The Federal Trade Commission issued an Enforcement Policy Statement on "Repair Restrictions Imposed by Manufacturers and Sellers," signalling to industry that it intends to ramp up law enforcement against companies who improperly restrict consumers' ability to repair products that they have purchased. Noting that this hasn't been an enforcement priority for the FTC for a number of years, the FTC said that it now intends to "prioritize" investigations into unlawful repair restrictions.
During an open Commission meeting where the new Enforcement Policy Statement was adopted, FTC Chair Lina Khan said, "These types of restrictions can significantly raise costs for consumers, stifle innovation, close off business opportunity for independent repair shops, create unnecessary electronic waste, delay timely repairs, and undermine resiliency. The FTC has a range of tools it can use to root out unlawful repair restrictions, and today’s policy statement would commit us to move forward on this issue with new vigor.”
In the Enforcement Policy Statement, the FTC said that manufacturers and sellers may, without reasonable justification, be restricting competition for repair services in numerous ways, such as by:
- Imposing physical restrictions (such as through the use of adhesives);
- Limiting the availability of parts, manuals, diagnostic software, and tools to authorized repair networks;
- Using designs that make independent repairs less safe;
- Limiting the availability of telematics information;
- Asserting patent rights and enforcement of trademarks in an unlawful and over-broad manner;
- Disparaging non-OEM parts and independent repair;
- Using unjustified software locks, digital rights management, and technical protection measures; and
- Imposing restrictive end user license agreements.
While the FTC's new Enforcement Policy Statement is largely focused on ways in which companies may make it difficult for consumers to repair products on their own or through independent repair shops, there are some important things for companies to keep in mind when they are advertising as well.
The FTC highlighted that it may be an unlawful practice to "disparage non-OEM parts and independent repair." In other words, if you're encouraging consumers in your advertising to use only OEM parts, or to only get products repaired through authorized repair shops, you'd better be careful about the claims you are making. If you're claiming that OEM parts and authorized repairs are better, you'd better be able back up those claims.
The FTC is also warning companies to exercise care about how they enforce their trademarks. If the FTC thinks you're improperly restricting other companies from using your trademarks, by attempting to protect your trademark rights in "unlawful and over-broad manner," you might be the subject of an FTC enforcement action. This is a good time, then, to consider any brand guidelines you've published, as well as your methods for challenging others' uses of your trademarks, to make sure that you've got a strong legal basis for the positions you are taking.
"The FTC has a range of tools it can use to root out unlawful repair restrictions, and today’s policy statement would commit us to move forward on this issue with new vigor" -- FTC Chair Lina Khan