Nearly 50 years after Congress passed the Magnuson-Moss Warranty Act, warranties are in the antitrust news again. The “right to repair” movement is clamoring for legislation to give consumers the right and ability to unlock, fix and share diagnostic information from phones, cars and other products. And the U.S. Federal Trade Commission (FTC) and private plaintiffs are filing right-to-repair lawsuits. What has happened? What does this mean for old warranty provisions? What can manufacturers still say about third-party parts and repairs? What might happen next?
Magnuson-Moss
Section 2302(c) of the 1975 Magnuson-Moss Warranty Act makes it illegal to condition a warranty “on the consumer’s using, in connection with such product, any article or service (other than article or service provided without charge under the terms of the warranty) which is identified by brand, trade, or corporate name.” This means companies generally cannot void a warranty if the customer uses a non-authorized part or repair service. 16 C.F.R. § 700.10(c) gives an example of a prohibited provision: “This warranty is void if service is performed by anyone other than an authorized ‘ABC’ dealer and all replacement parts must be genuine ‘ABC’ parts.”
The FTC’s “Nixing the Fix” Workshop and Report
In 2019, the FTC held a workshop entitled “Nixing the Fix: A Workshop on Repair Restrictions." Congress in 2020 directed the FTC to provide a report on anticompetitive practices related to repair markets. In response, in 2021, the FTC issued its “Nixing the Fix” report, which concluded that “repair restrictions have diluted the effectiveness” of the anti-tying provision of Magnuson-Moss and promised that the FTC would consider “reinvigorated regulatory and law enforcement options.” The FTC also issued a Policy Statement on Repair Restrictions Imposed by Manufacturers, promising to increase enforcement.
Recent FTC Enforcement Actions
Following its own direction, the FTC filed three right-to-repair cases in June and July 2022. The FTC announced complaints against and settlements with grill maker Weber-Stephens Products LLC, motorcycle manufacturer Harley-Davidson Motor Company Group, LLC, and outdoor power equipment manufacturer MWE Investments, LLC. The FTC complaint against Weber targets a provision providing: “[t]he use and/or installation of parts on your WEBER products that are not genuine WEBER parts will void this warranty, and any damages that result hereby are not covered by this warranty.” The FTC complaint against Harley-Davidson targets similar provisions, including one stating that “[u]se of aftermarket performance parts may void all or parts of your limited warranty.” And the FTC complaint against MWE faults MWE’s warranty for excluding “MWE Investments, LLC portable generators that utilize non-MWE Investments, LLC replacement parts” and “products that are altered or modified in a manner not authorized in writing by MWE Investments, LLC.” The complaints assert both violations of Magnuson-Moss and deceptive conduct in violation of Section 5(a) of the FTC Act. The FTC Act claims assert that the representations about voiding warranties are false and misleading.
The consent orders resolving the Harley and MWE cases: (1) prohibit any statement that a warranty will be voided by use of unauthorized parts of service; (2) require an affirmative statement that that use of unauthorized dealer or third-party parts will not void warranty; but (3) allow a statement that damage caused by unauthorized dealers or parts may not be covered by the warranty. See Harley-Davidson Order and MWE Order.
Private Right-to-Repair Cases
Private plaintiffs have also pursued right-to-repair cases. There is a series of lawsuits against John Deere in the Northern District of Illinois alleging that John Deere monopolized a repair-services market for John Deere products through multiple limitations on non-authorized repair services and parts. These cases have been consolidated into an MDL pending in the Northern District of Illinois. A consolidated complaint and responsive pleadings will be filed in 2022 and 2023. Both sides will likely spill a lot of ink discussing the applicability or inapplicability of the Supreme Court’s 1992 decision in Eastman Kodak v. Image Technical Services, Inc., which recognized the possibility that limitations on repair rights could support a monopolization claim.
State Right to Repair Laws
There is a growing “Right to Repair” movement that is pushing for sweeping state legislation to give consumers the right and ability to unlock, fix and share diagnostic information from phones, cars and other products. Many states have passed new right-to-repair laws. For example, Massachusetts passed right-to-repair laws in 2013 and 2020 supporting independent repair shops. The 2020 law focuses on allowing independent auto repair shops to have access to telematics data. These, and similar laws in other industries, effectively force product makers into contractual obligations with independent repair shops. The Alliance for Automotive Innovation has filed litigation challenging the new right-to-repair legislation. A decision in that case is expected in late 2022.
IP Rights
Stripping away IP related to repair parts, tools and information is a main strategy of the Right to Repair movement, and a slew of actions have recently been taken to try to limit copyrights and patent rights. For instance, various state and federal right-to-repair bills have been introduced that would exempt entire industries from patent-infringement liability and would mandate copyright owners make protected works available. Copyrights have already been weakened in connection with automobiles and consumer-electronic devices, and are threatened in connection with heavy machinery and medical devices, among others. These bills are gaining popularity based on the growing public sentiment, as well as the current political landscape. Soon, the control that IP owners have historically been afforded might be diminished, and IP owners will likely need to provide increased access to protected parts, tools and information.
