Center for Freedom and Prosperity Foundation
For Immediate Release
Thursday, January 28, 2016
New CF&P Paper Calls for Action On
Auto Parts Protectionism
Abuse of design patents threatens competition
(Washington, D.C., Thursday, January, 2016) The Center for Freedom and Prosperity Foundation released today a new paper on the growing use of design patents to prevent competition in the auto parts aftermarket. Authored by CF&P Director of Policy and Communications Brian Garst, the white paper argues that policymakers should act to limit the design patent abuse that is leading to an uncompetitive market.
Entitled “Aftermarket Shock: The High Cost of Auto Parts Protectionism,” the paper documents how automakers have increasingly turned to a novel use of design patents to shut out competition. It also shows that this effort fits a global pattern of protectionist practices on the part of manufacturers rather than a legitimate concern over intellectual property. Finally, the paper concludes that design patents as currently constructed do not match the needs of the industry and should be revisited by policymakers to find a better balance between encouraging innovation through intellectual property protections and allowing the competitive market to work for the benefit of consumers.
The paper’s author, Brian Garst, commented, “Consumers are already seeing higher costs for repairs and insurance premiums than they would in a more competitive auto parts market. If Congress doesn’t step in soon, it’s only going to keep getting worse for American pocketbooks.”
Executive Summary: Robust, competitive markets provide tremendous consumer benefits. In the market for collision repair parts the primary – but by no means only – benefit comes in the form of lower insurance premiums. Yet major auto companies have long sought ways to encumber competition in the collision parts aftermarket. Most recently they have turned to the International Trade Commission to sanction a novel use of design patents on individual repair parts to shut out aftermarket competition altogether. This represents a departure from the historic use of design patents to prevent infringement from other manufacturers on an automobile’s overall design.
The resulting restrictions threaten consumer welfare and the competitive health of the market. This paper explores the policy implications of the changing use of design patents and considers an alternative approach adopted by other nations that provides a modified 30-month design protection window for collision parts in order to more appropriately balance the goal of promoting innovation with the interests of consumers.