©2022. Published in Landslide, Vol. 15, No. 2, December/January 2023, by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association or the copyright holder.
The right to repair products is critical. But in recent years, manufacturers have made it extremely difficult to do so. They have made parts unavailable, prevented products from working, restricted access to service manuals, and relied on intellectual property (IP),
As discussed elsewhere, repair restrictions have affected medical ventilators, military equipment, technological devices, andThis article focuses on agricultural equipment, in particular, tractors.
A Case Study: Tractors
The casual observer would be surprised by the role software plays in farm equipment. Today’s John Deere tractors “cost as much as $800,000” and “The problem is that when any of these parts fail, the machine goes into “limp mode,” which “disables most of the equipment’s functionality” until “it is repaired and
Software erects a hurdle in the form of copyright law. The Digital Millennium Copyright Act (DMCA) punishes conduct that circumvents technological protection measures (TPMs) protecting copyrighted works, which include theThe DMCA created a “triennial exemption process” that allows the Librarian of Copyrights to grant exemptions every three years Since 2015, there has been an exemption for motorized land vehicles, which includes tractors.
While this exemption is helpful for users able to circumvent the TPMs, it does not cover the trafficking of such tools, which prevents those not handy enough to fix the products themselves fromIn addition, just after the exemption was first granted in 2015, John Deere “started requiring farmers to These licenses compel users to agree that the licensed material is “protected under copyright law, trade secret law, and and that they will not “‘modify,’ ‘reverse engineer,’ or ‘reproduce’ the covered information” even though these are “necessary steps to understanding, repairing, and
These restrictions’ significant effects are exacerbated given the sensitivity of timing. The finite duration of harvesting seasons and idiosyncrasies of weather raise the stakes for each day farmers are not able to use their equipment. Just to give one example,
The role of software and importance of timing increase the leverage of manufacturers, in particular market leader John Deere. In the market for large farm tractors in 2018, for example,Deere’s power is buttressed by competitors using similar restraints, which apply This power is strengthened even more by dealer consolidation. As a result, “some farmers only have one dealership choice near them,” which can
In short, the combination of ubiquitous software, time-sensitive applications, competitors’ use of similar restraints, and dealer consolidation suggests that John Deere effectively has market power.
Because of the competitive effects of repair restrictions like those imposed by Deere, competition law would seem to offer a natural antidote. But it has not played the robust role it could. The reason is that the primary instrument for effectuating competition—antitrust law—has erected nearly impossible hurdles in front of plaintiffs making right-to-repair claims.
First, an essential facility claim requires a monopolist to share facilities necessary toBut in part because these claims could be interpreted to cover a wide array of products,
Second, courts have narrowly construed refusals to license, especially when they involve IP. For example, in In re Independent Service Organizations Antitrust Litigation (Xerox), the Federal Circuit held that a refusal to sell patented parts did not exceed “the scope of the patent grant” and
Third, tying claims require a plaintiff to show several factors: (1) two separate products, (2) coercion, (3) market power in the market for the “tying product” (the one the consumer desires), and (4) a not insubstantial amount of commerce in the market for the “tied product”In particular, courts have made it difficult for plaintiffs to
Finally, courts have hamstrung the most relevant doctrine. In Eastman Kodak Co. v. Image Technical Services,(Deere’s 53% market share in the primary market likely would not reach the ) Aftermarket power could result from customers being “locked in” to the manufacturer’s product because of high switching costs, thereby weakening the significance of the primary market. This theory could be a natural fit for claims challenging a manufacturer’s repair restrictions.
But courts soon “severely limitedand “bent over backwards to construe Most notably, several courts required plaintiffs to show that defendants changed their service policies “to exploit the installed For example, the Sixth Circuit stated that “the change in policy in Kodak was the crucial
FTC Act Section 5
Even though courts have limited antitrust law’s ability to address right-to-repair claims, there should be an available competition-based claim. Into this breach steps Section 5 of the Federal Trade Commission (FTC) Act, whichSection 5 can reach expansively to target conduct lying outside antitrust’s scope. While such an approach could be applied in a way that has few limits, the framework ) is designed to modestly expand Kodak in a predictable manner that is consistent with the decision’s rationale.
In particular, the application of Section 5 discussed here builds on the “gap filler” rationale that Susan Creighton and Thomas Krattenmaker proposed for settings in which one of the elements of anThe element targeted here is market power, as courts’ unwillingness to find this factor satisfied could be addressed by practical indicators of market power based on consumers’ lack of choice. Given developments in the past several years, the rationales underlying courts’ and commentators’ skepticism of market power in aftermarkets immediately after Kodak is less relevant today.
This Section 5 gap filler applies to five scenarios that functionally prevent consumers from having a choice.
First, multiple manufacturers could impose similarly restrictive terms. As a result, even if the manufacturer with whom the customer is dealing does not have significant market power, the use by other firms of analogous terms could effectively prevent choice.
Second, a manufacturer could have control over a separate level of the distribution chain needed to service the product. Farmers using John Deere tractors need to obtain service at certified Deere dealers. And such dealers may be the only repair facilities in the vicinity. For example, in Montana’s “58 million acres of farmland,” there are
Third, today’s range of more intrusive restrictions leads to users lacking knowledge. One of the main strands underlying hostility to Kodak aftermarket claims is a purchaser’s ability to consider the policies of a single manufacturer, engage in “lifecycle pricing” that considers these costs, and make comparisons with rivals. But today’s use of not only simple parts and servicing policies but also
Fourth is revealed market power over time. Despite the presence of suffocating policies threatening lives and livelihoods, multiple generations of purchasers are still buying the products. The inability to switch away from such restrictive policies provides an indication of equipment owners’ sustained market power.
Fifth is the importance of time-sensitive uses. In the agricultural setting discussed above, delay has dramatic consequences. Farmers suffering equipment breakdowns when a tractor is needed to harvest crops face timing constraints that increase the manufacturer’s market power as users do not have the luxury of deliberately looking to other manufacturers in a theoretically competitive primary market for alternatives.
First, there are uniquely severe anticompetitive effects. Antitrust’s typical anticompetitive effects have been higher prices and lower output, and to a lesser extent, reduced innovation and quality. The first two effects are relatively easy to measure, and (where significant enough) make consumers’ lives worse. But as concerning as these effects are, there’s a whole level of harm higher than that—in fact, significantly higher. Consumers are not “just” experiencing an anticompetitive market with higher prices, but also suffering direct effects on their lives and livelihoods. For example, farmers are not able to fix machines that are their literal livelihood. If they cannot use their tractor, they will not be able to harvest their crops. And the ability to repair broken medical ventilators, military equipment stranded on a battlefield, and wheelchairs needed for mobility affects lives. These effects present a compelling argument for the FTC to use Section 5.
Manufacturers have claimed procompetitive justifications for their repair restrictions.the focus here is IP. trademarks, and trade secrets before exploring in detail manufacturers’ primary justification: copyrights.
Design patents protectManufacturers have frequently obtained design patents in the automobile industry. Ford, for example, has claimed that its “designers create the appearance of headlamps, hoods and other parts to appeal aesthetically to customers”; that “[g]iven the importance of vehicle design, [the company] invests heavily in design and protects some of its artistic products through design patents”; and that a Design patent protection makes sense where “the design . . . make[s] some type of material aesthetic contribution to the art,” having But it does not seem appropriate for the “internal parts of a product, which no one buys for their appearance,” As Sarah Burstein has explained: “internal, mechanical parts are going to be created regardless of whether design patent protection is available,” “[t]he public gains nothing by protecting them,” “patenting such designs raises serious concerns related to circumvention of the utility patent system,” and
To do this, they have placed trademarks on “internal parts like batteries, processors, and cables” that users never see and The setting in which these issues arise—counterfeiting and importation of purportedly trademark-protected goods—is But such use is at odds with trademark law and policy in several ways.
First, it is not consistent with trademark law’s purpose, which is to: consumers will be aware of the fact that an independent servicer—which it chose— Second, under trademark law, repairers are allowed to refurbish parts as long as they do not Third, manufacturers have targeted independent repairers’ use of the manufacturers’ trademarks even though—in referring to the plaintiff’s product itself—repairers’ use of the trademark will typically be justified based on the doctrine of Finally,
Manufacturers also have sought to block independent repair organizations by using trade secrets. They have claimed that allowing these groups to service their products wouldand Despite these claims, three doctrines should prevent manufacturers from being successful. First, unlike information that gives an advantage over competitors, Second, protection does not apply when independent repairers can discover the information legally through reverse engineering.
And third, when informationthe owner may not have engaged in reasonable efforts to This could be the case “even where manufacturers have entered into confidentiality agreements with their authorized dealers” because the dealers’ repair personnel may not have In fact, the repair information could be so widely available and generally known that
In the realm of copyright law, manufacturers of video games and gaming consoles, to pick one example, have asserted thatIn particular, they contend that “‘some game console repairs may require replacing hardware components or parts of components, and
For several reasons, the copyright justification is not compelling in this setting. First, any reasonable assessment of the relationship between IP and competition law makes clear that IP rights are not absolute. Theconfirmed its decades-long approach of applying antitrust scrutiny to IP-based conduct. The Court held that it Citing cases going back to 1926, the Court explained that it
To similar effect, the D.C. Circuit in United States v. Microsoft rejected Microsoft’s assertion that the license restrictions it imposed on original equipment manufacturers were justified as theThe court explained that Microsoft “claims an absolute and unfettered right to use its intellectual property as it wishes,” but The court instead cited the long-standing proposition that
Second, Section 5 provides leeway to consider policy considerations not as directly relevant in the case law.In the right-to-repair setting, access concerns should be paramount. For starters, manufacturers have never shown that they need to control the market for service and parts to incentivize the creation of products with protectable expression. Nor would they need to do so to be motivated to service or provide parts for faulty products because—in addition to the lack of connection with protecting expression—t This favoring of access gains support from courts’ treatment of reverse engineering as fair use. Because the lesser step of repairing the system itself also would be. Finally, and innovation relies in significant part on users’ contributions—the “user innovation” highlighted by
Third, copyright doctrine supports the right to repair. The “first sale” doctrine in § 109 of the Copyright Act “allows those who have acquired products . . . considerable freedom to use, modify, and resell those products as they wish,As Pamela Samuelson has explained, this right “serves many positive functions,” including “promot[ing] broader public access to products,” “enabl[ing] preservation of products,”
Additionally,The drafters explained that Court holdings that such copying is a “reproduction” reserved to the copyright owner “call into question the right of an independent service provider . . . to even activate” a computer Section 117(c) serves a purpose that and supports repair.
Moreover, even though copyright law—in particular, the DMCA—makes unlawful the circumvention of TPMs that prevent access to copyrighted works, the legislative history and case law suggest that it was not intended to be applied in right-to-repair settings. The Register of Copyrights found that the exemption for tractors was warranted because
In enacting the DMCA, Congress was concerned that copyright owners would not “make their works . . . available on the Internet” because of the “massive piracy” resulting from theThe legislation was designed to encourage the availability of the
TheWorried about potential abuse, They explained that
Manufacturers have used copyright to target the use of not only software but also service manuals. Just to pick one example, Toshiba sent a cease and desist letter to an individual whoand courts have found that
But a service manual, whichis largely factual in nature. No one is interested in the manual because they are looking for flowery prose or creative expression. Absent access to the manual, the machine cannot be fixed. This seems to violate the foundational idea-expression dichotomy. And Nor are incentives needed to create service manuals,
In short, restrictions on the right to repair can present severe anticompetitive effects. The policy considerations relevant to Section 5 raise questions about whether this conduct can be justified by IP. It is time for competition law to address the right to repair.