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ACCC auto data-share action may spark legal battle

Question of law: Australian regulators may not have the power to require car-makers owned by an overseas entity to disclose their IP to local independent repairers.

Forcing car-makers to share service, repair data could impinge on IP rights: lawyer

11 Aug 2017

THE Australian Competition and Consumer Commission’s recommendation to mandate the sharing of service and repair data may spark a legal battle on the grounds that Australian law cannot force the divulging of intellectual property owned by an overseas company, according to a leading automotive lawyer.

Evan Stents, a Melbourne based automotive industry lawyer and partner of HWL Ebsworth, told GoAuto this week the ACCC’s mandatory data sharing recommendation was a significant proposal because it had the potential to impinge on intellectual property (IP) rights that are owned by overseas companies and their ‘tier one’ suppliers.

“It’s complex because in most cases the companies that distribute cars in Australia are subsidiaries of overseas manufacturers and do not own the IP rights,” he said. “The Australian distributors of vehicles merely have a licence to use the IP and to share the IP within their dealer networks.”

Mr Stents makes the point that Australian regulators may not have the power to require an overseas entity to disclose its IP to local independent repairers.

“There may be jurisdictional challenges as to whether an Australian law is effective to compel an Australian company to disclose information which it does not own,” he said.

 center imageLeft: HWL Ebsworth partner Evan Stents

Mr Stents said the car companies spend hundreds of millions of dollars on developing IP and then establish dealer networks as part of the business model to repair the cars that they sell.

“Encouraging customers to have their cars serviced by these networks was a legitimate part of their business model. It is one of the ways they can recoup some of the investment they made in the IP,” he said.

“This is a fundamental attack on the very nature of the business model car companies have created and which authorised dealers rely on to obtain a return on their significant dealership and workshop investments. No one would expect Apple to disclose all of its IP and trade secrets to independent tech repairers.”

He said manufacturers were also reticent to share their IP for fear that it could be reverse engineered by unauthorised parts-makers.

Christian Teese, who is also a lawyer in the HWL Ebsworth automotive industry group, said there were other issues that needed to be solved around the recommended mandate to make data available.

The ACCC recommendation says that data should be made available on a commercially fair and reasonable basis, without defining what is fair and reasonable.

“There will likely be widely divergent views between the aftermarket industry and the car companies about what constitutes commercially fair and reasonable terms,” Mr Teese said.

Mr Stents also pointed out that, while having your vehicle serviced by an independent repairer cannot invalidate your consumer rights, it may invalidate any contractual warranty or guarantee provided by a car company that is separate to the consumer law guarantees.

Mr Stents drew a distinction between the statutory consumer rights that any consumer is guaranteed by law and the warranty that a car company may offer in the sale contract that operates separately to those basic statutory rights.

“What’s very clear is that a car company’s contractual warranty does not say that a consumer must only ever service their car at an authorised dealer,” he said.

“What it will say is that if a consumer does not service their car at an authorised dealer or use authorised parts, it may invalidate their contractual warranty – but not their consumer law rights and guarantees.”

He said such a stipulation cannot detract from the consumer law guarantees provided under the Australian Consumer Law.

“That’s a legitimate business practice and occurs across a wide range of industries,” he said.

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