ITC says it will review Ford Mustang’s claim of alleged patent infringements by AM

WASHINGTON--Ford Motor Company dropped the other shoe on the independent parts replacement market, this time centering on alleged patent infringement on Mustang parts.

The U.S. International Trade Commission stated on May 29th that it will review a second case filed by Ford over replacement parts for Mustang cars by LKQ Corp. and its Keystone Automotive Industries Inc. unit.

Ford Motor Co.’s patent-infringement complaint over the Mustang parts will be reviewed by the ITC which said it will investigate claims by the second-biggest U.S.-based automaker that the replacement parts violate its patents on designs for the hood, fender, bumper, side-view mirror and tail lamp of the Mustang.

This is not unlike the original complaint which Ford filed in late 2006 alleging patent infringement as it pertained to replicated parts for the F-150.

That case took nearly a year before the ITC rendered a split decision, claiming that Ford had justification in claiming patent violations in more than one-half of the 14 parts at issue.

As it was with the F-150, Ford is seeking to block U.S. imports of the parts by Chicago-based LKQ, Keystone and six other companies, including four based in Taiwan.

That case is still in appeal and has cost the industry several millions of dollars to defend.

At the time, Keystone president and CEO Rick Keister claimed Ford was attempting to control the market for replacements parts such as bumpers and fenders, gaining a position through patent enforcement which they were unable to secure in the marketplace.

It has been nearly three decades since the independent collision parts aftermarket had busted the once sacrosanct monopoly on crash parts which was held by the carmakers for more than 60 years.

From that battle, a group representing Keystone--now LKQ-- and other makers and importers of independent replacement parts founded the Quality Parts Coalition.

The Coalition has as its objective the passage of “repair parts legislation” by Congress which would exempt replacement parts--spare parts--from the tenets of patent laws.

In reality, a loose collection of spare parts for any make or model automobile is not an attempt by an outside agency to replicate the looks of the entire automobile or to negate the intrinsic value of design integrity built into a particular model.

The spare parts exist to give consumers a financial choice as to what parts to use after an accident, some of which cost may not be borne by a third party such as an insurance company.

Generally, independently manufactured crash parts are less expensive to produce than those which are supplied by the OEs and give to the public a value that just does not exist when carmakers monopolize the parts replacement field.

Spare parts legislation such as that now sought in the United States has been passed in other countries such as Australia, New Zealand and within the European Economic Union.

``By instituting this investigation, the ITC has not yet made any decision on the merits of the case,’’ the agency said in a statement.

The designs came from an overhaul of the Mustang introduced with the 2005 model. The patents, for ornamental features of the cars, last 14 years, a shorter term than for patents on inventions.

 Keystone and other replacement parts companies are legally seeking to overturn an ITC decision made last year that blocked imports of parts for the F-150 truck after they were found to violate Ford design patents.
The Quality Parts Coalition, which has the full support of the Automotive Body Parts Association, among other groups, is comprised of replacement parts companies and other associations.

QPC has long accused Ford and other automakers of abusing the U.S. patent system and it’s the impetus for lobbying Congress to pass legislation that would create an exemption to U.S. design patent laws when it comes to repair parts.
Said coalition Executive Director Eileen Sottile, who also is a vice president for Government Relations for LKQ Corp., “This clearly shows the car companies’ attempt to monopolize the replacement parts industry and consumers should be highly concerned with these new developments.”

Ford is currently struggling to counter a decline in car sales and contends American workers will be hurt if the imports are allowed to continue.

The company claims that all the Ford parts for the Mustang are made at plants in Michigan and Indiana which together employ almost 7,500 workers, according to the complaint.

The replacement parts are made in Asia.

While General Motors Corp. is the largest U.S. automaker, it has been Ford which has taken the lead in claiming patent infringement on spare parts.

Commenting on this latest turn of events, ABPA Chairman Charlie Hogarty--a retired Keystone president--said, “We knew this was coming and it was only a matter of time. If there is any silver lining to this cloud, it can only be that for those within the independent parts industry, there has to be more than a few key companies hauling water for everyone else.”

Remarked ABPA Executive Director Stan Rodman, “Our members better get serious about protecting their businesses or they are not going to have them.”

He added, “We will be making another solicitation in late July among our members to support the Quality Parts Coalition again with donations keyed to container imports.

“The filing of this second ITC case, regardless of the outcome, has to finally convince them that we have a problem and we need their support in working for legislative relief,” he added.

The case is In the Matter of Certain Automotive Parts, 337- 651, U.S. International Trade Commission (Washington).