Last week, President Biden issued an executive order promoting competition in the US economy. As a partner, Elizabeth Haas, points out, the antitrust implications are considerable. Of the 72 different initiatives of the OE, the question of the future of the “right to repair” will have an impact on manufacturers.
In the fact sheet accompanying President Biden’s OE, the White House notes its intention to “[m]Make it easier and cheaper to repair the items you own by preventing manufacturers from banning self-repairs or third-party repairs of their products. The fact sheet calls out “[p]Powerful equipment manufacturers “who” use proprietary repair tools, software and diagnostics to prevent others from making repairs. ” The OE itself directs the chairman of the Federal Trade Commission to exercise the regulatory power of the Commission to remedy “unfair anti-competitive restrictions on third-party repair or self-repair of items, such as restrictions imposed by powerful manufacturers that prevent farmers from repairing equipment. “In May 2021, although before the current president took office, the FTC released a report to Congress concluding that” there is little evidence to substantiate manufacturers’ justifications for the repair restrictions. ”It is too early to determine what the FTC regulations will look like, but given the Biden administration’s elevation of what has always been an issue addressed at the level state, if at all, there is little reason to believe the current president will be inclined to dismiss the FTC’s May 2021 findings.
Manufacturers have advanced several arguments to support the position that only they should perform certain repairs on certain components of the equipment they manufacture. Even though the FTC rejected them in its May report to Congress, the FTC has left the door open to provide further evidence. It is essential that manufacturers take this opportunity to present more evidence during the rulemaking process.
First, manufacturers argue that asserting and defending their intellectual property rights is essential for innovation and growth. They argue that providing individuals and independent repair shops with access to proprietary information, parts, tools and equipment without the contractual guarantees currently in place between manufacturers and affiliated service providers would put them at risk. important to sensitive protected intellectual property and trade secrets and would require them “to reveal sensitive technical information about their products, including source code, tools and trade secrets.” They claim that any requirement that a company provide patented spare parts for repair would be contrary to a patent holder’s statutory right to prohibit others from making, using or selling their invention. patented. The FTC dismissed these concerns in May, saying “[a] a full discussion of the interplay between intellectual property and remedies is beyond the scope of this opinion. Two commissioners noted the difficulty of conducting a cost-benefit analysis of repair restrictions without an analysis of manufacturers’ intellectual property rights. During the rulemaking process, manufacturers should explain why Section 117 (c) of the Copyright Act does not undermine their arguments and why sharing trade secrets or confidential trade information with authorized repair centers does not weaken or eviscerate these allegations of trade secrets. If manufacturers intend to rely on patent law arguments, they must make them explicit.
Second, manufacturers argue that there are inherent safety and security risks associated with some consumer repairs, especially those involving embedded software that is becoming increasingly ubiquitous and complex. “Repairing” is more than just exchanging parts. These safety risks are mitigated when repairers are properly trained and have the skills to repair products to the manufacturer’s original standards. Manufacturers note that unauthorized repairs are dangerous not only for those who perform the repairs, but for end users. The FTC dismissed these arguments as lacking specific evidence. Therefore, during the regulatory development process, manufacturers must provide evidence of harm to consumers caused by unauthorized repairs in order to demonstrate that the risks are not purely theoretical. If this is not commercially feasible, manufacturers need to be more explicit about the precise types of damage consumers face as a result of unauthorized repairs. Manufacturers must also provide evidence of self-healing and third-party repairs they authorize in order to rebut any assumption that repair limits are inherently anti-competitive.
Third, manufacturers argue that unauthorized repairs can result in liability and damage to reputation. The FTC noted that it had requested data and research to support this argument, but received none. During the rulemaking process, manufacturers should provide examples of the liability they incur when independent repairers or consumers are injured during unauthorized repairs and the liability they incur when a user is injured. injured by a product that has been improperly repaired by a third party.
Fortunately for manufacturers and other tech companies who, for safety and security reasons, limit some self-repairs and third-party repairs, the regulatory process takes time, and manufacturers will have ample opportunity to present evidence for refute the current working assumptions of the FTC. . Manufacturers should continue to engage with members of Congress. FTC rules – if passed – can change from jurisdiction to jurisdiction. While this EO is a victory for self-healing advocates, they will certainly continue their efforts to push for a legislative solution. Manufacturers must ensure that they are able to present these arguments to Congress if Congress is seriously considering legislation.