By: Richard Hoffberg
The right-to-repair is the idea that consumers should be able to repair the products they own as they please. This rather simple idea has very contentious implications. These implications produce questions such as what the appropriate jurisdiction is for IP-related disputes, economic considerations, how patent and copyright protections should be treated, and what modifications to current law are necessary. Consumers would be advantaged by strengthening the right to repair because, among other benefits, it reduces waste and creates jobs by allowing consumers to repair products themselves or go to third party repair shops called independent service organizations (ISOs). Manufacturers, known more specifically as original equipment manufacturers (OEMs), are disadvantaged by this movement because it may limit their intellectual property rights and reduce their profit margins, among other detriments. Recently, the topic has had significant developments in the United States including newly enacted legislation, an agreement between private parties, and a presidential executive order which led to agency action.
The right to repair is predominantly an issue relating to businesses, so it should be up to the states to decide, right? Not exactly. States have taken up the issue and some states have enacted statute protecting the right to repair in some circumstances. But thus far, it’s incredibly limited and gives deference to federal statutes wherever possible to avoid preemption under the Supremacy Clause of the Constitution. And although it appeared to be mostly within the states’ jurisdiction, President Biden then issued an executive order commanding the Federal Trade Commission to step in. The FTC has since initiated inquiries and findings against some OEMs. President Biden’s justification for intervention, which is quite a valid one, is that limiting the right to repair fringes on anti-trust law. OEMs control the market for repair of their goods which could have Sherman Act implications. The Sherman Act is legislation from the late 19th century enacted to break up and deter monopolies that are formed in an illegal manner (monopolies that are formed through legitimate means are permissible but are rare to find). This is not the first time the federal government has acted to protect consumers in the right to repair, however. The Magnuson–Moss Warranty Act includes a provision (15 U.S.C. § 2302(b)) that suggests warranties by OEMs cannot be void if a consumer uses another manufacturer’s parts, although not without exception.
Governments tend to favor consumers, not corporations, but in this circumstance government intervention may be contrary to public interest. Enforcing the right to repair may cause price increases. Large corporations will be affected by right to repair legislation and sophisticated institutions may decide to recoup lost revenue in the form of higher initial costs to customers. Since the right to repair is such a broad concept, it will likely have an economy-wide impact. While it is colloquially known in the electronics and automotive industries, the agricultural industry has recently made headlines on the issue and other industries are not immune either.
Intellectual property rights are another compelling reason to be careful when developing policy on the right to repair. For example, allowing ISOs to repair products will generally expose the intellectual property of OEMs, and this exposure is generally unwanted for a variety of reasons. These include exploitation of the: (1) right to repair in patents, (2) fair use in copyright law (17 U.S.C. § 107), and (3) potential exposure to trade secrets. Patent law has an implicit right to repair which has been defined in case law rather than statute. The law allows for ISOs to make replacement parts of patented inventions as long as they don’t constitute reconstructions. An increase in the prevalence of the right to repair of patented inventions also creates the opportunity for ISOs to sell patented parts on the black market. In copyright, the right to repair is most prevalent to software. While the right is less clear, software repair would likely be justified using the fair use defense which consists of statutorily defined factors. This has recently been tested and fair use in software has been ruled to exist according to the Supreme Court. Fair use to repair software has not been tested but likely would be a meritorious argument. Trade secrets are only useful when they are not exposed. Non-disclosure agreements and other protective measures can be used to avoid this exposure, but the increased usage of OEMs secrets will almost certainly lead to some inadvertent exposure, and while the OEM can bring suit for this exposure, their secrets are still lost. Another issue to consider is how this will potentially hinder innovation. As ISOs reap the rewards of OEMs research and development, there is less incentive to create unique and novel solutions to technological challenges if they are forced to share the ideas and subsequent profits stemming from those ideas with other companies.
Software is particularly vexing because of how the American society has becoming increasingly digitized. In intellectual property, the right to repair (in patent law) allows for repair – not reconstruction. This has not been defined yet for software, so whatever the courts or Congress decide will produce a ripple effect throughout society. In copyright, Congress has considered issues like this already when it amended the Copyright Act to overturn a 9th Circuit case (MAI Sys. Corp. v. Peak Computer, 991 F.2d 511 (9th Cir. 1993), cert. denied, 114 S. Ct. 671 (1994)) making it illegal to copy software in order to repair hardware, but has not taken up this exact issue.
This is not just table talk; the issue is present. Change is inevitable and imminent. One example of this is the Memorandum of Understanding (MOU) between John & Company (d/b/a John Deere) and American Farm Bureau Federation. The MOU was agreed upon to avoid formal legal remedies such as a lawsuit and allows farmers to use ISOs to repair the software of their agricultural equipment from John Deere. Another showing of this is Executive Order 14036 which directed the FTC to consider the anti-trust aspects of the right to repair. This has led to legal action against three companies: Harley-Davidson (a motorcycle manufacturer), MWE Investments (outdoor power equipment manufacturer), and Weber (grill maker). Each of these companies is now required to reduce anti-competitive warranty policies that violate the Magnuson-Moss Warranty Act. Legislation related to the right to repair has existed for roughly a decade in the form of a Massachusetts statute recognizing the right in the automotive industry. This was later reinforced by an amendment to catch up to the increasing digitization of cars in 2020, but manufacturers are fighting back, which has prevented its implementation. The final and most recent development was a New York statute creating a right to repair for electronics. The act was enacted in late 2022 and will take effect July 1, 2023. While the Massachusetts law is the first right to repair law, the New York law is landmark because it goes after electronics. It does have some limitations, but is pushing the nation toward greater consumer rights. The Copyright Right Office had been requested, and subsequently commented on, its role in relation to software. It ultimately determined the legal framework in place is sufficient to account for software and that software changes so rapidly that modifying the law to address new issues would be futile. The report is about 6 years old, and the recent developments listed above may change this position but no other reports to address this have been requested.
Whether the right to repair helps or harms consumers it yet to be determined, but it surely is coming. With it will be legal challenges that must balance the rights of the public with those of private industries. Economic and intellectual property right considerations should be some of the most important matters addressed as the law develops both federally and in state governments.