Innovation Asset Blog

US automakers worried by proposed patent cuts

California Representatives Darrell Issa and Zoe Lofgren recently introduced the Promoting Automotive Repair, Trade and Sales (PARTS) Act, a bill which is intended to increase competition and potentially lower prices encountered by consumers in the market for replacement car components. However, automotive industry delegates have suggested that the bill could carry a number of unfortunate side effects that run counter to American economic goals.

According to Consumer Reports, original equipment manufacturers (OEMs) now produce approximately three-quarters of auto body replacement parts, with just 12 percent coming from independent producers. But while limited competition could bring higher collision repair prices and consequently higher insurance premiums, eliminating design patent rights could be a risky maneuver.

In her testimony against the bill, attorney Kelly Burris noted that automotive manufacturers "consistently lead the world" in research and design spending and that 14 different OEMs now maintain a design center inside the United States. These operations employ approximately 30,000 Americans, but these jobs are likely contingent on the fact that the current system is set up to protect and promote the monetization of the operator's patent portfolio.

What's more, according to Body Shop Business, substandard replacement parts manufactured by independent operations could affect the reputation of OEMs. If those components lead to future mishaps once the vehicle is back on the road, the failures or incidents will be associated with the OEM brand itself and could potentially put doubt into the minds of consumers.ADNFCR-3832-ID-800835455-ADNFCR

Peter Ackerman

Peter Ackerman

Founder & CEO, Innovation Asset Group, Inc.