Thursday, April 15, 2010
Posted by D. Daniel Sokol
Norman W. Hawker, Western Michigan University - Haworth College of Business explores The Automobile Aftermarket: Crash Parts, Design Patents, and the Escape from Competition.
ABSTRACT: Automobile manufacturers have increasingly relied on design patents to prevent competition in the aftermarket for collision repair parts. This trend has competitive ramifications for consumers and other stakeholders in a number of related markets, including automobile insurance companies and collision repair services.
The proposed “Access to Repair Parts Act” would create a limited exception to design patent law to promote competition in the collision repair parts aftermarket. This paper provides an overview of design patents, describes the aftermarket, elaborates on the anticompetitive effects design patents when enforced by the OEMs against third party parts distributors, and evaluates the proposal.
Ultimately, this paper concludes that the proposal need not deny automobile manufacturers the profits that a design patent entitles them to receive, although it would shift their collection of that profit away from the aftermarket and toward the primary market. More importantly, the proposal would likely increase price competition in the aftermarket and benefit consumers in a variety ways, including improved transparency in the lifetime costs of different automobiles in the primary market.