whether a court would identify these limited exceptions.

No Limits to Industrial Applications: Reaching Far Beyond Automobile Manufacturers

Though the proposed bill was introduced in contemplation of the struggle between the OEM and replacement parts manufacturers, as written, it does not appear to be limited to the automotive industry at all. In fact, the bill does not mention any industry.

Accordingly, industries with a thriving market for replacement parts are similarly under threat of losing the ability to enforce their design patents. Some of these industries could include aerospace, maritime or even the consumer goods industry, especially electronics and luxury watches.

Conclusion

As of the release of this Client Alert, there is still no indication from Congress whether the Access to Repair Parts Act will be considered for vote in the House and Senate Judiciary Committees. Still, it may be worthwhile for automobile manufacturers as well as manufacturers in other industries where unauthorized replacement parts are an issue to assess their current design patent portfolio and consider whether it would be affected if this bill is signed into law.