A new white paper by US social justice and technology researcher Blaire O’Neal PhD claims automotive OEMs use design patents on collision parts such as steel bumpers to create a ‘backdoor’ monopoly, causing harm to consumers, local economies, and the environment.
According to O’Neal, a backdoor monopoly is created through a series of calculated business moves that appear benign at first glance, but ultimately extinguish competition.
“For OEMs, the approval and explosion of design patents for functional parts like steel bumpers is the catalyst for the backdoor monopoly. OEMs wield their patent rights to stamp out competitors through expensive, tedious litigation. The most glaring outcomes of the backdoor monopoly are higher part prices. For example, OEM-patented front bumpers are being sold up to 213 per cent higher than their non-patented counterparts,” said O’Neal.
“Part supply shortages are also becoming more common. These initial outcomes are only the beginning of a domino effect that includes more expensive repairs, higher insurance premiums, increased total losses, repairable vehicles in the waste stream, delayed repairs, more dangerous cars on the road, and considerable interruptions to consumers’ livelihoods.”
O’Neal said allowing these design patents to persist, without limits on how they can be used by grantees, is unconscionable.
“Intellectual property law is meant to benefit, not harm, the public. Transportation costs are the second highest expense for American households after housing, and with inflation outpacing growth in household median income, consumers cannot afford to bear the brunt of artificially high repair costs to increase car company profits.
“This is especially true for low-income consumers who dedicate up to 16.5 per cent more of their income to transportation expenses.”
The paper also says that the backdoor monopoly runs counter to sustainability goals in the automotive industry, with artificially high part prices contributing to increased total losses that funnel consumers into the primary market for new vehicles.
“The inflated demand for ‘new’ puts pressure on natural resources and increases the industry’s cradle to gate carbon emissions – the carbon emitted during mining and vehicle manufacturing processes. Further, more total losses mean more repairable vehicles in already taxed waste streams,” said O’Neal.
“Local and regional economies that support diverse networks of professionals and businesses also stand to lose in the OEM backdoor monopoly. The alternative auto repair market provides robust, reliable options that protect consumers’ investments and get them back on the road quickly. The negative impacts of the backdoor monopoly ripple through these networks, putting economic stress on local and regional auto repair industries already struggling in the post-pandemic economy. They cannot afford to lose customers or profit due to artificially high repair costs and excessive wait times.”
O’Neal urged legislators to end the backdoor monopoly and protect consumers, local economies, and the environment, by supporting US bills like the newly reintroduced REPAIR Act and SMART Act, and reconsider design patents for functional collision parts. She also suggested consumers consider the merits of seeking compensation from OEMs for unduly high repair costs and total losses.