Right to Repair and What it Means for Entrepreneurs (U.S. House Committee on Small Business, Subcommittee on Underserved, Agricultural, and Rural Business Development)

Hearing	Right to Repair and What it Means for Entrepreneurs
Committee	U.S. House Committee on Small Business, Subcommittee on Underserved, Agricultural, and Rural Business Development
Date	September 22, 2022

Hearing Takeaways:

• The Right to Repair: The hearing focused on the policy debate surrounding whether and how consumers and independent repair shops should be permitted to make repair to their own products. Subcommittee Members and the hearing’s witnesses highlighted how this right to repair would impact consumers, small businesses, farms, manufacturers, equipment dealers, and the environment.
  • Manufacturer-Imposed Repair Restrictions: Subcommittee Chairman Jared Golden (D-ME) and Mr. Clark noted how manufacturers will employ a variety of tactics to make repairs more difficult. These issues include making their products more difficult to open and limiting access to genuine parts, repair manuals, tools, or schematics. They stated that these tactics were meant to drive people to either throw away their products (and purchase replacement products) or use only authorized repair shops. Of note, Mr. Gerritsen testified that his family farm had made a strategic decision to only own equipment that they could repair themselves so that the farm would not be at the mercy of manufacturers.
  • Impact on Consumers, Small Businesses and Farms: Subcommittee Chairman Golden, Ms. Gordon-Byrne, Mr. Clark, and Mr. Gerritsen stated that repair restrictions were raising costs and creating burdens for consumers, small businesses, and farms that depended on equipment and machinery. They noted how these consumers and businesses depended on equipment and machinery to function and that delays in repairs could create significant challenges. Mr. Clark further discussed how the data stored on devices (including contact information, communications, and photos) was often priceless and noted that authorized repair generally did not provide data recovery options.
  • Impact on Independent Repair Shops: Subcommittee Chairman Golden and Mr. Clark remarked that manufacturer repair restrictions on devices and equipment were adversely impacting the independent repair businesses and noted how these businesses often offered cheaper repair services relative to manufacturers. Mr. Clark discussed how certain manufacturers (such as Apple) used affiliation programs to limit access to parts for independent repair shops. He stated that these affiliation programs imposed very invasive information sharing requirements on independent repair shops.
  • Impact on Rural and Underserved Communities: Subcommittee Members, Ms. Gordon-Byrne, Mr. Clark, and Mr. Gerritsen emphasized that repair restrictions particularly impacted rural communities because they forced the people in those communities to travel far distances for repairs.
  • Impact on the Environment: Ms. Gordon-Byrne noted how repair restrictions could lead consumers to throw away broken products, which would exacerbate the U.S.’s electronic waste (e-waste) problem. She emphasized that taxpayers were responsible for paying for this problem.
• Right to Repair Policy Proposals: Subcommittee Member and the hearing’s witnesses expressed interest in working to develop a bipartisan right to repair proposal. Ms. Gordon-Byrne expressed support for the bipartisan Freedom to Repair Act, which would lift certain restrictions on the building of repair tools. Mr. Taylor expressed concerns however that right to repair legislative proposals currently under consideration would completely alter the equipment industry’s distribution model.
  • Massachusetts Automotive Framework: Ms. Gordon-Byrne recommended that the U.S. base its right to repair framework off a Massachusetts legislative template currently being used within the automotive space. She explained that the automotive industry framework required automotive manufacturers to provide “fair and reasonable” access to the same parts, tools, diagnostics, and service information that were being provided to dealerships. She indicated that 43 states have since adopted this framework and noted how states were beginning to apply this framework outside of the automotive context.
  • Access to Authentic Parts, Tools, and Documentation: A key area of contention during the hearing involved the extent to which independent repair shops should have access to parts, tools, and documentation from manufacturers. Mr. Taylor noted how some right to repair proposals would require original equipment manufacturers (OEMs) to sell parts and diagnostic tools directly to the public at cost. He asserted that this requirement would effectively dismantle the equipment distribution industry’s aftermarket parts business and would drive many equipment dealers out of business. He also remarked that it would exacerbate inflationary pressures in the equipment market and create long delays in parts availability. Mr. Clark and Mr. Gerritsen stated that while equipment dealers should be able to derive profits from parts sales, tools, and documentation, they contended that dealers often charged unreasonable rates for these items.
  • Facilitation of Formal Relationships Between Manufacturers and Independent Repair Shops: Subcommittee Ranking Member Claudia Tenney (R-NY) suggested a compromise policy that would enable manufacturers to share intellectual property (IP) with contracted repair shops if the repair shops were to sign non-disclosure agreements (NDAs) and adhere to certain requirements. She stated that this type of compromise would protect the IP of manufacturers and limit liability exposure for manufacturers. She also commented that this compromise would provide a right to repair. Mr. Clark, Mr. Taylor, and Ms. Gordon-Byrne expressed their receptiveness towards the general parameters of this proposed compromise.
• Concerns over the Right to Repair: Subcommittee Republicans and Mr. Taylor raised concerns that a right to repair could have unintended consequences for consumers and businesses.
  • Consumer Privacy, Security, and Safety Concerns: Subcommittee Republicans raised concerns that a right to repair could put the privacy and security of users at risk and asserted that the U.S. could not open technology producers to this kind of liability. Subcommittee Republicans and Mr. Taylor also raised concerns that attempts to self-fix or modify products with electronic components could lead to “disastrous” results, including product failure and serious injury to the consumer. Mr. Taylor contended that governmental, environmental, and safety regulations and technological developments necessitate restrictions in access to source code and software. Ms. Gordon-Byrne noted however the U.S. Federal Trade Commission (FTC) had previously studied the issue of right to repair and noted how the Agency had only identified one instance where a third-party repair might have impacted the safety of a consumer.
  • Intellectual Property IP Concerns: Subcommittee Republicans and Mr. Taylor expressed concerns that the right to repair could lead U.S. manufacturers to become the victims of IP theft through forcing them to divulge proprietary information that foreign and hostile entities could take advantage of. They also expressed concern that making proprietary information easily available could reduce incentives for manufacturers to make investments in research and development (R&D). Ms. Gordon-Byrne remarked however that IP was not involved in repairs. She noted how the Digital Millennium Copyright Act (DMCA) allowed for people to back up and restore all of their licensed software without violating federal copyright laws. She also highlighted how patents were already made public and asserted that a right to repair would therefore not lead to more patent infringements. 
  • Legal Liability Concerns: Mr. Taylor expressed concerns that equipment and machinery dealers might face legal liability if a given repair were to violate environmental and safety regulations. He also noted how modern machinery and equipment involved sensors that were very sensitive. He expressed concerns that third-party tampering with these sensors could subject dealers to false claims of liability.
• Other Topics: Subcommittee Members and the hearing’s witnesses discussed additional policy issues impacting the ability of consumers and businesses to repair their own equipment and devices.
  • The U.S. Repair and Service Technician Workforce: Mr. Taylor remarked that the U.S. was failing to produce enough repair and service technicians. He stated that repair and service technician jobs paid well and provided economic opportunities.
  • Impacts of Market Concentration: Mr. Gerritsen discussed how the U.S. agriculture sector was experiencing “extreme” market concentration and asserted that this market concentration emboldened equipment manufacturers to restrict the ability of farmers to repair their own products. He called on Congress to enjoin the U.S. Department of Justice (DoJ) to “vigorously” enforce existing laws that restrain monopolies, including the Sherman Antitrust Act of 1890. He also stated that new legislation would be necessary to adjust to address market concentration and anti-competitive behaviors.
  • Promotion of Self-Repair Options: Rep. Mike Flood (R-NE) remarked that the Subcommittee should first examine the already available self-repair options before it sought to adopt a federal right to repair policy. He highlighted how some manufacturers were increasingly offering customers with remote support to troubleshoot through some of the most difficult equipment problems. Mr. Taylor discussed how Caterpillar was currently pursuing a services growth strategy, which entailed providing more services directly to the customer in order to drive more parts sales. 

Hearing Witnesses:

1. Ms. Gay Gordon-Byrne, Executive Director, Digital Right to Repair Coalition
2. Mr. Brian Clark, Co-Owner, The iGuys’ Tech Shop, LLC
3. Mr. Jim Gerritsen, Marketing Manager, Wood Prairie Family Farm
4. Mr. Ken Taylor, President, Ohio Machinery Co., testifying on behalf of the Associated Equipment Distributors (AED) in his capacity as 2022 Chairman

Member Opening Statements:

Subcommittee Chairman Jared Golden (D-ME):

• He discussed how consumer electronics, automobiles, and other products have become more complicated to fix and maintain and stated that large manufacturers and corporations had moved to limit the ability of consumers and independent small businesses to make repairs to their products.
  • He commented that these repair restrictions could increase costs and sometimes upend business models.
• He mentioned that the FTC had outlined how manufacturers inhibited the ability for people and small businesses to make repairs to common products in a 2021 report.
  • He noted that these common products included mobile phones, automobiles, agricultural machinery, and medical equipment.
• He highlighted how manufacturers employed a variety of methods for making repairs more challenging, including making their products more difficult to open and requiring access to proprietary diagnostic software.
  • He asserted that these repair restrictions frustrated consumers through forcing them to go to the manufacturers for repairs or to replace the products entirely.
• He also stated that repair restrictions negatively impacted small firms through raising costs and limiting repair options for small businesses that depend on machinery.
  • He highlighted how farmers were increasingly less able to make repairs to their equipment, which could force farmers to abruptly stop harvesting for prolonged periods of time.
• He then remarked that repair restrictions were adversely impacting independent repair businesses and noted how these businesses often offered cheaper repair services relative to manufacturers.
• He stated that there was significant evidence showing that repair restrictions led repair costs to increase, harmed small businesses, and created waste.
• He remarked that the Subcommittee would need to explore “commonsense” and bipartisan right to repair laws that protect consumers and small businesses.
  • He mentioned how there were currently several legislative proposals to restrict the ability of large companies to monopolize repairs and after-market products.

Subcommittee Ranking Member Claudia Tenney (D-NY):

• She remarked that the right to repair was “alluring” in its simplicity and that this right could enable quicker and cheaper repairs.
  • She commented that a properly designed right to repair could create consumer choice, competitive pricing, and cost savings.
• She stated however that the issue of right to repair was not straightforward and highlighted how modern machines have become increasingly sophisticated in nature.
  • She noted how attempts to self-fix or modify products with electronic components could lead to “disastrous” results, including product failure and serious consumer injuries.
• She further discussed how self-repairs could put the privacy and security of users at risk and asserted that the U.S. could not open technology producers to this kind of liability.
• She raised concerns that the right to repair could lead U.S. manufacturers to become the victims of IP theft through forcing them to divulge proprietary information that could then be taken advantage of.
  • She commented that these disclosures could thus subject U.S. companies to unfair competition.
• She also remarked that policymakers ought to be cognizant of the downstream impacts of the right to repair on consumers and small businesses.
  • She stated that the right to repair could create new markets where small and independent repair shops could flourish and noted how this had occurred within the automotive space.
  • She stated however that the right to repair might also harm small businesses that provide products, replacement parts, and professional repair services.
• She concluded that a well-designed right to repair could be beneficial and expressed interest in further exploring the issue.

Witness Opening Statements:

Ms. Gay Gordon-Byrne (Digital Right to Repair Coalition):

• She remarked that the inability of consumers to fix their own products would force consumers to throw away broken products, purchase new products, or do without broken products.
  • She commented that the throwing away of broken products would further exacerbate the U.S.’s e-waste problem and noted that taxpayers were responsible for paying for this problem.
  • She also stated that forcing people to purchase new products or do without certain products would exacerbate the U.S.’s “digital divide.”
• She indicated that 90 percent of currently available products were “repair monopolized,” which meant that the product manufacturers were the only parties that could repair the products.
• She discussed how the right to repair was particularly important for rural Americans and businesses and highlighted how Americans and businesses were often located far away from repair technicians.
  • She stated that many urban Americans also lacked access to repair technicians because they could not afford them, which led them to forgo certain products.
• She remarked that there needed to exist competition for repairs and suggested that the U.S. base the framework for this competition off a legislative template currently being used within the automotive space.
  • She explained that the automotive industry framework required automotive manufacturers to provide “fair and reasonable” access to the same parts, tools, diagnostics, and service information that were being provided to dealerships.
• She mentioned how Massachusetts has been the first state to implement the automotive industry framework ten years ago and commented that this framework had not undermined consumer safety.
  • She indicated that 43 states have since adopted this framework and noted how states were beginning to apply this framework outside of the automotive context.
• She further requested that Congress work to lift many of the copyright restrictions associated with repairs.

Mr. Brian Clark (The iGuys’ Tech Shop, LLC):

• He discussed how he owned a technology repair shop located in a rural part of New Hampshire and testified that the shop served between 1,200 and 1,500 paying customers each year.
• He noted how his technology repair shop was independent and did not maintain any affiliations with manufacturers.
  • He asserted that any paths for his repair shop to become an authorized repair facility were “far from ideal” and would be invasive for their business.
• He acknowledged that there were drawbacks associated with his repair shop’s decision to remain independent.
  • He highlighted how most manufacturers offered independent repair shops little to no official access to genuine parts, repair manuals, tools, or schematics.
• He asserted that manufacturers want control over how and whether devices were repaired through forcing customers to use authorized repair services.
• He noted how the nearest authorized repair shops for Apple, Samsung, and Google devices were located very far away from his shop while other devices (such as Motorola and LG devices) required mail-in repair.
  • He highlighted how many of his repair shop’s customers already drove far distances to come to the shop and that these authorized repair shops were located even further aways from these customers.
• He stated that these distance issues were not unique to New Hampshire and commented that there were other parts of the U.S. where people needed to drive far or mail in their devices to receive authorized repairs.
• He then discussed how the devices that his repair shop serviced had become integral tools and stated that access to timely repair for these devices was crucial.
  • He asserted that access to timely repair would be impossible in rural areas without independent repair shops.
• He also stated that consumers were not always provided with completely truthful information when they contacted authorized repair shops.
  • He elaborated that authorized repair shops will often tell customers that their products could not be repaired when they did not offer an authorized repair option for the customer’s repair issue.
  • He commented that this practice was unfriendly to consumers and sought to force the replacement of devices.
• He called it important to keep technology in use and emphasized that many people could not afford to purchase the most up-to-date technologies (especially in rural areas).
• He further discussed how the data stored on devices (including contact information, communications, and photos) was often priceless.
  • He noted that authorized repair generally provided no options for a situation where data recovery was needed.
• He concluded by calling on manufacturers to provide independent repair shops with “reasonable” paid access to parts, tools, and documentation so that they could continue to offer their repair services.

Mr. Ken Taylor (Ohio Machinery Co., testifying on behalf of the Associated Equipment Distributors):

• He first explained how his organization, the Associated Equipment Distributors (AED), was the international trade association representing independent companies that sell, rent, and service equipment.
  • He indicated that this equipment was used for construction, agriculture, forestry, energy, mining, material handling, and industrial production.
• He then called the right to repair a “simple slogan” and commented that the policy proposals surrounding the issue were complex with “significant” consequences.
• He remarked that AED members supported the rights of their customers to repair their machinery.
  • He testified that AED members made available diagnostic tools, repair information, parts, and remote customer support to their customers.
• He discussed how idle and non-functioning equipment harmed AED customers in terms of lost time and money and asserted that equipment dealers and manufacturers had strong incentives to keep machines running for their customers.
  • He commented that this could involve repairs completed by dealership service technicians, customers, or third-party providers.
• He stated that the equipment industry was “highly competitive” and that customers could easily switch between machinery companies.
• He asserted however that there should not exist unfettered access to critical on-board software and information pertaining to environmental and safety protections or key operational functions.
  • He noted how many federal and state proposals would provide such unfettered access to this software and information.
• He also discussed how equipment and machinery had become increasingly sophisticated.
• He stated that while customers could complete most repairs to their machinery, he contended that governmental, environmental, and safety regulations and technological developments necessitate restrictions in access to source code and software.
  • He commented that these restrictions would ensure that key operational functions would not be modified or disabled.
• He remarked that right to repair legislation currently under consideration in Congress would completely alter the equipment industry’s distribution model.
• He discussed how equipment manufacturers rely upon a network of independent small-to-medium-sized companies to sell, rent, and service their equipment.
  • He indicated that these dealers made “significant” investments in their employees, including the provision of training to their service technicians.
• He highlighted how many AED member facilities were in rural and underserved areas and commented that these facilities created well-paying careers and economic opportunities.
  • He also stated that equipment dealers invested “extensive” capital in parts inventories to ensure that repairs and maintenance can occur as soon as possible.
• He noted how right to repair proposals require OEMs to sell parts and diagnostic tools directly to the public at cost and emphasized that these sales would completely circumvent the equipment dealer.
  • He asserted that this requirement would effectively dismantle the equipment distribution industry’s aftermarket parts business and would drive many equipment dealers out of business.
• He also called this requirement logistically impractical and asserted that it would exacerbate inflationary pressures in the equipment market, as well as create long delays in parts availability.
• He noted how parts revenue produced most of the income for many parts dealers and stated that parts margins were “far from inordinate”.
  • He commented that requirements for parts to be provided at cost would therefore drive many dealers out of business.
• He also discussed how anyone (including equipment owners, third-party service providers, equipment operators, and the general public) could purchase OEM parts from AED member facilities for their equipment.
  • He asserted however that there would not exist any incentives for equipment dealers to carry parts inventory if the manufacturer or dealer is forced to sell parts without the ability to make a profit.
• He referred to right to repair proposals as a “solution in search of a problem” and contended that these proposals would stifle entrepreneurship.
  • He further expressed concerns that these proposals would result in lost economic activity, job losses, reduced technological advancements, and a less competitive America.

Note: The Subcommittee recessed here for approximately eight minutes to address Mr. Gerritsen’s technical difficulties.

Mr. Jim Gerritsen (Wood Prairie Family Farm):

• He expressed support for preserving the right of farmers and independent shops to repair the equipment that farmers own.
  • He called on Congress to codify traditional farmer and independent repair shop rights through passing new legislation.
• He mentioned how his family farm had been growing organic crops for 50 years and was in a very isolated region of Maine.
• He noted how his son now operated his family farm and highlighted how his son was a skilled mechanic with a degree in diesel hydraulic mechanics.
  • He stated that it was “extremely common” for farmers in his region to do most of their own repair work.
• He testified that his family farm had made a strategic decision to only own equipment that they could repair themselves.
  • He stated that this decision had precluded his farm from purchasing modern electronically sophisticated tractors and equipment containing computer chips.
  • He indicated that his farm relied upon older equipment that dated back as far as the 1970s.
• He remarked that his family farm would never choose to place itself in the vulnerable position of being at the mercy of malfunctioning electronic sensors or being locked out of their own equipment.
  • He commented that common problems in modern farming equipment (such as water condensation issues) could place both individual farmers and the U.S.’s broader food security at risk.
• He then discussed how the U.S. agriculture sector was experiencing “extreme” market concentration and mentioned how a large dealership group had recently acquired his town’s John Deere dealership.
  • He asserted that this market concentration emboldened equipment manufacturers to restrict the ability of farmers to repair their own products.
• He called on Congress to enjoin the DoJ to “vigorously” enforce existing laws that restrain monopolies, including the Sherman Antitrust Act of 1890.
• He also stated that new legislation would be necessary to adjust to modern conditions, force farm equipment manufacturers and software companies to compete fairly, prevent abuse and market manipulation, and combat monopolistic behavior.

Congressional Question Period:

Subcommittee Chairman Jared Golden (D-ME):

• Chairman Golden asked Ms. Gordon-Byrne to discuss how Massachusetts’s right to repair law had benefited independent repair shops.
  • Ms. Gordon-Byrne noted how Massachusetts’s right to repair law requires automotive manufacturers doing business within the commonwealth to provide general access to their diagnostic tools, software, software updates, and regular tools. She indicated that this law did not require general access to automotive parts because the automotive parts industry was already very open. She stated however that accessible parts requirements would be necessary in other right to repair contexts. She remarked that this Massachusetts law had worked well and had enabled independent mechanics to remain in business. She commented that the viability of independent mechanics had been in jeopardy prior to the law’s enactment.
• Chairman Golden then mentioned how Apple maintained several different levels of affiliation that could increase access to parts for independent repair shops. He asked Mr. Clark to discuss these different levels of affiliation and to explain why his repair shop had remained independent.
  • Mr. Clark noted that an independent repair shop could become an Apple Authorized Service Provider, which was the highest-level affiliation status available from Apple. He stated however that higher level Apple affiliation statuses imposed restrictions on the status holders. He commented that Apple Authorized Service Provider status was “very invasive” for the status holder’s business. He also stated that the process for becoming a high-level affiliate of Apple remained largely unknown because Apple required its affiliates to sign NDAs. He then mentioned how Apple had recently launched its Independent Repair Provider program, which provided independent repair shops with less access to parts, tools, and software as compared to the Authorized Service Provider program. He asserted however that Apple’s Independent Repair Provider program was still “frightfully invasive” to one’s business. He noted that participation in the Independent Repair Provider program opened a business up to financial and inventory audits from Apple at any time. He stated that the full terms and conditions of this program were largely unknown because program participants were required to sign NDAs. He further mentioned how Apple had recently introduced their Self-Service Repair option. He noted how parties using this option would need to provide the serial number of a device to order the appropriate parts. He stated that it was impractical for his independent repair shop to make use of the Self-Service Repair option because it would take too long for his shop to receive the appropriate parts.
• Chairman Golden then asked Mr. Taylor to explain why he was concerned that right to repair laws might lead people to bypass environmental and safety regulations.
  • Mr. Taylor stated that the bypassing of environmental and safety regulations made equipment trade-ins more difficult. He recounted how his company had received a trade-in farm tractor that was “chipped,” which he explained was an alteration made to bolster the tractor’s horsepower. He noted that his dealership could not allow for this tractor to leave their facility with this alteration. He stated that this dealership therefore had to spend extra money to make this tractor valid for sale.

Subcommittee Ranking Member Claudia Tenney (D-NY):

• Ranking Member Tenney raised concerns that many of the right to repair legislative proposals under consideration could lead to liability and IP issues for small businesses. She expressed interest in developing a right to repair policy proposal that would protect small business owners and dealers. She asked Mr. Taylor to provide his thoughts on this issue.
  • Mr. Taylor stated that the machinery and equipment industry had many differences with other industries (such as the consumer electronics industry). He mentioned how his dealership offered Caterpillar’s Electronic Technician software, which facilitated customer repairs. He also noted how Caterpillar’s website provided repair instructions aimed towards equipment users. He testified that his company would help customers to come up with repair solutions and indicated that these repair solutions could involve providing advice for self-repairs. He stated that his company’s primary goal was to maximize the uptime for the equipment of its customers.
• Ranking Member Tenney asked Mr. Taylor and Mr. Clark to indicate whether Congress could develop a right to repair solution that would make it easier for manufacturers to create authorized repair facilities.
  • Mr. Taylor estimated that it cost at least $5 million to set up a machinery and equipment dealership. He stated that these dealerships sought to achieve economies of scale to afford these substantial investments.
• Ranking Member Tenney interjected to ask Mr. Taylor to indicate whether machinery and equipment dealerships could contract with independent repair shops in rural areas to expand access to repairs.
  • Mr. Taylor remarked that the manufacturer would need to approve such an arrangement.
• Ranking Member Tenney interjected to ask Mr. Clark to indicate whether he would support allowing independent repair shops to contract with dealerships to provide authorized repair services.
  • Mr. Clark expressed support for allowing independent repair shops to contract with dealerships to provide authorized repairs. He stated however that manufacturers often imposed burdensome requirements on independent repair shops that want to become authorized repair shops. He commented that these burdensome requirements made it impractical for many independent repair shops to become authorized repair shops.
  • Mr. Taylor remarked that dealerships maintained high standards for the products and services that they offer to customers. He stated that dealerships would be unable to maintain these high standards if repairs were to move outside of authorized dealer networks.

Rep. Troy Carter (D-LA):

• Rep. Carter noted how manufacturers often justified their repair restrictions as necessary for securing their IP rights. He asked the witnesses to address how these repair restrictions impacted their operations.
  • Ms. Gordon-Byrne remarked that IP was not involved in repairs. She noted how the DMCA allowed for people to back up and restore all of their licensed software without violating federal copyright laws. She also highlighted how patents were already made public and asserted that a right to repair would therefore not lead to more patent infringements. She stated that federal copyright law was not in peril and mentioned how a study of the U.S. Copyright Office from five years ago had found no issues with U.S. copyright law.
• Rep. Carter interjected to reiterate that manufacturers had claimed that repair restrictions were needed so that they could maintain their IP rights. He asked Ms. Gordon-Byrne to address whether this claim was valid.
  • Ms. Gordon-Byrne stated that the claim from manufacturers that repair restrictions were needed to secure IP rights was disingenuous.
  • Mr. Taylor remarked that the equipment industry was currently experiencing “extraordinary” innovation and noted how software was now being used extensively to support equipment functions. He commented that this increased use of software was a significant development.
• Rep. Carter interjected to ask the witnesses to provide recommendations for addressing the IP concerns of manufacturers in right to repair legislative proposals. He also mentioned how there were several rural communities located within his Congressional District. He noted that these rural communities often faced challenges in terms of accessing repair services. He asked the witnesses to provide recommendations for addressing these repair access challenges for rural communities.
  • Ms. Gordon-Byrne remarked that the U.S. should work to increase the overall availability of repair options for consumers. She stated that rural Americans would benefit from being able to use local repair shops to fix their products (rather than having to drive far distances to use authorized repair shops).
  • Mr. Taylor noted how there were extensive training and knowledge requirements for repair technicians. He suggested that repair shops could pay for more training for their technicians so that the technicians could provide more repair options. He commented however that repair shops would need to assess whether this additional training was worth the cost.
• Rep. Carter then asked the witnesses to identify actions that the Committee could take to address manufacturers that used the guise of IP rights to unfairly restrict repairs.
  • Ms. Gordon-Byrne expressed support for the bipartisan Freedom to Repair Act, which would lift certain restrictions on the building of repair tools. She elaborated that these repair tools were often software tools.
• Rep. Carter requested that Ms. Gordon-Byrne follow-up with the Committee with information about the Freedom to Repair Act.

Rep. Roger Williams (R-TX):

• Rep. Williams remarked that the issue of right to repair was not as straightforward as it would appear. He criticized proposals that would force equipment and machinery materials to be sold at cost. He also asserted that it was difficult to assess the true cost of these materials. He further noted how equipment and machinery could be financed and/or fully deducted on federal taxes. He mentioned how he owned a car dealership and stated that independent repair shops were his dealership’s best customers. He elaborated that independent repair shops often referred their more difficult repair jobs to car dealerships. He attributed the difficulty of these repairs to government regulations. He expressed skepticism toward legislative proposals that would impose additional government requirements on repairs and predicted that these proposals would ultimately harm consumers. He then noted how manufacturers made “significant” investments in R&D for their products and services. He stated that forcing these manufacturers to share their R&D with third parties would reduce incentives for innovation. He further raised concerns that a right to repair could imperil consumer privacy and data security. He asked Mr. Taylor to discuss how right to repair legislation could impact his business’s ability to remain competitive. He also asked Mr. Taylor to identify the right to repair legislative proposals that would most harm equipment distributors.
  • Mr. Taylor testified that 75 percent of the profit for his company’s agricultural division came from the division’s parts business. He noted how his company lost money on service and relied on its parts business to remain profitable. He stated that legislative proposals to require equipment and machinery dealers to sell their parts at cost could therefore jeopardize the viability of his company. He also noted that such a requirement would force manufacturers to develop a parts distribution strategy, which would be burdensome.

Rep. Scott Peters (D-CA):

• Rep. Peters asked Mr. Taylor to address why AED members were concerned about IP violations related to right to repair laws.
  • Mr. Taylor remarked that the IP issues associated with right to repair laws impacted manufacturers more than dealers. He stated that AED members were concerned that they might face legal liability if a given repair were to violate environmental and safety regulations. He also noted how modern machinery and equipment involved sensors that were very sensitive. He expressed concerns that third-party tampering with these sensors could subject dealers to false claims of liability.
• Rep. Peters then noted how the FTC was now taking actions to enforce a warranty law against bad actors that illegally restricted the ability of consumers to fix their own products. He asked Ms. Gordon-Byrne to address whether the FTC’s enforcement of this warranty law could help small businesses. He also asked Ms. Gordon-Byrne to indicate whether the U.S. needed to take additional actions to address these types of illegal repair restrictions.
  • Ms. Gordon-Byrne remarked that she was not qualified to comment on the FTC’s precise legal authorities. She stated however that the FTC should have pursued warranty law violations much earlier. She highlighted how the FTC was now taking actions against Harley Davidson for falsely telling their customers that they could not repair their Harley Davidson equipment with an independent mechanic. She expressed excitement regarding the FTC’s recent actions.
• Rep. Peters then asked Mr. Clark to discuss how his independent repair shop’s customers reacted to the warning messages that their phones could receive if their phones were repaired using aftermarket parts. He asked Mr. Clark to indicate whether his repair shop had lost business because of these warning messages.
  • Mr. Clark testified that these warning messages had not yet caused his independent repair shop to lose any customers. He acknowledged that while these warning messages had led to consumer questions and concerns, he stated that his shop’s customers ultimately accepted these warning messages because they did not feel they could be avoided. He explained that his shop’s customers preferred the convenience that his shop provided over geographically distant authorized repair shops.

Rep. Pete Stauber (R-MN):

• Rep. Stauber highlighted how Mr. Gerritsen’s farm had decided to only purchase farm equipment that it could repair itself. He asked Mr. Gerritsen to indicate whether his farm’s forgoing of more advanced technologies had reduced the farm’s output.
  • Mr. Gerritsen remarked that his farm was focused on maximizing profits and commented that his farm was not necessarily focused on maximizing its output. He stated that his farm was focused on increasing its independence and viability through ensuring their control over their own tools. He added that most farms probably maintained a similar operating philosophy.
• Rep. Stauber asked Mr. Gerritsen to indicate whether he knew of other farmers that had faced technical challenges associated with modern equipment. He also asked Mr. Gerritsen to address how these farmers had dealt with these challenges.
  • Mr. Gerritsen discussed how an increasing number of farmers were switching to older pieces of farming equipment because this equipment was cheaper and easier to repair. He also stated that some of the newer pieces of farm equipment had become unaffordable for family farmers.
• Rep. Stauber then asked Mr. Taylor to indicate whether he had ever interacted with equipment where the safety features had been overridden or manipulated for machine performance purposes.
  • Mr. Taylor testified that he had seen several customers operate equipment without backup alarms. He noted that these backup alarms had either been disabled or failed.

Rep. Mike Flood (R-NE):

• Rep. Flood remarked that the Subcommittee should first examine the already available self-repair options before it sought to adopt a federal right to repair policy. He highlighted how some manufacturers were increasingly offering customers remote support to troubleshoot through the most difficult equipment problems. He asked Mr. Taylor to discuss his dealership’s available self-repair options for its Caterpillar equipment.
  • Mr. Taylor discussed how Caterpillar was currently pursuing a services growth strategy, which entailed providing more services directly to the customer in order to drive more parts sales. He mentioned how Caterpillar’s website included a self-service section that supported customers seeking to repair their own Caterpillar equipment. He stated that Caterpillar’s new focus on supporting self-repairs constituted a departure from the company’s previous emphasis on dealership maintenance.
• Rep. Flood asked Mr. Taylor to indicate whether manufacturers would continue to make R&D investments if proprietary information were to be made available to third-parties.
  • Mr. Taylor stated that making proprietary information easily accessible would lead manufacturers to become less willing to make R&D investments.
• Rep. Flood remarked that the U.S. should seek to protect the IP rights of manufacturers. He recounted how a Chinese national had recently been convicted of attempting to steal the algorithm behind a farming software platform. He noted how this Chinese national was seeking to bring this stolen software back to China. He remarked that Congress should work to avoid policies that may provide China with opportunities for IP theft. He also stated that Congress should work to promote rural broadband deployment in order to facilitate self-repair options.

Subcommittee Chairman Jared Golden (D-ME):

• Chairman Golden first expressed agreement with Rep. Flood’s concerns regarding the problems associated with the U.S. from IP theft. He then mentioned how his family had a business that used very old equipment. He noted how this business faced challenges in terms of obtaining older parts for their equipment. He added that his family often had to machine their own parts so that they could repair and operate this older equipment. He asked Mr. Gerritsen to indicate whether he was concerned that his farm would still be able to make use of older equipment. He also asked Mr. Gerritsen to indicate whether the discontinuation of certain parts could ultimately force his farm to transition toward electronic equipment.
  • Mr. Gerritsen expressed hope that the increasing demand for older farming equipment would trigger a market response from manufacturers to produce older parts. He also stated that a right to repair would help farmers to maintain their equipment.
• Chairman Golden also asked Mr. Gerritsen to indicate whether a parts seller had a right to make a profit from the parts being sold.
  • Mr. Gerritsen answered affirmatively. He stated however that many parts sellers currently operated under monopoly conditions, which enabled them to make unreasonably high profits.
  • Mr. Taylor disputed Mr. Gerritsen’s assertion that parts sellers were making unreasonably high profits from parts. He noted how older equipment tended to be rarer and stated that it was therefore more expensive for manufacturers to produce parts for this equipment. He commented that manufacturers thus needed to charge high enough prices for certain parts so that it would be economical to produce the parts.

Subcommittee Ranking Member Claudia Tenney (D-NY):

• Ranking Member Tenney asked Ms. Gordon-Byrne to indicate whether she would support a compromise policy that would enable manufacturers to share IP with contracted repair shops if the repair shops were to sign NDAs and adhere to certain requirements. She stated that this type of compromise would protect the IP of manufacturers and limit liability exposure for manufacturers. She also commented that this compromise would provide a right to repair.
  • Ms. Gordon-Byrne remarked that there did exist opportunities for compromise with regard to right to repair policies. She stated that repair was simply the process of replacing broken parts in a device. She asserted that device modifications (such as chipping) did not constitute repairs and commented that much of the policy conversation surrounding the right to repair therefore involved non-issues.
• Running Member Tenney emphasized that devices often involved extensive R&D investments. She reiterated her support for allowing manufacturers to negotiate repair options with third-party repair shops. She stated that most manufacturers wanted to limit their liability exposures and to ensure that their customers were happy. She commented that a compromise right to repair proposal could achieve both goals.
  • Ms. Gordon-Byrne expressed agreement with Ranking Member Tenney regarding the possibility for achieving a compromise right to repair bill. She stated however that there were many false assumptions currently underlying the policy discussions around the right to repair. She mentioned how the FTC had previously studied the issue of right to repair and noted how the FTC had only identified one instance where a third-party repair might have impacted the safety of a consumer. She added that the automotive and agriculture industries had participated in the FTC’s study. She then remarked that parts pricing was a problem and noted how several states had worked to address this problem. She commented that parts producers should be able to profit from parts sales.
• Ranking Member Tenney asked Ms. Gordon-Byrne to identify the state with the best right to repair legislation.
  • Ms. Gordon-Byrne identified New York’s right to repair legislation as her favorite state law on the topic. She stated however that New York’s right to repair legislation was not comprehensive and noted how the legislation did not address agricultural equipment, heavy equipment, home appliances, and medical equipment.
  • Mr. Taylor disputed Ms. Gordon-Byrne’s description of the repair process as being simple. He stated that the tools and diagnostic equipment that his company needed to complete repairs were very expensive. He then remarked that the U.S. was failing to produce enough repair and service technicians. He mentioned how his company had to provide large amounts of training and incentives to attract and develop repair and service technicians.