From vehicles to electronic goods, consumers, trapped in a vicious circle concocted by the manufacturers, have been losing what is now being called the “right to repair” the property they have bought free and clear. Manufactures have created a sustainable revenue stream by limiting the consumers’ ability to repair such goods, particularly in electronics. With technology developing at a lightning speed, companies manufacturing electronic commodities come up with new products and designs for laptops, phones and other electronic accessories, often citing that models are too old or unsupported for repair.
In the U.S. Market the cornering of repair markets has become a lucrative business. For example, the market for collision repair of any automobile was valued at $33 billion in 2018. Americans spend over $39 billion repairing heavy machinery such as tractors and bulldozers and the market value for repairing cell phones, computers and electronics is capped at $22 billion. Repair and aftermarket sales are a fundamental part of manufacturer’s revenue streams, accounting for 10% to 40% of revenue for industrial companies. Under such circumstances, a lot of discussion has been happening over the Right to Repair.
Methods of Restricting Right to Repair
In order to ensure there is this continuous flow of revenue stream the manufacturers have resorted to several tactics to ensure that they can insert influence on products even in the after-sale phase of a transaction. Methods range from withholding critical tools, or simply designing products that can be repaired, to leveraging intellectual property and contract law to criminalize or outright deter independent repair
First, warranty is nothing but a guarantee which is issued to the purchaser of an article by its manufacturer in case of any repairs or replacement. Auto manufacturers often resort to this tactic to ensure that buyers use the dealership for repairs to maintain their warranties. This is less egregious than other tactics in that at least nominally, it saves the consumer money on repairs. However, warranty claims can be opaque or vague in many cases. Some warranty conditions, such as warranty voiding stickers, are even legally questionable under US law.
Second, designs of such goods undergoing changes over a period of time has given an upper hand to such manufacturers and companies to monetize on the repair expenses incurred by the consumer. For example the cell phones that we use today are very complex in design compared to the ones we used to use in the past. Some of this might be unavoidable due to rapid increases in technology. Other, more cosmetic or incremental changes, are more suited to deliberately hampering external repair efforts than actually increasing the efficiency of the product. For example, the internal rechargeable battery of AirPods by Apple cannot be replaced without destroying the outer casing.
Thirdly, another method to curtail the right to repair is by withholding essential tools, parts, and manuals that can play an instrumental role in repairing the goods. Manufacturers refuse to sell or make original equipment available to the public. For example, if the thumbstick on the Nintendo Switch controller breaks, the only available option for consumers is to buy a new controller. This is because Nintendo only produces this part in-house, and does not make it available to repair shops.
Fourthly, most electronic appliances are protected by Intellectual Property laws, and it’s a given fact that no company would take any step that would jeopardize the protection of the subject matter of the IP owned by the company. In cases of electronic devices it is often seen that copyright protection is claimed for a computer code and patent protection is claimed for the hardware of the device. Acts of tinkering with the device parts without the prior permission of the manufacturer are discouraged, with fairly recent US case laws even protecting manufacturers from the utilization of patented products in repair.
Lastly, manufacturers is the End User License Agreement (EULA). EULA, first created by IBM, is a conventional approach taken by manufacturers to ensure that the consumer does not exercise the right to repair the device without prior approval of the manufacturer. EULA is a legal agreement, often written using complicated language used to conceal manufacturer intentions. These agreements grant companies access to monitor, manage and restrict the consumer’s use of their products. For example, the Media Services Terms and Conditions of Apple states that Apple reserves the right to change, suspend, remove, disable or impose access restrictions or limits on any External Services at any time without notice. Courts have even routinely upheld the enforcement of these EULAs, with multinational corporations being the primary beneficiary. EULAs are of such nature as to abridge the rights of consumers and are excessively used, why are they still being enforced by courts?
Consequences of Restricted Repair
With companies indulging in these tactics to sustain their revenue stream and dominate the repair market, the consumers face several consequences.
Corporations indulging in the abovementioned tactics tend to generate more revenue through the repair market stream than the stream that projects the sales. In case of automobiles, a consumer tends to incur additional costs in the servicing of their automobiles. The US National Automobile Dealers Association found that a typical car dealer derives 48% of its profits from repairs, compared to just 26% from car sales. The same can be said for electronic appliances- from 2007 to 2014, the repair and replacement of damaged iPhones cost Americans $10.7 billion
In addition, manufacturers restrict the consumer’s right to initiate repairs by blocking access to important tools, diagnostics and manuals, this goes on to stifle the repair economy. Repair market comprises several independent repair shops run by private individuals, who often fix goods at a lower rate than the original manufacturer. Not supplying Independent repair shops with essential components means they cannot initiate repairs and the consumers are forced to approach the manufacturers. Independent repair shops can be 30% to 50% cheaper than the manufacturers repair services.
Forcing consumers to incur additional expenses to purchase new products or get replacements of parts and components increases the amount of E-waste that is generated. One report estimated that the world produced nearly 50 million tons of e-waste in 2018.
In order to tackle these problems exemptions must be created to protect the rights of consumers to initiate repairs. This will ensure that manufacturers and sellers do not dominate the repair market and burn holes in the pocket of the consumers on every purchase of any electronic consumable commodity.
Author: Nihal Raj, Legal Intern at PA Legal.
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