Curbing Aftermarket Monopolization

Published date01 June 1993
Date01 June 1993
DOIhttp://doi.org/10.1177/0003603X9303800201
Subject MatterArticle
TheAntitrust Bulletin/Summer 1993 221
Curbing aftermarket monopolization
BYJOHNJ.VOORTMAN*
In Eastman Kodak Company
v.
Image Technical Services! the
United States Supreme Court held that replacement parts could be
a market separate from the original equipment for which the parts
were designed and that Kodak could have market power in the
market for the replacement parts despite the fact that
it
had no
market power in the market for the original equipment. The Court
held, therefore, that a showing that Kodak had market power in
replacement parts plus a showing that it refused to sell replace-
ment parts except to those firms that also purchased its repair
services would constitute a per se illegal tie-in. Three of the Jus-
tices, however, dissented. The majority and dissenting opinions
reflect
the
vigorous
disagreement
over
the
broader
issue
of
whether competition in replacement parts and repair services (the
*Partner, Schiff Hardin &Waite, Chicago, Illinois.
AUTHOR'S
NOTE: This article has been adapted for the readership
of
The
Antitrust Bulletin from an article with the same title previously appear-
ing in the Journal of Legislation published by the University
of
Notre
Dame. 19 J.
LEGIS.
155 (1993).
! _ U.S.
-,112
S. Ct. 2072, 2080 (1992).
C 1993 by Federal Legal Publicationa, Inc.
222
The antitrust bulletin
"aftermarket"}' for a single brand
of
equipment is necessary or
even
desirable-whether
an
original
equipment
manufacturer
(OEM) should have the legal right to prevent others from copying
the unpatented, OEM-created, designs
of
the components
of
its
equipment.
The disagreement on the issue of the desirability of aftermar-
ket competition is reflected not only in the opinions in Kodak and
earlier opinions dealing with similar questions! but in an over
70-year history of lobbying efforts, led more recently by OEMs
and particularly by automobile companies, to obtain protection for
designs from Congress. That includes 45 bills introduced between
1914 and 1950 with a copyright office bibliography running 160
pages.s
Adesign patent statute protecting designs that are new, origi-
nal,
ornamental,
nonobvious
and
not
"dictated
by functional
requirements" already exists." However, the "nonobvious" and
2The "aftermarket" includes replacement parts and other products
and services related to the use of the original equipment. Typically, the
manufacturer of the equipment not only manufactures parts for sale as
replacement parts but also acts as a wholesaler providing to a dealer
organization
parts
purchased from other
parts
manufacturers, usually
from the manufacturers who supply parts for assembling the original
equipment.
The
dealer
organization
retails
the
equipment
and is the
equipment manufacturers' choice to do the actual servicing. Situations
like Kodak, in which the manufacturer of the equipment seeks to be the
exclusive supplier of maintenance for the equipment appear to be uncom-
mon. (See discussion in section III.A.l infra.)
See section IILA.1 notes 75, 86, 90 infra.
4Dratler, Trademark Protection for Industrial Designs, 4
ILL.
L.
REV.
1109, 1112 (1988).
35 U.S.C. §§ 103, 171; Chrysler Motors v . Auto Body Parts
of
Ohio, 908 F.2d 951 (Fed. Cir.
1990)
(hearing on appeal from denial
of preliminary injunction). Amicus briefs were filed on behalf of plaintiff
by the Motor Vehicle Manufacturers Association of the United States and
on behalf of defendant by insurance companies, the Consumer Federation
of America and by the advocates for highway auto safety. (Id. at 952
n.L)
Aftermarket monopolization :223
"nonfunctional" requirements severely limit the applicability
of
that act to replacement parts."
Modern technology such as computer controlled machine tools
apparently makes production
of
many parts in smaller quantities
more
competitive
than formerly and
reduces
the
OEMs'
cost
advantage over independents? in obtaining such parts. The result
has been a resurgence of OEM interest in legal methods to prevent
copying of their parts for the replacement market. The present
thrust
of
their efforts is to obtain
copyright
protection for the
design
of
the parts which would prohibit copying the designs not
only by competitors in the sale
of
original equipment but also,
and probably more important to OEMs, by firms competing in the
aftermarke1.8
6Id.
7"Independent" as used herein refers not only to parts suppliers
who are not OEMs but also to an OEM attempting to sell replacement
parts for brands other than its own. Independents include parts manufac-
turers, some with their own distributor organizations, and a wide variety
of wholesalers and retailers who compete with the OEM and its dealers in
the sale of parts and repairs, e.g., auto parts departments of chain retailers
(Sears, Wal-Mart); auto parts stores (National Auto Parts Association,
"NAPA"); specialty chains (Genuine Parts Company as a parts supplier
to NAPA).
8See, The Industrial Innovation and TechnologyAct: Hearings on
S. 791 Before the Subcomm. on Patents, Copyrights and Trademarks
of
the Senate Comm. on the Judiciary,
lOOth
Cong., 1st Sess. 98 (March 26,
1987) [hereinafter Senate Hearings]; Protection
of
Industrial Designs
of
Useful Articles: Hearings on H.R. 1179 Before the Subcomm. on Courts,
Civil Liberties and the Administration
of
Justice
of
the House Comm. on
the Judiciary, 100th Cong., 2d Sess. (1988) [hereinafter 1988 House
Hearings]. H.R. 902, H.R. 3499, H.R. 3017; Industrial Design Protec-
tion: Hearings Before the Subcomm. on Courts, Intellectual Property,
and the Administration
of
Justice
of
the Comm. on the Judiciary, House
of
Representatives, lO1st Cong., 2d Sess. on H.R. 902, H.R. 3017 and
H.R. 3499 on May 3, 1990, June 20, 1990 and September 27, 1990 [here-
inafter 1990 House Hearings].
The issue has also arisen in the Uruguay round of trade talks in con-
nection with the proposals on industrial design submitted by the Nordic
countries and the European Community. Dullforce, EC Proposals Could

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