WASHINGTON : Effort to Halt Piracy of Industrial Designs Revs Up Again
The possibility of legislation prohibiting the pirating of industrial designs has sparked a hot debate between automobile manufacturers and the independent parts and service industry even before Congress kicks the new session into drive.
The proposed Industrial Design Anti-Piracy Act, which has been stalled for several years in Congress, would impose a 10-year design copyright on nearly every design that is original and distinctive. It is intended to bridge the gap between the artistic nature of current copyright law and the functional nature of patent protection.
The bill’s powerful co-sponsors, House Majority Leader Richard A. Gephardt (D-Mo.) and House Minority Leader Robert H. Michel (R-Ill.) have said they are not sure when they will reintroduce the measure. But both have expressed a continuing interest in it.
“It is time that the United States act to stem the losses in export sales and jobs that result from inadequate intellectual property protection and product counterfeiting by our trading partners,” Michel said.
Manufacturers say they support the legislation because it would protect their long-term investment in the development and design of specific parts and protect consumers by guaranteeing high-quality and safe parts. Auto manufacturers say that they are interested only in exterior parts made from sheet metal, such as hoods, fenders and doors.
“Current law does not adequately protect the auto makers’ investment,” said Kenneth W. Myers, parts and service marketing manager at Ford Motor Co. “Copyright law focuses on objects that are purely artistic, while the patent law system focuses on the mechanical aspects of an object. Neither adequately protects industrial designs.”
Pure bunk, say the “aftermarket” service and parts people. They contend that, because it is getting more difficult for manufacturers to make a profit from the sale of cars, they are trying to legislate a sure portion of the $135-billion parts and service aftermarket.
This side of the debate is also concerned that the bill is vague enough to cover interior parts, too.
“The Automotive Parts & Accessories Assn. is extremely concerned that the broad scope of design protection legislation being considered will provide the new car manufacturers with a 10-year, government-protected monopoly over the production and distribution of a wide array of replacement and add-on parts for vehicles,” said Julian C. Morris, the group’s president. “The anti-piracy premise of this bill is little more than an attempt by the car companies to grab the market share they have lost through the years in a competitive market.”
In fact, Project 2000, a long-range, strategic planning effort by the National Automobile Dealers Assn. has recommended to dealers nationwide that they pursue the service and parts aftermarkets because of declining profits from new-car sales.
“Our problem is that we have the same size pie but more players,” said Allan Wilbur, NADA’s executive director of public affairs. “In the next few years, the areas for greater emphasis should be on service, parts and, when possible, the finance and insurance business.”
Added Wilbur: “Small-town dealers already know this. If they don’t give good service, they don’t survive. But 80% of the cars sold nationwide are sold by only 20% of the dealers.”
Much of the debate was initiated by the insurance industry when it began encouraging the use of less expensive parts rather than those made by the original manufacturers. The aftermarket proponents still wrap themselves in the consumer side of the issue, saying affordability, convenience and competition are at stake.
But the manufacturers respond that safety, quality and fairness are on their side.
“It is hard for American manufacturers to compete with the inexpensive, imitation parts made abroad,” said Anne Carlson of the Motor Vehicle Manufacturers Assn. “Many of these companies are using ungalvanized steel that rusts prematurely and they are making copies of a copy, so that they don’t fit properly. At the same time, they have lower labor costs and few of the environmental laws that we have to work with here.”
All parts, regardless of where they are manufactured, have to live up to the same standards, countered Linda Hoffman, vice president of government affairs for the parts and accessories organization. “They say they’re talking about design, but invariably it has something to do with getting the advantage over their competition in the marketplace.”
FDIC Plan Would Have Banks Purchase Stock
Late this month or early next, the Bush Administration will propose measures to strengthen the deposit insurance fund for the nation’s banks and remove Depression-era restrictions on banking activities. In doing so, it will signal the official start of a lengthy and important debate in Congress over the future of banking.
In a time-honored Washington tradition, the Administration has floated one of its ideas as a trial balloon, and reaction has been predictably divided.
Leaked last week was word of a proposal to bolster the ailing Federal Deposit Insurance Corp. fund by requiring banks to buy preferred stock from the agency.
A spokeswoman for the FDIC quickly confirmed the report as accurate and pointed out that it was one of several ideas being discussed.
Banks would have to buy the stock in proportion to their deposits, the same way they pay for FDIC insurance. Officials have discussed mandating stock purchases ranging from 50 cents per $100 of deposits to $1 per $100. The plan would raise $14 billion to $28 billion for the insurance fund.
As a sweetener for the banks, they would receive market-rate interest on the stock and could count it as part of the capital they are required to have on hand to meet federal standards. But that hasn’t removed all the bad taste.
Bert Ely, an Alexandria, Va., banking consultant, was quick to blast the concept as a thinly disguised tax that would damage healthy banks.
“In effect, the safe drivers of the banking world are paying higher and higher deposit insurance premiums because the regulatory process has done a miserable job of catching banking’s drunken drivers,” said Ely.
But the banking industry was not so fast to condemn the proposal.
“I don’t know that banks are necessarily going to oppose this,” said Joe Belew, president of the Consumer Bankers Assn., which represents the nation’s smaller banks.
“They are terribly worried about any move toward a premium increase because profitability is hurting so much in the industry. They are equally concerned about that there not be a taxpayer bailout. This plan has some attractive aspects.”
But Belew and others see the proposal as only the first in a series of measures and issues that will dominate the banking agenda in Congress in the coming session.
