[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]






                          DESIGN PATENTS AND 
                         AUTO REPLACEMENT PARTS

=======================================================================

                                HEARING

                               BEFORE THE

                       COMMITTEE ON THE JUDICIARY
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 22, 2010

                               __________

                           Serial No. 111-112

                               __________

         Printed for the use of the Committee on the Judiciary


      Available via the World Wide Web: http://judiciary.house.gov




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                       COMMITTEE ON THE JUDICIARY

                 JOHN CONYERS, Jr., Michigan, Chairman
HOWARD L. BERMAN, California         LAMAR SMITH, Texas
RICK BOUCHER, Virginia               F. JAMES SENSENBRENNER, Jr., 
JERROLD NADLER, New York                 Wisconsin
ROBERT C. ``BOBBY'' SCOTT, Virginia  HOWARD COBLE, North Carolina
MELVIN L. WATT, North Carolina       ELTON GALLEGLY, California
ZOE LOFGREN, California              BOB GOODLATTE, Virginia
SHEILA JACKSON LEE, Texas            DANIEL E. LUNGREN, California
MAXINE WATERS, California            DARRELL E. ISSA, California
WILLIAM D. DELAHUNT, Massachusetts   J. RANDY FORBES, Virginia
STEVE COHEN, Tennessee               STEVE KING, Iowa
HENRY C. ``HANK'' JOHNSON, Jr.,      TRENT FRANKS, Arizona
  Georgia                            LOUIE GOHMERT, Texas
PEDRO PIERLUISI, Puerto Rico         JIM JORDAN, Ohio
MIKE QUIGLEY, Illinois               TED POE, Texas
JUDY CHU, California                 JASON CHAFFETZ, Utah
LUIS V. GUTIERREZ, Illinois          TOM ROONEY, Florida
TAMMY BALDWIN, Wisconsin             GREGG HARPER, Mississippi
CHARLES A. GONZALEZ, Texas
ANTHONY D. WEINER, New York
ADAM B. SCHIFF, California
LINDA T. SANCHEZ, California
DEBBIE WASSERMAN SCHULTZ, Florida
DANIEL MAFFEI, New York
[Vacant]

       Perry Apelbaum, Majority Staff Director and Chief Counsel
      Sean McLaughlin, Minority Chief of Staff and General Counsel














                            C O N T E N T S

                              ----------                              

                             MARCH 22, 2010

                                                                   Page

                           OPENING STATEMENTS

The Honorable John Conyers, Jr., a Representative in Congress 
  from the State of Michigan, and Chairman, Committee on the 
  Judiciary......................................................     1
The Honorable Lamar Smith, a Representative in Congress from the 
  State of Texas, and Ranking Member, Committee on the Judiciary.     3
The Honorable Maxine Waters, a Representative in Congress from 
  the State of California, and Member, Committee on the Judiciary     4
The Honorable Darrell E. Issa, a Representative in Congress from 
  the State of California, and Member, Committee on the Judiciary     4

                               WITNESSES

Mr. Jack Gillis, Director of Public Affairs, Consumer Federation 
  of America
  Oral Testimony.................................................     6
  Prepared Statement.............................................     8
Mr. Robert C. Passmore, Senior Director of Personal Lines, 
  Property Casualty Insurers Association of America
  Oral Testimony.................................................    17
  Prepared Statement.............................................    19
Mr. Damian Porcari, Licensing and Enforcement, Ford Global 
  Technologies, LLC
  Oral Testimony.................................................    27
  Prepared Statement.............................................    28
Mr. Perry Saidman, Saidman Design Law Group
  Oral Testimony.................................................   112
  Prepared Statement.............................................   114

                                APPENDIX

Material Submitted for the Hearing Record........................   135

 
                          DESIGN PATENTS AND 
                         AUTO REPLACEMENT PARTS

                              ----------                              


                         MONDAY, MARCH 22, 2010

                          House of Representatives,
                                Committee on the Judiciary,
                                                    Washington, DC.

    The Committee met, pursuant to notice, at 3:38 p.m., in 
room 2141, Rayburn House Office Building, the Honorable Zoe 
Lofgren, Chairwoman of the Subcommittee presiding.
    Present: Representatives Scott, Watt, Lofgren, Jackson Lee, 
Waters, Delahunt, Gonzalez, Smith, Coble, Issa, and Chaffetz.
    Staff Present: (Majority) Eric Garduno, Counsel; Diana Oo, 
Counsel; Christal Sheppard, Counsel; Reuben Goetzl, Staff 
Assistant; (Minority) Richard Hertling, Counsel; Blaine 
Merritt, Counsel; and Allison Halataei, Counsel.
    Ms. Lofgren. The Committee will come to order.
    Welcome, everyone, to today's hearing on ``Design Patents 
and Auto Replacement Parts.''
    Chairman Conyers is over with the Speaker and asked for me 
to begin in his absence and expects to be back soon. I 
understand from Mr. Coble that Mr. Smith is also on his way.
    Mr. Issa. He is here.
    Ms. Lofgren. Oh, is he? Oh, good. Well, then I will not say 
that. He will offer his statement in due course.
    I would like to thank Chairman Conyers in absentia for 
scheduling this hearing. Intellectual property exists to create 
incentives for innovation. That is why it is in our 
Constitution. The Constitution grants monopolies for a limited 
time over the reproduction of creations in order to reward 
innovators for their risk-taking, creativity, and investment, 
and because we want to encourage others to do the same. These 
government-created exclusive rights are crucial to the legal 
framework that promotes innovation in our country.
    However, they come with a cost, and we should not be blind 
to those costs. Any time government creates a monopoly over a 
particular product, consumers will pay more for that product, 
and further innovation based upon that product may be 
restrained.
    Such costs are justified when the exclusive right promotes, 
in the words of the Constitution, ``the progress of science and 
the useful arts.'' In other words, government should grant 
intellectual property rights when necessary to spur innovations 
that would not exist without them.
    Today, we are here to discuss one specific type of 
intellectual property: design patents, as applied to 
replacement exterior car parts. I think this, personally, is a 
textbook case of how the cost of government-created monopolies 
can, in some instances, perhaps outweigh the benefits to 
society. Automakers, understandably, make large investments to 
develop new exterior designs. They do so because the design and 
style of their cars will have a big effect on sales. But 
automakers don't sell exterior parts through new car sales; 
they also sell replacement parts to repair a vehicle after an 
accident. These are crash parts.
    And in the market for crash parts the automakers face 
competition from other suppliers. This results in significantly 
lower prices for consumers, both in the direct cost of repairs 
and the indirect costs that affect car insurance premiums.
    Unfortunately, the creative enforcement of design patents 
may threaten this competition. Federal court decisions have 
cast doubt on the application of design patents in this market, 
but the International Trade Commission has gone the other way 
in a recent decision, enforcing these patents against some 
specific crash parts. And, as a result, automakers in this case 
was able to demand licensing agreements and royalties, and of 
course the costs go up.
    One study found that independently supplied auto parts are 
already 34 percent to 83 percent less expensive than those sold 
by automakers. If competition is eliminated, these prices could 
rise even further. Without third-party suppliers, effective 
competition in the crash parts market is not possible, and no 
consumer will ever look at the price of replacement exterior 
parts in deciding whether to buy a new car. So the situation 
invites price gouging of consumers after they have no other 
option.
    Now, I don't think these price increases are justifiable 
because automakers, who we value and want to prosper, do not 
need a monopoly over crash parts as an incentive for design 
innovations. Carmakers have a powerful profit motive to develop 
new designs that attract new car buyers. And this incentive, I 
believe, is far more important than the after market for crash 
parts, which will exist and has always existed even without a 
monopoly over crash parts.
    It is for these reasons that I introduce the ``Access to 
Repair Parts Act'' to protect competition and consumers by 
clarifying that design patents may not be enforced against 
crash parts.
    Now, I know that some who oppose this--and, certainly, the 
right to oppose is fundamental--have used words like ``theft'' 
and ``piracy'' to describe this actually rather modest 
legislation. But I think it is important to recall that not 
every conceivable application of intellectual property is a 
natural right. I have great respect for genuine innovation, but 
I think this disingenuous invocation of morality to justify 
what I think are far-fetched monopoly rights really does a 
disservice to legitimate intellectual property rights.
    Now, I look forward to hearing the testimony of the 
witnesses gathered here today. The purpose of a hearing, of 
course, is to shed light on the bills and the issues before us. 
And if there are witnesses who think I have misunderstood this, 
I look forward to hearing from them. I am someone who is always 
willing to learn.
    At this point, I would turn to the Ranking Member, Mr. 
Smith, for his opening statement.
    Mr. Smith. Thank you, Madam Chair.
    Today, we revisit design protection to determine whether 
the Committee should amend existing law to help the after-parts 
automotive industry. In a 2008 Subcommittee hearing on design 
law, proponents of greater protection argued that current law 
provides insufficient help for innovators who want to prevent 
the misuse of their designs.
    Chapter 16 of the Patent Act allows an inventor to earn a 
design patent for any new, original, and ornamental design for 
an article or manufacturer. However, the chief limitation on 
the patentability of designs is that they must be primarily 
ornamental in character. If a design is dictated by the 
performance of the article, then it is judged primarily 
functional and ineligible for protection.
    Combined with the high cost of patenting, this reality 
explains why many inventors, including automobile companies, 
file for relatively few design patents. But auto manufacturers 
assert that automotive supplier lose upwards of $12 billion 
annually to counterfeit products. And at least one prominent 
car company invests $100 million or more in the design of each 
new car line. So it is understandable why car manufacturers 
want a higher return on their investments.
    Not surprisingly, they have argued in the past that 
Congress should amend the Patent Act or the copyright design 
statute to provide them with greater protection. But the 
legislative process is like Newton's third law of motion: For 
every action, there is an equal and opposite reaction. Amending 
either the Copyright or Patent Act invites opposition from 
others who work in the automobile after-parts industry. Their 
plea has less to do with the nuances of intellectual property 
law and more to do with competition and consumer choice.
    Independent garage owners fear that they will go out of 
business if copyright design laws extended to cover auto 
replacement parts or if the Patent Act is amended to provide 
more expansive protection to designs. In fact, the after-parts 
industry now argues that we can't afford to maintain the 
legislative status quo on patent designs. The auto 
manufacturers are filing for more and more design patents under 
current law, meaning the independent garages could lose a war 
of attrition. It is just a matter of time and lawsuits.
    That is why Representative Lofgren has introduced H.R. 
3059, the ``Access to Parts Act.'' The bill doesn't prevent 
automakers from patenting designs on replacement parts, but it 
does prevent them from suing competitors who repair cars with 
cheaper parts. The Committee must therefore weigh these 
competing interests and the consequences of establishing the 
precedent of creating an exemption to design law that benefits 
the after-parts industry.
    All of us understand the constitutional mandate to protect 
intellectual property rights so that those who fairly deserve 
to reap the benefits of their creative contributions may do so. 
At the same time, we must also ensure that our legislative 
efforts do not have an adverse impact on economic growth and 
consumer choice and savings. When we allow goods to be taken 
out of the marketplace and assign ownership rights to one 
individual or company, we should examine the fairness of doing 
so and the impact it will have on the market.
    Thank you, Madam Chair. And I will yield back.
    Ms. Lofgren. Thank you, Mr. Smith.
    And other Members, without objection, will have their 
opening statements included in the record.
    Oh, I am sorry. Ms. Waters actually did request to make a 
statement, and Mr. Issa has asked for the same.
    So, Ms. Waters, you are recognized.
    Ms. Waters. Thank you very much, Madam Chairlady. I thank 
Chairman Conyers for organizing this hearing, and I thank you 
for sitting in for him in his absence.
    This hearing today is being held to discuss design patents 
and auto replacement parts. Indeed, this issue is of great 
importance to many of our constituents, as it concerns the 
maintenance and repair of automobiles.
    I am very anxious to hear from our panel of witnesses 
regarding the impact this legislation would have on consumers 
in the auto industry. In the weeks leading up to this hearing, 
I have received many letters from leading consumer advocacy 
groups who believe H.R. 3059, the ``Access to Repair Parts 
Act,'' would promote competition and consumer choice.
    In these economic times when so many people are struggling 
to find employment, the last thing they should have to contend 
with is costly auto repair bills. The car companies contend 
that these parts are their original design and that this 
legislation would violate their patent rights. Consequently, 
over the years, many of them have lobbied Congress in an effort 
to amend Federal copyright law to enable auto manufacturers to 
obtain protection for their designs for individual crash parts 
through a design registration scheme.
    Moreover, the car companies are also concerned about the 
quality of replacement crash parts. They argue that permitting 
this intellectual property infringement also exposes consumers 
to significant safety performance or durability risk.
    However, the Consumer Federation of America advocates for 
auto and highway safety will testify today that consumers pay 
the same price for automobile parts that some pay for high-
speed computers and flat-screen televisions. So when many 
across the country rely on their cars for employment, I am 
concerned that some of our car companies may be taking 
advantage of consumers in its strict control over the 
distribution of its repair parts.
    Therefore, Madam Chairwoman, I look forward to our 
witnesses' testimony and hope that we can take a closer look at 
this issue that greatly impacts the American public.
    And I yield back the balance of my time.
    Ms. Lofgren. Thank you, Congresswoman Waters.
    Congressman Issa?
    Mr. Issa. Thank you, Madam Chair.
    It is always difficult in Congress to be lobbied by two 
sides and tell both sides that you see merit in their position 
and then chastise them for excess. Today, I believe that is an 
example.
    The auto companies have repeatedly asked for more than what 
they could be entitled to and come to this Committee asking for 
protection that we are not permitted to grant. Often, the 
argument is that replacement parts are inferior, dangerous and, 
thus, will in some way be unreasonably produced in a way that 
would endanger the public. And, yet, the request is of this 
Committee, a Committee that has no such jurisdiction. We have 
jurisdiction over monopolies, and we certainly have 
jurisdiction over patent, copyright, and the like.
    Having said that, the parts industry, from which I came, 
would certainly pride itself on its design patents and its 
right to have an ornamental look added to the automobile be 
protected. Whether it is an aftermarket sunroof company, 
spoilers, air dams and the like, or even custom wheels, no 
company in the after market would give up its right to its 
trademark, its copyright, or its patents willingly.
    So that brings me to a conundrum as the owner of 37 
patents, some of which are design patents. How do we protect 
the inherent right of the manufacturer to have no confusion as 
to the original maker, the quality, and the predictability, 
while at the same time recognizing that there is a huge 
difference between parts, for example, that would make a Ford 
Mustang into a Shelby Cobra when, in fact, it is not, and 
simply a repair part for an inner wheel well, maybe even a 
fender that has become rusted or damaged?
    I believe that this Committee lacks the jurisdiction to do 
it all by itself. I certainly believe that the Chairwoman, 
rightfully so, is trying to find the right answer, but I 
believe that we must carefully make sure that this Committee 
limits itself to the proper meaning of this intellectual 
property over which we have jurisdiction and then moves on to 
the competitive questions with the Committee of jurisdiction.
    For that reason, I have not signed on in the past, nor 
presently, on this bill. But I do look forward to trying to get 
it right now and in future legislation. I look forward to the 
testimony of all of the witnesses because I believe there is a 
valid middle ground.
    Since we are fortunate enough to have the right people 
here, I will again use the example that a Ford Mustang versus 
something that looks like a GT500 Shelby Cobra is not a small 
set of replacement parts but, in fact, a huge difference. I 
often go to the auctions and watch them also on TV in which the 
difference in the value of a 25-, 30-, 40-year-old automobile 
based on nuanced differences of whether it was a GTO or just 
another off-the-line car that had a few stickers put on it is 
significant. And those significant differences should be 
respected when they belong to the manufacturer.
    So, with that, Madam Chair, I look forward to working 
together on finding the right balance, and yield back the 
balance of my time.
    Ms. Lofgren. Thank you, Congressman Issa.
    And, without objection, other Members, unless they wish to 
give their opening statement, will be invited to submit them 
for the record. And we will turn now to the witnesses.
    I am pleased to introduce, first, Mr. Jack Gillis. Mr. 
Gillis is the director of public affairs with the Consumer 
Federation of America. He is also the author of several books, 
including ``The Car Book.'' He received his MBA from the George 
Washington University.
    Second will be Mr. Damian Porcari, who is director of 
licensing and enforcement for Ford Global Technologies. He 
oversees enforcement of Ford patents through licensing and 
litigation. He received his law degree from the University of 
Detroit Law School.
    Third will be Mr. Robert Passmore, the senior director for 
the Property Casualty Insurers Association of America. He 
specializes in automobile claims but has worked on a wide 
variety of other claims issues. He is a member of the Society 
of Chartered Property Casualty Underwriters, having received 
this designation in 2002.
    And, finally, we will welcome Mr. Perry Saidman, an expert 
in design patent law and principal of a boutique law firm 
specializing in design patents. He has authored many articles 
on design law, and he received his law degree from the George 
Washington University Law School.
    Without objection, your written statements will be placed 
into the record, and we would ask that you limit your oral 
remarks to 5 minutes.
    You will note we have a lighting system. The light will be 
green. When it turns yellow, it means that you have used up 4 
minutes, and when it turns red, it means your 5 minutes have 
expired. We won't cut you off mid-sentence, but we do ask that 
you try and live within the 5 minutes so that we will have time 
for Members to ask questions.
    And we will begin with you, Mr. Gillis. Will you please 
proceed?

TESTIMONY OF JACK GILLIS, DIRECTOR OF PUBLIC AFFAIRS, CONSUMER 
                     FEDERATION OF AMERICA

    Mr. Gillis. Congresswoman Lofgren, Ranking Member Smith, 
Members of the Committee, I am here not only on behalf of the 
Consumer Federation of America but the Advocates for Highway 
and Auto Safety, the Center for Auto Safety, and Public 
Citizen. And we appreciate your invitation to appear today.
    Consider any of the following experiences which happen 
every year to thousands of Americans: You back into a pole, 
someone in front of you stops suddenly, or you sideswipe your 
car in a cramped parking lot. Fortunately, few of these fender-
benders result in injuries, but they often result in shocking 
repair bills.
    Why are these repair bills so high? As Congresswoman Waters 
said, one reason is the parts that are needed to repair our 
cars. For example, Ford charges the same price for a fender as 
Dell charges for a computer and a flat-screen monitor. An 
unpainted door from Ford will cost the same as a Sears 
refrigerator. And yet, these are just part prices; costs can 
double with installation.
    In fact, computers, refrigerators, and many other products 
are better today than ever before for one reason and one reason 
only: competition. In the early 1990's, the car companies came 
to you, they came to Congress, and asked for special design 
copyright protection on these replacement parts, and you 
emphatically said no. But, as you can see from this chart, that 
hasn't happened. There has been an enormous spike in the number 
of design patents which companies like Toyota and Ford have 
received on their crash parts.
    Now, unless there is something special about a Ford fender 
for a 2009 Ford which wasn't true in 2002, then I think you 
will agree with me that this effort is not about some newfound 
design patents but, instead, a newfound business strategy. The 
question you need to ask is, why all of a sudden are these 
fenders patentable? This is a business strategy and not a 
legitimate use of our very important patent laws.
    What is particularly disturbing about these figures is that 
they are only selectively putting design patents on those parts 
where competition is available. The competition and parts that 
the car companies are trying to kill lowers prices, provides 
choice, and improves quality. In fact, many independent parts 
have lifetime warranties and are 34 to 83 percent less 
expensive than the car company parts.
    If the automobile makers succeed in using design patents to 
eliminate competition for crash parts, it will not only result 
in higher crash repair costs for you and me and everyone else, 
but it will increase our insurance premiums. On the safety 
side, as Congresswoman Waters indicated, delaying or ignoring 
the replacement of a headlight, a side mirror, or a brake light 
simply because they are too expensive will cause serious safety 
problems for the consumers.
    One of the most tragic ironies in the lack of competition 
is what I call the automakers' double whammy. Not only can the 
car companies charge whatever they want for the parts we need 
to fix our cars, but when they charge so much that the car is 
totaled, our only recourse is to go back to them and buy 
another one of their products.
    I applaud you, Representative Lofgren, for introducing H.R. 
3059. It is not often that Congress is presented with such an 
elegant solution to a problem. By providing a repair clause in 
the design patent law, Congress will be providing consumer 
choice and protecting an open and competitive market. Such a 
very narrow, practical exemption to the design patent law would 
not, and rightly should not, interfere with an automaker's 
right to prevent competing car companies from using their 
patented vehicle and part designs.
    Nine European countries and Australia have enacted laws 
that specify that making the use of a matching exterior 
patented part is not an act of infringement. American consumers 
deserve no less.
    So, the Consumer Federation of America, the Advocates for 
Highway and Auto Safety, the Center for Auto Safety, and Public 
Citizen believe the consumers need competitive crash parts. On 
behalf of these groups, I strongly urge Congress to adopt 
Congresswoman Lofgren's bill in order to ensure a competitive 
market with fairly priced alternatives to expensive car company 
brand parts.
    I would like to thank you for the time before you, and be 
happy to answer questions later on.
    [The prepared statement of Mr. Gillis follows:]
                   Prepared Statement of Jack Gillis




                               __________

    Ms. Lofgren. Thank you very much, Mr. Gillis.
    We will turn to you, Mr. Passmore, for your testimony.

 TESTIMONY OF ROBERT C. PASSMORE, SENIOR DIRECTOR OF PERSONAL 
    LINES, PROPERTY CASUALTY INSURERS ASSOCIATION OF AMERICA

    Mr. Passmore. Congresswoman Lofgren, Ranking Member Smith, 
and other esteemed Members of the Committee, my name is Robert 
Passmore, and I am senior director of personal lines policy 
with the Property Casualty Insurers Association of America, 
otherwise known as PCI. PCI is comprised of more than 1,000 
member companies, who, together, write 44 percent of the 
personal automobile insurance in the United States.
    I would like to commend you for holding this important 
hearing and thank you for the opportunity to present our views 
on the impact of design patent enforcement on automotive 
collision repair parts and express our support of H.R. 3059, 
the ``Access to Repair Parts Act.''
    At its core, this is a consumer issue. The cost of auto 
body repair are borne by consumers, either reflected in their 
insurance costs or directly when they pay for repairs 
themselves. Auto manufacturers justifiably use design patents 
to protect the overall design of their cars from the other car 
companies they compete with in the primary market. But some are 
also using them in unjustifiable ways: to keep competitors out 
of the market for replacement crash parts or parts commonly 
replaced following automobiles accidents, such as fenders and 
doors.
    For decades, the availability of aftermarket crash parts 
has had a moderating effect on the price of such parts sold by 
the car companies. H.R. 3059 will help ensure that design 
patents will not be used in anticompetitive ways and high-
quality aftermarket parts will remain available, helping keep 
auto repair and insurance costs down.
    Since 2003, car companies have increasingly filed for 
design patents protecting not only the overall design of the 
vehicle but also individual component parts of the vehicles 
they manufacture. One company, Ford, has filed two cases at the 
International Trade Commission against companies in the 
aftermarket parts industry for allegedly infringing on design 
patents held by Ford for various exterior parts. Almost 5 years 
later, those cases were settled, but the desired result was 
achieved for Ford: There was no competition for those parts 
during that time. And, even though cases were settled, there is 
nothing that would prevent Ford or any other car company from 
doing the same thing today.
    We recognize that the overall design of the vehicle 
represents a substantial investment in its development by the 
manufacturer that can and should be protected. While we claim 
no special expertise in patent law, I would point out that 
there is no room for innovation by alternative suppliers of 
these collision repair parts so as not to be accused of 
infringing on the car companies' design patents. Their only use 
is to restore the vehicles' original appearance and function; 
they have no other use.
    In fact, many State laws require that alternatively 
supplied collision repair parts be of like kind and quality to 
car company parts. The aftermarket manufacturers must meet the 
requirements of those State laws, yet, by doing so, risk being 
found to have infringed on design patents.
    Design patents, when applied to these parts in the after 
market, serve only to restrict or eliminate the competition and 
facilitate a monopoly on replacement parts. Indeed, nine 
European companies and Australia have addressed the situation 
by enacting laws similar to what is proposed here in H.R. 3059. 
Studies have shown that the mere existence of a competitive 
part in the marketplace reduces the price of a car company part 
by an average of 8 percent per part, and that is even before a 
single part is purchased.
    To put the benefits of availability of these parts in 
perspective, consider that even now car company parts dominate 
the market for auto body repair parts, used more than 70 
percent of the time--clearly a dominant position. 
Alternatively, supplied collision parts are used about 12 
percent of the time and can cost as much as 60 percent less 
than a car company part.
    PCI estimates that eliminating the competitive influence of 
even that small market share for alternatively supplied parts 
would result in more than $3 billion in increased insurance 
costs on an annual basis. The effect of a monopoly on 
replacement crash parts would not be limited to consumers' auto 
insurance costs. Consumers that pay for their own repairs out 
of pocket would bear those costs directly or might choose to 
forgo repairs, leading to more rapid deterioration and 
depreciation of their vehicle.
    High repair costs also means that there is an increased 
likelihood of a vehicle being declared a total loss, compelling 
consumers to replace the vehicle, pay off a loan that may 
exceed the value of the vehicle, and seek financing for the 
purchase of a replacement vehicle--all of which deplete 
savings. In tough economic times like we are currently 
experiencing, the impact of all these factors would be much 
greater on low-income or fixed-income consumers, who can least 
afford it.
    We are not here today to advocate for the use of one type 
of part over another, but we are here in support of a measure 
that we believe would clearly benefit consumers. That is why we 
are part of the Quality Parts Coalition with companies like LKQ 
Corporation, based in Chicago; AutoZone, based in Nashville; 
Safelite, based in North Carolina; and ABRA, based in 
Minnesota. Those companies believe, as we do, at its core this 
is a consumer issue. Costs of auto body repair are borne by 
consumers, either reflected in their insurance costs or 
directly when they pay for repairs themselves.
    We believe that the ``Access to Repair Parts Act'' will 
preserve competition in the market for replacement crash parts 
and benefit consumers. On behalf of our members, we applaud 
Representative Lofgren and all the bill's cosponsors for 
introducing this legislation, and we thank the Committee for 
the opportunity to share our views on this issue.
    [The prepared statement of Mr. Passmore follows:]
                Prepared Statement of Robert C. Passmore



                               __________

    Ms. Lofgren. Thank you very much, Mr. Passmore.
    Now we will turn to you, Mr. Porcari, for your testimony.

 TESTIMONY OF DAMIAN PORCARI, LICENSING AND ENFORCEMENT, FORD 
                    GLOBAL TECHNOLOGIES, LLC

    Mr. Porcari. Thank you.
    Chairwoman Lofgren, Ranking Member Smith, and Members of 
the Committee, my name is Damian Porcari. I am an attorney with 
the Ford Global Technologies. I am responsible for obtaining 
Ford's design patents.
    This legislation, if signed into law, would undo wins by 
Ford in the International Trade Commission against foreign 
manufacturers making copycat parts of our popular F-150 trucks. 
In these instances, the infringers purchased a single genuine 
Ford part and then they used low-cost laser scanners to make 
photocopy-like clones of our parts. And as a result of these 
infringements, Ford, our suppliers, our dealers are losing $400 
million a year because of the loss in genuine part sales.
    Certainly, a company can save money by copying a design as 
opposed to creating, testing, marketing, and selling an 
original design. This is not a revelation. It has been and will 
always be cheaper to steal something than to pay for it. Our 
opponents' argument is no more than a justification to deny all 
intellectual property rights across the board.
    Copycat parts hurt Ford, our employees, our suppliers, our 
dealers, and our customers. Ford customers rarely know that 
they are getting copycat parts because their installation is 
frequently concealed. Customers purchase a Ford vehicle for 
many reasons, including its features, its quality, its styling, 
and its value, but these factors are also important in a repair 
decision. But often, when customers take their cars to a body 
shop, they frequently receive non-Ford, non-U.S., non-UAW 
parts.
    You know, they may be given an untested part, an 
experiment, that may or may not function as intended. Ford 
doesn't test how copycat parts work or what interaction various 
copycat parts have with each other. We test Ford vehicles with 
genuine Ford parts.
    Copycat part makers talk of monopoly pricing by automakers 
if parts can't be freely copied. Yet, for over 100 years, Ford 
has prided itself on selling vehicles with readily accessible 
and affordable replacement parts. If pricing of genuine Ford 
parts made insurance unaffordable, we wouldn't sell any cars or 
trucks.
    So, as a November 18, 2009, letter from a broad coalition 
of IP right supporters makes clear, we strongly oppose the 
fundamentally dishonest practice of purchasing a single Ford 
part and making cheap copycat parts in low-wage, foreign 
factories that are sold to the American public.
    Technology transformed copying books in the 1970's, music 
in the 1990's, and movies this century. It is now transforming 
the car part market. Virtual 3D photocopiers are making it 
faster and cheaper to copy parts. That is why you are seeing a 
significant increase in the number of design patents filed in 
the U.S. It is in response to this increased copying of parts. 
If this bill becomes law, copying will continue to increase, 
and more and more American manufacturing jobs will be lost. 
Auto companies, suppliers, and dealers will have no choice but 
to compete with cheap Taiwanese copycat parts by outsourcing 
manufacturing to other even lower-cost countries.
    The timing for this bill couldn't be worse. An 
International Trade Administration report, entitled ``U.S. 
Automotive Parts Industry Annual Assessment 2009,'' outlines 
the problems facing the domestic auto parts industry and shows 
increasing imports of aftermarket parts from foreign countries. 
The Bureau of Labor Statistics reported that the automotive 
part industry lost more than 300,000 U.S. jobs since 2000.
    Foreign part copiers say that car companies are unwilling 
to license copies. This is not true. Car companies vigorously 
compete with each other. We also compete with the salvage and 
specialty equipment makers on component parts. Beyond that, we 
have existing restoration part licensing programs, where we 
license our designs, know-how, and brands to responsible 
companies that make high-quality parts. Ford has no objection 
to generic or specialty repair parts.
    Finally, Ford broke new ground and licensed LKQ to make and 
sell copy parts. We also required that LKQ clearly label copy 
parts as non-original equipment after market. We collect a fee 
for the use of our patents that we reinvest in new vehicle 
designs.
    This settlement gives Ford customers up to five options 
when repairing their vehicle. They can: one, buy a new genuine 
Ford part; two, a salvaged genuine Ford part; three, an 
approved restoration part made to Ford specifications; or, 
four, a generic or specialty equipment part that is not a copy, 
such as parts made by SEMA; and, five, an LKQ copycat part that 
is not made to Ford's specifications.
    This bill won't give consumers more choices; they already 
have five. This bill would merely eliminate compensation to the 
original American designer and spur more foreign copying.
    In conclusion, we believe retroactively targeting one group 
of intellectual property rights for unequal treatment would be 
a dangerous precedent. And it would be particularly so should 
it come from this Committee, with the role to ensure that these 
rights are protected.
    We thank Congress for taking on the difficult issue of 
design protection. Thank you, and I would be happy to answer 
any questions the Committee may have.
    [The prepared statement of Mr. Porcari follows:]
                  Prepared Statement of Damian Porcari
    Chairman Conyers, Ranking Member Smith, and members of the 
Committee, my name is Damian Porcari. I am an attorney with Ford Global 
Technologies, LLC., a wholly owned subsidiary of Ford Motor Company. I 
am responsible for obtaining and enforcing Ford's design patents, 
especially those directed to exterior components such as fenders, 
hoods, grilles, lights, and mirrors.
    This legislation, if signed into law, would undo wins by Ford with 
the International Trade Commission against foreign manufacturers making 
copycat F-150 parts. The infringers purchased a single genuine Ford 
part and used low-cost laser scanners to make `photocopy-like' copycat 
parts. Ford hosted representatives of the U.S. Patent and Trademark 
Office in our design studios and demonstrated how infringers are able 
to make tooling for a copycat fender in a matter of hours using this 
equipment. Ford, our suppliers and our dealers are losing $400 million 
per year in genuine part sales because of this flood of imported 
copycat parts.
    I freely admit that a company can save money by copying a design as 
opposed to creating, testing, marketing, and selling an original 
design. This is not a revelation. It has been and will always be 
cheaper to steal something than to pay for it. This applies to all 
markets and all products. Our opponent's argument is no more than a 
justification to deny all intellectual property rights across the 
board.
    Copycat parts hurt Ford, our employees, our suppliers, our dealers, 
and our customers. Ford customers rarely know that they are getting 
copycat parts because their use is frequently concealed. Customers 
purchase a Ford vehicle for many reasons, including its features, 
quality, styling, and value. They also buy a Ford because of its high 
domestic content (Monroney sticker) or because it was made by UAW 
workers. These factors are also important in repair decisions. But when 
this same customer takes his or her car to a body shop, they frequently 
receive non-Ford, non-U.S., non-UAW parts, all without any disclosure 
or warning. They take a Ford in for repair and given in return an 
untested experiment that may or may not function as intended. Ford 
doesn't test how copycat parts work or what interaction various copycat 
parts have with each other. We test Ford vehicles with genuine Ford 
parts.
    Copycat parts makers talk of monopoly pricing by automakers if 
parts can't be freely copied. Yet there is no evidence for this 
argument. For over one hundred years, Ford has prided itself for 
selling vehicles with readily accessible and affordable replacement 
parts. If the pricing of genuine Ford parts made insurance 
unaffordable, we wouldn't sell any cars or trucks. Everyone purchases 
insurance before they drive their new car home. This argument is a 
smokescreen to divert attention away from the fundamentally dishonest 
practice of purchasing a single Ford part and making cheap copycat 
parts in low-wage foreign factories that are sold to an unknowing 
American public. Technology transformed the copying of books in the 
70's, music in the 90's, and movies this century. It is now 
transforming the car parts market. Virtual 3-d photocopiers are making 
it faster and cheaper to clone parts. Ford's only recourse is to rely 
on an imperfect form of intellectual property protection- design 
patents- to stop the wholesale cloning of our vehicles. That's why you 
are seeing a significant increase in the number of design patents filed 
in the U.S. Patent and Trademark Office. It is a response to the 
increased copying of parts. If this bill becomes law, part copying will 
continue to increase and negatively further erode U.S. manufacturing 
jobs. Auto companies, suppliers, and dealers will compete with cheap 
Taiwanese copycat parts by outsourcing manufacturing to other even 
lower-cost countries.
    This bill encompasses more then car parts. Any replaceable 
component would be free game for foreign copying including battery 
packs, printer cartridges, razor blades, tires, and golf clubs. All 
forms of intellectual property are aimed at preventing copies. There is 
no fundamental reason to treat a fender differently than a drug, a 
purse, or a movie. To do so otherwise is to devalue design. I explain 
this comparison by describing an accident. The vehicle's fender, 
brakes, and tires are damaged. The driver also breaks her sunglasses, a 
CD that was playing is scratched, some prescription drugs fall on the 
ground, and a $100 bill blows away. Which of these articles should be 
freely available to foreign copyists and why? What fundamental 
principle supports treating a fender differently? The bill's proponents 
present no basis for treating visible repair parts differently than 
other repair parts or other items protected by intellectual property. 
The copyists want to eliminate design patent protection on copycat 
parts because that's what they make. As soon as their business model 
includes engines, brakes, and air bags, we will likely hear the call 
for the elimination of patent protection on all types of replacement 
parts. And it won't stop with cars. The denial of intellectual property 
rights will always reduce copiers' costs.
    Proponents argue that this bill is needed to restore ``balance'' 
between car companies and customers. The phrase: ``It's my car, I 
should be able to fix it'' is used to suggest there should be a ``fair 
use'' right-to-repair. While the car indeed belongs to the owner, the 
patents protecting it do not. Patents have never needed a ``fair use'' 
concept because they involve commercial production of products. The 
patent teaches others how to make something. If a patent is 
unenforceable against foreign manufacturers, the American inventor is 
left with nothing. This entire repair argument is a smoke-screen. Car 
companies don't sue customers for pulling a dent from their fender. 
Razor companies don't sue customers for sharpening a dull blade. 
Customers have the right to repair their car or sharpen their razor, 
but they don't have the right to make copy fenders or copy razor 
blades. Far more importantly, foreign companies don't have the right to 
sell millions of copycat fenders or razor blades into this country. 
That's not ``fair use'', that's a large-scale foreign commercial 
enterprise stealing business from the American inventor through 
unethical copying. And that's exactly what's happening in the car 
business today. Dozens of foreign factories, employing thousands of 
workers are selling billions of dollars of copied car parts. Ford is 
working to stop this practice by enforcing its design patents. Rather 
than restore balance, this bill would upset long standing US 
intellectual property law and would tell the world it's OK to copy 
American products - both here and abroad. This issue is not one of 
allowing customers to repair their cars, they already have that right. 
The issue is, can foreign manufacturers freely copy America's 
creations?
    The timing for this bill couldn't be worse. An International Trade 
Administration report entitled ``U.S. Automotive Parts Industry Annual 
Assessment 2009'' outlines the problems facing the domestic auto parts 
industry and shows increasing imports of aftermarket parts from foreign 
countries (Attachment 1). The Bureau of Labor Statistics (BLS), U.S. 
Department of Labor, reported that the automotive parts industry lost 
more than 300,000 US jobs since 2000 (id at p35).
    Some background about the insurance industry will illuminate what's 
really spurring foreign parts copiers and unscrupulous insurance 
companies. Ford provides insurance companies with its genuine Ford 
replacement part pricing for every new Ford vehicle. Insurance 
companies use genuine Ford part prices to set their insurance rates. 
After state regulators approve these rates, insurance companies then 
refuse to pay for genuine Ford parts and steer body shops to use cheap 
copycat parts. Most insurance companies don't tell drivers that they 
aren't getting genuine Ford parts unless they are required to do so by 
state law. Consumers rarely know they're getting copycat parts. What 
consumer prefers a copycat part over a genuine Ford part? This entire 
discussion about consumer choice and right-to-repair is merely a 
distraction from the basic unethical business practice of pricing 
insurance premiums using genuine Ford parts and then giving consumers 
cheap foreign copies.
    Foreign parts copiers also argue the basic ``unfairness'' of giving 
car companies 14-year protection on replacement parts. Let's look at 
some basic fairness issues: Proponents want to retroactively reduce the 
period of design protection for car parts from 14 years to zero. 
However, Congress recently retroactively extended copyright protection 
for Hollywood movies to 120 years. If this bill becomes law, a real car 
would have no protection against copies, but a cartoon car would be 
protected for 120 years. Somehow all of these ``fair use'' and 
``consumer choice'' arguments don't apply to saving American families 
money when it comes to movies.
    Foreign parts copiers also suggest that Ford should be able to 
protect the entire vehicle, but not individual components. Ford 
protects what's copied. No one is making copy cars. Even Chinese car 
companies that were accused of copying didn't copy everything. They 
copied the front of one car and the rear of another. The current law 
allows car companies to protect individual parts and prevents this 
behavior. This bill doesn't address patentable subject matter under 35 
USC 171, but instead focuses on what is an infringement. It will add 
confusion to an already unclear area of law. If Ford sells a vehicle 
having Goodyear tires, are Goodyear's patents now unenforceable? Can 
foreign companies freely make specialty equipment parts such as those 
on a Saleen Mustang###(tm)###? If a customer resells an automobile with 
specialty wheels, are those specialty wheel patents now unenforceable? 
If Ford sells a vehicle with specialty parts such as a Ford Expedition 
Funk Master Flex(tm), are those patents also unenforceable?
    Proponents for this bill will tell you ``a hood is a hood is a 
hood'' and that the aftermarket is required to copy Ford parts by state 
insurance law. First, a hood is not a hood. If they were, why would 
foreign manufacturers be making exact copies rather than generic parts 
that fit Ford cars? Different hoods create a different visual 
impression and result in different sales for that vehicle. We sell 
different models of the same cars with different hoods, grilles, and 
lights to create a different visual impression and to garner more 
sales. Second, state insurance laws don't trump federal intellectual 
property laws. We don't allow states to create unique forms of 
intellectual property. And we don't allow states to invalidate federal 
intellectual property protection or mandate patent infringement.
    Foreign parts copiers say that car companies are unwilling to 
compete. Not only do car companies vigorously compete with each other 
for each and every sale, we also compete with salvage and specialty 
equipment makers on component parts. Beyond that, each of the Detroit 3 
have existing restoration part licensing programs where we license our 
designs, know-how, and brands to responsible companies that make high-
quality parts. Ford has no objection to generic or specialty repair 
parts. Consumers are familiar with this concept and know what they're 
getting when they buy generic razors or cereal. Generic items don't 
look like the genuine article.
    Ford broke new ground and licensed LKQ to make and sell copycat 
parts. We did this primarily to end a series of very expensive lawsuits 
and to gain recognition that automobile parts were patentable. We also 
required LKQ to clearly label copycat parts as ``Non-Original Equipment 
Aftermarket''. Attachment 2 is a sample label that is affixed to every 
copycat part to clearly distinguish them from genuine Ford parts. We 
also collect a fee for the use of our patents that we reinvest in new 
vehicle designs. This settlement gives Ford customers up to five 
options when repairing their vehicle. They can buy:

        1.  a new genuine Ford part

        2.  a salvaged genuine Ford part

        3.  an approved restoration part made to Ford specifications 
        (for older vehicles)

        4.  a generic or specialty equipment part that is not a copy 
        (e.g., SEMA(tm))

        5.  an LKQ copycat part not made to Ford specifications

    This bill won't give consumers more choices. They have five 
already. This bill would merely eliminate compensation to the original 
American designer and spur more foreign copying.
    In conclusion, we believe retroactively targeting one group of 
intellectual property rights for unequal protection would be a 
dangerous precedent. And it would be particularly so, should it come 
from the Committee with the role to ensure that these rights are 
protected. We thank the Congress for taking on the difficult issue of 
design protection. We encourage it to tackle this issue in-depth and 
see how intellectual property laws can be used to level the playing 
field with foreign companies making copycat parts.
    Thank you and I would be happy to answer any questions that the 
Committee might have.

                              Attachment 1

                       ITA Annual Assessment 2009




                               __________

    Ms. Lofgren. Thank you, Mr. Porcari.
    And we will turn to our final witness, Mr. Saidman, for 5 
minutes.

                  TESTIMONY OF PERRY SAIDMAN, 
                    SAIDMAN DESIGN LAW GROUP

    Mr. Saidman. Thank you very much.
    Chairwoman Lofgren, Ranking Member Smith, other Members of 
the Committee, thank you for inviting me to testify today. My 
name is Perry Saidman. I am an attorney in private practice, 
and I specialize in design patent law. My clients rely on me to 
get strong design protection for their original designs and 
enforce them against knockoffs.
    Now, as a professor at GW Law School, I teach a course in 
design law. I would like to emphasize that a design patent is a 
very unique animal because it protects the appearance of a 
product, how a product looks, not how it works. If you want to 
protect how it works, you have to go get yourself a utility 
patent, which is not the subject of this hearing.
    Now, cutting to the chase, I think it is a bad precedent to 
carve out an exception in the design patent law for a 
particular class of goods--in this case, auto repair parts. The 
companies who get design patents invest substantial sums in 
research and development of new designs. They file design 
patent applications in the U.S. Patent Office, which are 
carefully examined by specialist design patent examiners who 
search all previous patents and publications to make sure that 
the applicant's design is novel, nonobvious, and nonfunctional. 
These are the statutory criteria for getting a design patent. 
And because of this rigorous examination, the issued design 
patent has a statutory presumption of validity which can only 
be overcome in litigation by clear and convincing evidence.
    Now, the proponents of this carveout for auto repair parts 
do not say that design patents for these parts are invalid. 
They do not say that these design patents are not infringed. 
Well, they can't very well say that, because their knockoffs 
look exactly like the patented designs. What they are saying is 
that these valid and infringed design patents should be 
rendered unenforceable.
    Now, why do they say this? Well, they lost a big design 
patent infringement suit and have been enjoined from selling 
certain auto repair parts. The problem is, if this bill passes, 
every industry that loses a design patent lawsuit will petition 
the Congress to exempt them from having valid and infringed 
design patents enforced against them. That is why it is a bad 
precedent.
    Now, the proponents also say, if a valid and infringed 
design patent cannot be enforced against them, we will have 
open and free competition in auto repair parts, which should 
bring down the cost to consumers. But the U.S. Supreme Court 
has said in the Bonito Boats case, and I will quote this, ``The 
requirements of patentability embody a congressional 
understanding implicit in the patent clause itself that free 
exploitation of ideas will be the rule to which the protection 
of a Federal patent is the exception,'' unquote.
    So, once the Patent Office decides that a design meets all 
of the statutory criteria, they issue a patent that gives the 
owner a time-limited monopoly in that design. This trumps open 
and free competition and is grounded in the strong public 
policy stated in the U.S. Constitution, article 1, section 8, 
clause 8, that the purpose of patents is to promote the 
progress of science and the useful arts, to encourage 
innovation, and reward inventors and designers for a limited 
time.
    Now, companies that are in the knockoff business flout this 
strong public policy. Their activities do not promote the 
progress of science and the useful arts. They lie back and wait 
for others to do this, to make a successful unique design. Then 
they copy the patented design, they are found guilty in a court 
of law, and they come here asking that they not be held 
accountable for their actions. The end game of this logic--that 
free and open competition is the Holy Grail--would result in 
doing away with patents altogether.
    Now, Mr. Gillis today said that an automaker would still 
have the right to stop competing car companies from using their 
patented part design. Well, this is a red herring. Companies 
get design patents to stop knockoffs. They are rarely asserted 
against legitimate competitors, who are busy designing their 
own original and distinctive designs. The last thing they want 
to put out is a copy of a competitor's design.
    In conclusion, carving out a particular class of products 
that undisputedly infringe design patents just because this is 
advocated by the powerful insurance lobby undermines the rule 
of law, is tantamount to selective enforcement, and opens the 
door to yet new exemptions advocated by yet new lobbies in yet 
new product fields. Pretty soon, the law fades away, and all 
that is left are the exceptions, just like the Cheshire Cat in 
Alice's Wonderland, which fades away, leaving only its devious 
smile.
    Thank you, and I am happy to answer any questions.
    [The prepared statement of Mr. Saidman follows:]
                  Prepared Statement of Perry Saidman



                               __________

    Ms. Lofgren. Thank you very much.
    And thanks to all the witnesses for their testimony.
    Now is the time when Members can ask questions of the 
witnesses. And we will try and confine our questions to about 5 
minutes. And I will begin.
    Mr. Gillis, Mr. Porcari gave a list of five choices that 
consumers have for crash parts, including salvage parts, 
approved restoration parts, generic or specialty equipment 
parts.
    Why would these choices not be sufficient to provide 
competition in the market to keep prices down for consumers?
    Mr. Gillis. It is a good question.
    First of all, there really aren't five choices of parts. 
Two of the part choices that he listed are specious. They do 
not represent replications of the part, which is what most 
consumers want. We are not attempting to change the look, the 
feel, or the fenders or the hoods or the grills.
    So the only real choice that a consumer has today is an 
expensive car company brand part; a salvage part, which is of 
dubious quality; and, in some cases that Mr. Porcari talked 
about, a part in which he has licensed the manufacturer of.
    And what is very interesting about that alternative is that 
Ford has entered into a special agreement allowing a company to 
make its part, is getting paid by that company, yet Mr. Porcari 
just told you that these parts are not made to Ford's 
specifications. In other words, they are licensing someone to 
make their parts, and even they don't care if they meet their 
specifications. This is the absolute height of hypocrisy.
    Ms. Lofgren. I wonder, Mr. Porcari, going to that licensing 
situation, you have licensed, according to your testimony, with 
this LKQ to make and sell crash parts. And you also testified 
that Ford got a royalty fee out of this arrangement.
    How much was this fee? And how is this structured?
    Mr. Porcari. The exact amount of the fee is confidential. 
But I am able to tell you that we make much less licensing car 
parts than we do these little toy cars. That is why I brought 
that here to show you.
    Ms. Lofgren. Was this an exclusive agreement with LKQ?
    Mr. Porcari. Yes, it was. Yes, it was.
    And, you know, it was not like there was no infringement 
going on. There were 28 companies making thousands and 
thousands of Ford parts. So we didn't license into a vacuum. We 
licensed dozens of people, making thousands of parts.
    The reason it was exclusive was LKQ brought with them these 
dozens of Taiwanese companies and stopped all of the non-
infringers themselves. They had control because they had the 
pursestrings; they were buying from the Taiwanese.
    Ms. Lofgren. I see.
    You know, one of the things that I think is--I was talking 
to Mr. Smith before he left. It is a hard audience you have up 
here because I think all of us have cars that have been in 
crashes. And I will just speak--my daughter totaled my car, but 
the crash was such that it didn't even set off the airbags. I 
mean, it was--and because the parts were so expensive, the 
insurance company had to total the whole thing.
    And I was thinking about your comment, Mr. Porcari, about, 
you know, low-cost foreign manufacturers. But this was a Prius.
    And so, I think--and I guess this is to Mr. Gillis, since 
you have taken a look at the whole market, not just Ford--
aren't foreign auto companies also engaging in these design 
patents? And wouldn't that potentially have the impact of 
disadvantaging American parts manufacturers?
    Mr. Gillis. Well, absolutely, Congresswoman.
    In fact, I would like to submit for the record this picture 
from Auto News, in which 52 percent of the suppliers to the 
2008 Ford Taurus are foreign companies.
    [The information referred to follows:]
    


    
                               __________

    Mr. Gillis. In addition, this year, Ford's latest models, 
the 22 models that they are offering the American public, 
nearly half of them are built in foreign countries.
    So, for Mr. Porcari to come here and keep using the word 
``foreign'' as if it is a dirty word is, again, I think, an 
example of the extent that the car companies are trying to go 
to protect these monopolies.
    And he mentioned earlier that it cost him $400 million 
because of parts that were competitive in the marketplace. 
Well, guess who saved that $400 million? We did. And guess who 
will pay that $400 million if he gets to patent all of these 
parts? And that is what we are talking about today.
    Ms. Lofgren. Thank you very much.
    And I am not going to go on at too much length; I just 
thought it was important to note that, as far as--you know, I 
don't want to hold myself out as an expert on design patents, 
but I think the most significant case in our courts was the 
Chrysler case, that the circuit court really helped out about 
the design patents, and it is only the international decision 
that has brought this into play. It wasn't the U.S. court 
system that brought this into play.
    Isn't that correct, Mr. Gillis?
    Mr. Gillis. That is true. And, you know, that is what is 
particularly ironic about this particular situation. Consumers 
in Europe have a right to these parts. They are able to buy and 
make choices in the marketplace and are able to get the 
competition they need to keep the crash repair down.
    And what is particularly good about it is, when there is 
competition, not only do prices go down, but quality goes up. 
And Mr. Porcari was talking about quality. I mean, with all due 
respect to the Members of this Committee, to talk about car 
company quality in this environment, when last year 50 percent 
more cars were recalled than were even sold and this year we 
have already recalled almost twice as many cars as have been 
sold. So, the car companies aren't----
    Ms. Lofgren. I am going to cut you off, because I don't 
want to set a bad example of going over 5 minutes.
    And I am going to turn now to Mr. Coble for his questions.
    Mr. Coble. Thank you, Madam Chairman.
    Good to have you all with us.
    Mr. Passmore--and I am going to give Mr. Porcari a chance 
to respond after you respond--as I read Mr. Porcari's comments, 
he indicates that the auto insurance industry sets the 
insurance premium prices using Ford parts and then gives the 
consumers less expensive alternative parts and, furthermore, 
suggests that the insurance companies perhaps don't inform the 
consumer when they are getting these alternative parts.
    Now, what say you to that?
    And then we will hear from Mr. Porcari.
    Mr. Passmore. Well, I would say neither one of those 
statements are true.
    First of all, regarding the question of rates, rates are 
set based on historical loss data. And that is based on 
whatever has been paid for repairs in the past. And I think you 
heard me say in my testimony, the market for replacement parts 
is currently 70 percent car company parts and 13 percent 
aftermarket parts and 12 percent salvage parts. So that is the 
kind of marketplace that is being reflected in the loss costs 
that had been paid by insurers up to this ponit.
    And, going forward, if you change that market, you know, if 
that 70 percent becomes 90 percent, then it is reasonable to 
assume the loss costs are going to increase. And that could 
impact rates in the long run.
    Mr. Coble. Mr. Porcari, did I interpret you correctly?
    Mr. Porcari. Yes, you did.
    When a new vehicle is released by Ford, before the vehicle 
is sold we are required to provide to various insurance 
companies across the country the price of the components that 
go into making that vehicle as well as the time it takes to 
repair the vehicle for certain repairs.
    That is the rate; those are the prices that insurance 
companies use to set the policy.
    Mr. Passmore. Well, I don't know if that is--I don't 
believe that is true. It is true that there wouldn't be as much 
loss as for a brand-new model of a vehicle, and I guess you 
would have to have a reference point at some point, but it is 
also true that vehicles that have just been--you know, the 
first year of manufacture, probably don't have aftermarket 
options available.
    Perhaps some others could respond to that.
    Mr. Coble. Well, let me move along before the red light 
illuminates again.
    Is it not true, gentlemen, that all States permit the use 
of alternative collision repair parts and that most States have 
laws ensuring disclosure to the consumer when they are used, 
along with a good number of States that require those parts to 
be of like kind and quality in form, fit, and finish? Is that 
correct?
    Mr. Passmore. That is correct. That is correct. Thirty-nine 
States require that you have to identify the parts being used 
on the estimate. Another 37 States require specific disclosure 
that aftermarket parts have been used; that is after you have 
already listed them. And 31 States require that your disclosure 
includes that the warranty on the non-car-company parts is not 
provided by the car company, it is provided by the company that 
manufactured them.
    Mr. Coble. Now, Mr. Saidman, I have ignored, not 
intentionally, you and Mr. Gillis. Do either of you want to get 
your oars into these waters?
    Mr. Saidman. No, that is not my----
    Mr. Coble. Mr. Gillis?
    Mr. Gillis. Yes, I think there are more than adequate 
consumer protections in every State. And those protections not 
only are important for consumers but they foster competition.
    Mr. Coble. I have no further questions. Thank you, Madam 
Chair.
    Ms. Lofgren. The gentleman yields back. We will turn to Mr. 
Gonzalez, who has been sitting here from the beginning, before 
Ms. Jackson Lee.
    Mr. Gonzalez. Thank you very much, Madam Chair.
    Just real quick, Mr. Saidman, in your written testimony, 
you read it, ``A design patent protects only the outward 
appearance of a product as shown in the figures of design and 
so on. Unlike a utility patent, a design patent does not 
protect the function or structure of the product, only how it 
looks.''
    Mr. Saidman. Correct.
    Mr. Gonzalez. Okay. And the courts seem to be agreeing with 
you. And, yet, we know that Mr. Gillis in, not his testimony, 
but in his response said, the objective of having the 
alternatives is replication, is appearance. Right?
    Mr. Saidman. Exactly.
    Mr. Gonzalez. Okay. So now that is where Congress comes in. 
Because the courts are basically saying, if you want to do 
something about it, go to Congress. And we are here today. So, 
as Members of Congress, we can actually take a lot of things 
into consideration if we are going to modify a law that the 
courts now would be operating under.
    You said there is a public policy consideration as to this 
design patent. In this particular instance, identify the public 
policy consideration. I mean, why would we have the law? I 
mean, there has to be a public policy consideration in 
everything that we do.
    Mr. Saidman. Well, the public policy is expressed in the 
Constitution, to promote progress of the science, to promote 
the useful arts, to reward innovators, to encourage research 
and development, and to produce new and original designs. And 
the deal that is made with the designers is that we will give 
you a monopoly for a limited period of time in exchange for 
your efforts and your investment and your original designs. And 
the public policy is simply to adhere to that.
    Mr. Gonzalez. Congress would have to believe that we are 
not frustrating that public policy by making some sort of a 
carveout or exception in this case. Is that correct?
    Mr. Saidman. Yes.
    Mr. Gonzalez. Okay. But I think everyone really looks 
through that argument and doesn't really see that it is quite 
valid. All they know is that it is probably cornering the 
market. It is about having a monopoly on replacement parts.
    I mean, is that what really is going on? Because I think 
many Members just look at it--I think Mr. Issa kind of alluded 
to it--and I am not speaking for him, because he could have 
meant something totally different. But, you know, you guys are 
competitors. And right now someone has a corner on the market. 
And what is the impact? What is the public policy impact? The 
impact is, the consumer pays a lot more money. I don't think 
that is really in dispute.
    Now, Mr. Porcari, you may dispute that. I still remember we 
used to say, if you sell me a car for 40,000 bucks, you are 
selling me the whole package and you are putting it together 
for me. But if I ask that you sell it to me piece by piece, I 
would probably have a quarter-of-a-million-dollar car.
    I don't know if you agree with that, but what I am trying 
to point out is just what is practical out there, what is 
really going on in American society. And the utility of law 
really should reflect what is going on out there in American 
society and how the best interests of that society are served.
    I happen to think that if something costs a consumer an 
inordinate amount of money, unnecessary. And I don't think 
that--I know what you said, Mr. Porcari. I think you said, if 
it was so unreasonably priced, it would not be affordable. 
Maybe something doesn't have to be unaffordable before it is 
unnecessarily expensive. And that is not good for our economy.
    So if you would like to respond to what I think. The public 
is having this conversation as we speak, if, in fact, they are 
watching or if they are interested in the subject matter.
    Mr. Porcari. Well, one, we are very proud of our cars and 
our affordable replacement costs.
    I will give you the example that Mr. Gillis used, and that 
is a Dell laptop or a Dell computer. I have a Dell laptop, a 
Dell Latitude D630, and I looked up the replacement part cost 
of that screen. If I were to break my LCD screen, it would cost 
$245 to get a replacement screen.
    I also have a 2010 Ford SHO Taurus--a great car, made in 
Chicago, the newer version of the one Mr. Gillis showed you. If 
I were to dent my fender, that fender has a replacement part 
cost, manufacturer's retail price, of $303. But I found it on 
sale on the Internet--two clicks on Google, anyone could find 
it--for $216.47, less than the replacement cost of that Dell 
laptop screen.
    I don't think our parts are overpriced. I think they are 
affordable, and that is why people buy Ford cars.
    Mr. Gonzalez. Mr. Gillis, I probably have 30 seconds left.
    Mr. Gillis. Okay. Yeah, first of all, it is ridiculous that 
Mr. Porcari would have to pay $230 for a flat screen for his 
Dell, but the reason why he has to is because he can only get 
that from Dell. And that is our point.
    Mr. Saidman admitted that these designs were not to protect 
the car companies from each other, but, in his words, to stop 
competition. And that is what we are talking about. I am not a 
patent attorney, but I just heard him say, ``We are not worried 
about car companies copying each other; we are worried about 
stopping the competition.''
    And, from the consumer perspective, we are worried about 
keeping competition opening. Seventy-three percent of the car 
parts out there have no competition right now.
    Mr. Gonzalez. Thank you very much.
    Ms. Lofgren. Thank you.
    We will turn now to Congressman Issa.
    Mr. Issa. Thank you, Madam Chair.
    Mr. Gillis, you made a statement that I just want to make 
sure we correct for the record. You cited the amount of 
recalls. If you are not aware--hopefully after the Toyota 
hearings, you would be aware--that if you copy perfectly cars 
subject to recall, you will get recallable parts.
    So, unless you are implying that these companies have vast 
engineering that somehow would make them better than the 
original parts and less likely for a recall, maybe that wasn't 
the best citing.
    Mr. Gillis. Well, actually, Congressman, it is not a bad 
idea, because these parts also can be recalled by the U.S. 
Department of Transportation, the same way car company----
    Mr. Issa. Well, I appreciate that. But if they copied the 
foot pedal that was a little too long on a Toyota, they would 
end up hitting the carpet just the same.
    You know, I spent 20 years designing and producing for the 
auto aftermarket. Nobody could be more interested in not 
allowing a monopoly of the car companies. I was a participant 
and a contributor to the unsuccessful Chrysler case in which we 
tried to define and thought we were accurate that, inside a car 
dealership, the car company is a monopoly. And so, when you 
want to sell an aftermarket radio or an aftermarket car alarm, 
in the case of my company, that the prohibition by the 
manufacturer and the insistence on only their parts was, in 
fact, an antitrust violation. No question at all, I would be 
there for you relative to the aftermarket.
    In this case, I have a different concern. And maybe I can 
use Mr. Porcari as my stalking horse for this. If your interest 
is related to your creation of an art form or a design--as, by 
definition, when you go to the Patent Office, you say it is--
then isn't it fair to say that the question of the quality of a 
replacement part, the durability, all of that, is actually not 
within the purview of this Committee? So would you mind if we 
only address the portion that is related to the rights in a 
design patent?
    Mr. Porcari. Congressman Smith, you are correct that----
    Mr. Issa. Thank you, but I am a little less than 
Congressman Smith. I am Issa. But that is all right.
    Mr. Porcari. Oh, I am sorry. Congressman Issa, I am sorry. 
I apologize.
    You are correct when it comes to enforceability of design 
patent. But by losing our ability to enforce the patent, we are 
also losing our ability to control who is making copy of our--
--
    Mr. Issa. And I want to go to that immediately, because I 
want to try to address both, if I can, quickly.
    Currently, you get design patents for 14 years, 10 years 
minimum under TRIPS, in the U.S., right? Ten years is a very 
long time in the cycle of an automobile, isn't it? Basically, 
at the end of 10 years, you are not interested in making the 
parts anymore. Wouldn't that be true?
    Mr. Porcari. We are required by law to make the parts for 
10 years, but yes.
    Mr. Issa. Yeah, it gets a little tough. You end up in the 
salvage yard. I have a lot of historical automobiles, and, 
trust me, I know I can get certain parts for the Model T, but 
they are pretty limited.
    So, let's go through this. If we were to protect your 
original design, not based on the historic design patent, but 
to create a category much more similar to the way the French 
protect dress designs based on fashion, and we were to give you 
a lesser time, but, in fact, that lesser time was shorter than 
the cycle of the automobile but long enough for the original 
first use of what some people might call trade dress, even that 
goes on in perpetuity, but to that part. So we give you a 
patent on the whole car for, let's say, 3 years from the 
origination.
    If you absolutely had that, would you be more satisfied 
that you had that? And, if not, why not?
    Mr. Porcari. Enforcing a design patent is very expensive--
millions of dollars. And we have a very good track record--we 
have sued three times, not two--but even we are at about a 50 
percent track record. But----
    Mr. Issa. Okay. But then let me make a follow-up if the 
``if not, why not'' appears to be you are not interested. If, 
on the other hand, we said to Ford, GM, Chrysler, Toyota, and 
the rest, look, in this country we are perfectly willing to 
allow you to get your royalties, but those royalties cannot be 
unreasonably withheld, let's say, by everyone who has ISO 
9,000, meets the basic criteria for, quote, ``quality,'' a 
compulsory license that you could not have a monopoly, but you 
could, like the copyright holders in most cases, you could be 
guaranteed income but not guaranteed a monopoly, would you be 
interested in that?
    Mr. Porcari. We would study it, specifically if it included 
the elimination of these enforcement issues.
    Mr. Issa. Thank you, Madam Chair. I just regret that there 
is but so little time to ask.
    Ms. Lofgren. Thank you, Mr. Issa.
    Ms. Jackson Lee is not present at the moment, so we will go 
to Mr. Chaffetz and then to Ms. Jackson Lee.
    Mr. Chaffetz. Thank you, Madam Chair.
    I would like to, just so he can finish this, yield my time 
to Mr. Issa.
    Ms. Lofgren. Of course.
    Mr. Issa. So you were saying, though, that the idea of a 
compulsory license with provisions that would give you the 
reasonable control over your license, would that be of interest 
to you? You said there were other factors. Briefly, can you 
tell Mr. Chaffetz those?
    Mr. Porcari. Yes, certainly.
    Our parts frequently include contribution by suppliers. I 
cannot give away what I do not own. So, for example, in a 
headlight, there are dozens, if not hundreds, of patents owned 
by the supplier on that headlight. I merely create the original 
appearance, the ornamental appearance of the headlight. How it 
is made, how it works are not mine to give.
    Mr. Issa. Certainly. So we recognize that utility patents 
underlying would not be included, and therefore they would have 
to get those utility rights or they couldn't do the, if you 
will, design.
    Mr. Gillis, are you intrigued by that at all?
    And I want to yield back to the gentleman.
    Mr. Gillis. Yes, I am intrigued by that. And the question 
becomes, will the car companies offer these in the open market 
at fair and reasonable prices?
    Mr. Issa. Certainly, a licensee would offer them in the 
open market.
    Mr. Gillis. If I understand, what you are saying is that 
the car companies would be given the patent rights; however, 
they would have to share licenses to manufacture those----
    Mr. Issa. Right. Everyone up here on the dais recognizes 
that, let's say in the music business, that there is a 
compulsory license. If I want to perform ``I've Got You, 
Babe,'' for which I would be paid very little and booed, I 
have----
    Mr. Gillis. I would pay to see you sing.
    Mr. Issa. Thank you. Many might. But I have to pay. And 
yet, I have a right--there is a compulsory license in which I 
have a right to get that. That situation exists in other law. 
It also exists in some transition in the patent rights in 
health care. So it is not without precedent in U.S. law. It 
would not be totally new.
    But I think, for all of us on the dais who have seen both 
requests by the manufacturers to have totally exclusive rights, 
which you obviously object to, and then the idea that they have 
no rights or that immediately the product be available, and 
without control over quality, although we have a limited role 
in that control over quality and so on, the fact is that 
confusion as to source and quality and the harm to the Ford 
emblem as to quality is, in fact, within the purview of this 
Committee.
    And that is why I asked if we could begin, notwithstanding 
the gentlelady's starting point, talking in terms of a 
solution, rather than simply two problems that come back to 
this Committee perennially.
    Mr. Gillis. Well, first of all, again, I have to disclose 
that I am not a patent attorney. However, there is some 
question as to whether or not design patents should even have 
been issued to these particular parts, because they are, in 
many cases, functional parts of the car. A fender performs a 
number of functions. So that is one issue that would have to be 
addressed.
    If, in fact, there was consensus that these are 
legitimately earned and important design patents, then your 
solution, as long as it opened the market to consumers so that 
we would have many choices at fair prices, sounds reasonable. 
But I think first you would have to address the issue of 
whether or not the patents are, in effect, appropriate in the 
beginning.
    Mr. Issa. Certainly.
    Other comments, particularly--I mean, I think from the 
dais, we are not prepared to strike down design patents without 
recognizing that it goes far beyond the auto company right now, 
with similar--that the Dell notebook has a design patent on it, 
too.
    Please, anyone else that would comment on this direction?
    Mr. Porcari. Sure. A couple of comments. Perry can tell you 
all about the history of design patent law, but, for example, 
on functionality versus ornamentality, we make, I believe, 12 
different grills that fit an F-150, each looking completely 
different than the other to distinguish our series. It, by 
definition, says that these are not functional grills. There 
are many, many ways to make a grill. And that is not enough. 
The public can probably buy 40 to 50 aftermarket grills for 
that F-150.
    So I think, from a functionality argument, we clearly 
proved in court that these patents are not functional, that 
they are ornamental.
    Mr. Saidman. That is, in fact, the test for ornamentality. 
If the design can be embodied in any of a number of different 
ways and perform the same function, then it is not dictated by 
function and is, therefore, ornamental and meets the statutory 
requirement.
    Mr. Chaffetz. Thank you, Madam Chair. I see our time is 
within seconds, so we will come in under, and yield back.
    Ms. Lofgren. All right. The gentleman yields back.
    We turn now to the gentlelady from Texas, Congresswoman 
Jackson Lee.
    Ms. Jackson Lee. Thank you very much, Madam Chair.
    And I thank the witnesses for their presence here today.
    I am just going to start with Mr. Porcari.
    What is the body of law that you are basing your argument 
on, as you represent the auto manufacturers? Expanding beyond 
patent, but do you have case law that discerns between the 
automobile design, which means if you come out with a flying 
Thunderbird that really flies and you want no one to know about 
that--and I would get that real quick.
    Mr. Porcari. You haven't seen our new Ford SHO Taurus. It 
flies.
    Ms. Jackson Lee. Does it really?
    Mr. Porcari. But----
    Ms. Jackson Lee. Excuse us for a little engagement. I want 
you to know that your Ford Taurus station wagon took my 
children around. We had a good time in it.
    Mr. Porcari. Good.
    Ms. Jackson Lee. But let me--what is the body of law beyond 
patent law for the grills and extra?
    Mr. Porcari. There is, in trademark law--I am not a 
trademark expert, trade dress--but, within patents, there are 
three types of patents. There are utility patents that cover 
the functional aspects of an article. There are design patents 
that address its ornamental appearance. And then there are 
plant patents, which are quite similar to design patents; they 
are directed to the appearance of an asexually reproducing 
plant.
    So we, Ford, did not utilize trade dress or trademark 
arguments. We focused exclusively on design patents. We 
actually didn't even bring in utility patents, because we 
really wanted to clarify the issue and bring it into sharp 
focus that car parts are protectable by design patents.
    Ms. Jackson Lee. Give me the last one. You had utility, 
ornamental, and what is the third one?
    Mr. Porcari. Plants.
    Ms. Jackson Lee. So you focus mostly on the actual design 
and consider the grill and other parts part of that design.
    Mr. Porcari. Right.
    Ms. Jackson Lee. Is there a case law that has recently gone 
through the courts that has reinforced your position?
    Mr. Porcari. There are--and Perry is much better at giving 
you case law citations.
    Ms. Jackson Lee. Well, I am going to yield to him in a 
moment before I go to Mr. Gillis there.
    Mr. Porcari. Our cases--we had three cases in the ITC; one 
went to decision. In that case, the ITC judge found that the 
designs were valid and infringed.
    I have heard reference to the Chrysler Auto Body case, a 
Sixth Circuit case I believe, years back, on a summary 
judgment, found that the Chrysler Dakota fender was functional. 
That never went to trial; it was done on a summary judgment. 
And we think the court got it wrong.
    Ms. Jackson Lee. Could I ask your team to provide this 
Committee with an update on case law, whether it is 
administrative decisions and/or case law, that you have relied 
upon?
    Mr. Porcari. Yes.
    Ms. Jackson Lee. I would appreciate that.
    Mr. Saidman, would you answer the same question but, in 
addition to that, act as a--as this is a tutorial, very 
briefly, and tell me whether or not competitive issues are 
taken into consideration on the design cases under patent law. 
Are they basically strictly on the idea that someone proves 
that it is unique to them and then a decision is then made?
    Mr. Saidman. Well, design patents are part of the 35 United 
States Code. It is a distinctly different kind of patent than a 
utility patent. Design patent protects only the look of a 
product, how it looks, not how it works. And the statutory 
criteria are that it must be novel, it must be non-obvious to a 
designer of ordinary skill in that field, and it must be 
nonfunctional or ornamental, same thing. It is nonfunctional 
when there are other designs that can embody the same function.
    So when those statutory criteria are met, the design patent 
is issued. And the owner has a 14-year period of exclusivity in 
that particular design.
    Ms. Jackson Lee. So how would you solve a problem that 
consumers raise, that the cost is higher, that when they go to 
their local car fix-it shop or their distributor shop--I guess 
there is a lot of do-it-yourself going on right now--and the 
distributors can't get it and the consumer can't get it? How do 
you respond to that?
    Mr. Saidman. Well, I think----
    Ms. Jackson Lee. Couldn't a distributor buy it from the 
manufacturer?
    Mr. Saidman. The distributor gets it from the manufacturer 
and resells it, I understand, to the end seller.
    Ms. Jackson Lee. Right.
    Mr. Saidman. But I am not sure exactly how the chain of 
distribution works.
    Ms. Jackson Lee. Then let's--and I know that. But I am 
trying to get to how the distributor can, in fact, be made 
whole by getting this in a manner that allows them to lower the 
cost for the consumer.
    Mr. Saidman. Well, you know, part of--the fact of the 
matter is that the patent system creates the ability of the 
patent owner to control the price within a certain range. They 
can't flout what the market says, they can't price their goods 
outrageously, but the way the patent system works is that the 
patent owners have the ability to exclude others from making, 
using, or selling the patented item.
    That is the way it works across all industries. That is the 
way it works in pharmaceuticals. You don't have the generic-
drug makers coming to Congress and saying, ``We want to make 
generic drugs before the patents on these drugs expire.'' They 
sit, they wait, the patents expire, and then they jump into the 
market, and you have the increased competition.
    Mr. Issa. If the gentlelady could yield?
    Ms. Jackson Lee. I will yield if the Chairwoman would 
indulge us in additional time.
    Mr. Issa. I have to ask unanimous consent for an additional 
minute.
    Ms. Lofgren. Without objection.
    Ms. Jackson Lee. And I have a question for Mr. Gillis, so I 
will yield to you for a moment.
    Mr. Issa. I would only point out that, yes, the generics 
are in here asking for early rights all the time.
    Ms. Jackson Lee. I was going to say that, as well.
    Ms. Lofgren. And the gentleman yields back.
    Ms. Jackson Lee. That is not his fault for not being keen 
on what generics are doing in pharmaceuticals.
    But let me just quickly ask--Mr. Gillis, I went to the 
gentleman first so that you could have an opportunity to 
respond, if you will.
    One of the questions, as you respond--because you know my 
line of reasoning was the impact on consumers--respond to the 
concern about safety. Maybe it is someone putting on a grill 
incorrectly, impacting on Ford or someone else negatively when 
that grill falls off. So why don't you respond to safety and 
the competition issue?
    Mr. Gillis. Thank you very much, Congresswoman.
    There are two safety issues. First and foremost is the fact 
that many consumers who can't afford these overpriced parts may 
not replace a mirror, they may not replace certain parts of the 
car that are important for the safe operation of that vehicle 
simply because they can't afford to. So that is the number-one 
problem.
    The number-two problem, and it sort of alludes to the 
Congresswoman's question, these parts, if there are safety 
issues associated with them, can be recalled by the U.S. 
Department of Transportation National Highway Traffic Safety 
Administration. NHTSA does have the ability to take 
responsibility for these parts. So that really shouldn't be an 
issue.
    It really goes back to your first question of competition. 
And I have to go back to this drawing right here. When you 
think about the fact that 73 percent of the parts are only 
available from one source, that number has been pretty 
consistent for all of these years, and it is only recently that 
we have seen this exponential increase in these patents. So 
that is why we suggest that this is a business strategy and not 
a strategy to protect those fenders, which they have been 
making since the beginning of this chart.
    Ms. Lofgren. The gentlelady yields back.
    And we have no additional Members----
    Ms. Jackson Lee. I yield back.
    Ms. Lofgren [continuing]. Seeking time, so I would like to 
thank all of the witnesses for the testimony today.
    Without objection, Members will have 5 legislative days to 
submit additional written questions, which we will forward to 
the witnesses. And, if that should occur, we would ask that you 
answer as promptly as you can so that your answers could be 
made part of the record. And the record will remain open for 5 
legislative days with the submission of other material.
    I would just like to note, in closing, that the bill which 
I have introduced--we have had a wide-ranging discussion, but 
the bill only applies to the enforcement of design patents 
against repair parts. And, in that case, the repair parts must 
have the sole purpose of restoring something to their original 
purpose. So this is really, actually a very narrow bill 
oriented to a very large problem for consumers. And I just 
thought it was worth reiterating that point, since we have had 
a wide-ranging discussion.
    And, clearly, Congress has a role to play in the patent 
law. I was interested to hear the three kinds of patents, but 
there is still another until Bilski is decided: business 
methods. So sometimes the courts answer the question before the 
Congress gets around to it, but that doesn't preclude Congress 
from weighing in when necessary.
    So we appreciate your testimony.
    And, with that, this hearing is adjourned.
    [Whereupon, at 4:53 p.m., the Committee was adjourned.]
                            A P P E N D I X

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