22
Aug
07

Patents keep Ford trucks in the lead

WASHINGTON: F-150 pickup truck a unique design protected by patent, or an easily replaceable generic part?

The answer to that question will determine winners in the $16 billion-a-year US market for vehicle replacement parts. So far Ford, the second-largest US automaker, has the upper hand, using patents as the latest tool in a 20-year battle to keep imported parts out of the country.

On August 7, the Bush administration let stand an earlier ruling by the US International Trade Commission that bans imported versions of headlights and six other patented parts for the F-150. The generic-parts industry, which produces $2 billion a year in look-alike components, says it will challenge the decision in court.

The dispute pits parts distributors such as Keystone Automotive Industries against automakers, who control about 80% of the replacement-parts market, and will affect how much consumers and insurance companies pay to fix vehicles. “This attack using patents is using a different mechanism to achieve monopoly pricing,” said David Snyder, vice-president and assistant general counsel for the American Insurance Association, a Washington trade group that supported the importers’ side in the trade case. “It’s a battle in a long-running war.”

The two-decade dispute over replacement parts has led automakers to lobby for federal legislation to give repair parts design patents, advertise the “superiority” of original equipment parts, and in at least one case sue the generic-parts industry.

Patenting individual vehicle parts and then fighting to protect the patents is a more recent tactic. In 2001, Ford started obtaining patents on 80 of the F-150’s body parts that it said had unique designs.

After some of those designs started showing up in imports, Ford responded in 2005 by filing a complaint with the trade commission. “The scope of the problem has grown and we are losing double-digits in sales to copycats,” said Damian Porcari, an attorney with Dearborn, Michigan-based Ford’s intellectual property group. “They have lowered prices by stealing from Ford,” he said, estimating the company loses about $400 million a year to generic imports.

Ford wants the parts protected because it cost $1 billion to redesign the truck in 2003, Porcari said. “Car design is an art,” he said. “Months of work go into designing fenders. These guys are designers, not engineers.”

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