Does Ford’s complaint to ITC regarding infringement of design patents for certain replacement parts of the 2005 Mustang a bid to protect its intellectual property or, as some say, to eliminate competition and create a monopoly for OEMs?

Ford Global Technologies, a division of Ford Motor Co., the second-biggest US-based automaker, recently filed a trade complaint to block imports of replacement parts for its Mustang cars. Alleging that the parts infringed on design patents for certain exterior repair parts for the 2005 Ford Mustang, the car company filed a Section 337 complaint at the US International Trade Commission (ITC).

The United States International Trade Commission is an independent, quasi-judicial Federal agency that investigates the effects of dumped and subsidized imports on domestic industries and conducts global safeguard investigations. It also adjudicates cases involving alleged infringement by imports of intellectual property rights; and gathers and analyzes trade data and other trade policy-related information to facilitate the development of sound and informed U.S. trade policy.

Named in the complaint were eight companies, including Chicago-based LKQ Corp. and its Keystone Automotive Industries unit, US Autoparts Networks, several companies based in Taiwan where the parts are made (Jui Li Enterprise, Y.C.C. Parts Manufacturing, TYC brother Industrial, Taiwan Kai Yih Industrial) and Texas-based T.Y.G. Products L.P. Ford said these companies import parts that infringe design patents for the hood, fender, bumper, side-view mirror and tail lamp of the Mustang 2005 model. These particular patents (which cover the ornamental look of the car) last 14 years, while patents on inventions run a longer term.

This follows another ITC complaint by Ford in 2005 (currently under appeal) that alleges infringement of patent designs for the 2004, 2005, 2006 and 2007 Ford F-150 trucks – which opponents claim could remove competition when any of the nearly two million F-150 drivers in America seek to replace seven collision parts. In that case, an ITC administrative law judge ruled that seven of ten design patents directed to parts for the F-150 truck had infringed Ford’s patents – but that three were invalid due to Ford’s prior public use of the designs.

Protecting IP Rights and Ford’s Investment According to the car company – now struggling to counter its declining car sales and aiming to return to profitability next year – once a design is completed, it makes extensive investment in prototype and production (tooling and manufacturing each part), in a distribution network for replacement parts, and in the assembly and marketing of the vehicle. Ford also contends that all Ford parts are made at its Michigan and Indiana plants that together employ almost 7,500 workers and that these US-based workers will be hurt if imports of these replacement parts are allowed to continue.

The company thus turned to the ITC, a government agency set up to protect US markets from unfair trade practices, including patent infringement.

Preserving Consumer Choice According to a host of consumer groups and replacement parts companies, competition in the auto repair marketplace saves American consumers more than $1.5 billion a year. The Quality Parts Coalition (QPC) is one such consortium of independent parts and insurance companies committed to preserving a competitive marketplace in the damaged vehicle repair arena. It has argued that car company replacement collision parts that consumers typically need to repair their vehicles after a crash cost an average of eight percent less when a quality alternative replacement part is available – and these alternative parts are about 25 to 50 percent less than equivalent parts manufactured by OEMs.

Is H.R. 5638 the answer? Consumer and auto safety advocates have presented a case for keeping prices fair in the automotive collisions parts marketplace, and lawmakers have responded. Rep. Zoe Lofgren (CA-16) introduced H.R. 568 which would amend federal patent law to provide an exception from design patent infringement for alternative repair parts used for the purpose of restoring a vehicle to its original appearance. The Automotive Aftermarket Industry Association (AAIA) urged Congress to pass the legislation, saying car companies’ use of design patents to restrict availability of competitive collision replacement parts threatens the automotive aftermarket. AAIA also said that such a strategy to monopolize the market will put a larger dent in consumers’ pocketbooks.

But infringement is infringement, right? A statement from Damian Porcari, an attorney with Ford's intellectual property group (quoted in Cindy Skrzycki’s article in washingtonpost.com) probably sums up Ford’s 20-year battle to keep imported parts out of the country: "The scope of the problem has grown, and we are losing double-digits in sales to copycats …They have lowered prices by stealing from Ford." He estimated that the company loses about $400 million a year to generic imports.

But more importantly for consumers for whom quality and safety in automotive components override costs, a unique design protected by patent is not and can never be the same as a replaceable generic part.