Aro Manufacturing Co. v. Convertible Top Replacement Co.

Aro Manufacturing Co. v. Convertible Top Replacement Co., 365 U.S. 336 (1961), is a United States Supreme Court case in which the Court redefined the U.S. patent law doctrine of repair and reconstruction.. The decision is sometimes referred to as Aro I because several years later the Supreme Court readdressed the same issues in a second case in 1964 involving the same parties—Aro II..

Background The specific controversy in Aro concerned the replacement of a fabric top portion of an automobile convertible roof assembly. After some years, the tops became torn or discolored, often as a result of bird droppings,See Convertible Top Care ("Should you get bird dropping on your top, remove them immediately. They are very acidic and can quickly damage tops."). and owners wished to replace the cloth part without buying an entire new convertible top assembly.This point is illustrated by a colloquy that occurred during the oral argument between Justice Tom Clark, who later joined in the majority opinion, and counsel for the patentee, Elliot Pollack. Justice Clark said that he had given his son Ramsey Clark, then a student and subsequently U.S. Attorney General, his old 1949 Oldsmobile convertible, which had the patented top. Justice Clark had noticed that the cloth had become discolored or corroded, apparently by action of Washington's weather or birds, and although the product was still operative he was dissatisfied with its appearance and yet did not want to have to pay a second patent royalty to fix it. Pollack suggested that Justice Clark or his son could use a needle and thread to sew patches over the bad parts. Justice Clark said that he did not want to do that ("It would not be practical because the leak would come into the sewing the thread and also that it would cost so much to take the top off and -- and sew it, would [make] it cheaper for me to buy another top"), and Pollack felt he could offer no further suggestion. Justice Clark appeared dissatisfied with the answer. See Oral Argument; Written Transcript Text. The patentUS patent 2,569,724 covered the combination of the cloth and a number of metal parts that remained serviceable. Aro was a company that engaged in the supply of replacement cloth tops that fit various car models. Because Aro declined to pay a royalty to the patentee, patent infringement litigation followed.

Previous state of law Prior to the Supreme Court's decision in Aro I, when a purchaser of a patented product replaced some components of the product (because they were worn or otherwise unsatisfactory to the owner of the product), U.S. lower courts made the decision whether the conduct was permissible repair or impermissible reconstruction of the patented article by using a complex, multi-factor balancing test.

The courts weighed against one another factors such as the following, although there was no common denominator for them: the cost of the replaced component or components relative to the cost of the entire article, the number of replaced components versus the total number of components, the relative life spans of the different components, and whether the replaced component was the heart, essence, or “gist” of the invention.

Thus the court of appeals had said in its opinion that the fabric "is not a minor or relatively inexpensive component" of the patented combination, or an element that would expectedly wear out after a very short period of use—although its "expectable life span" is shorter than that of the other components—and, for these reasons, it concluded that "an owner would [not] rationally believe that...he was making only a minor repair" in replacing the worn-out fabric, but that, instead, the replacement "would be counted a major reconstruction".See Aro I, 356 U.S. at 343-44.

The Supreme Court's own few precedents, however, tended to paint with a broader brush instead of resorting to the foregoing factor analysis. The Supreme Court stated that “the distilled essence” of the prior case law came from Judge Learned Hand, who ruled in 1948 that "[t]he [patent] monopolist cannot prevent those to whom he sells from...reconditioning articles worn by use, unless they in fact make a new article".See Aro I, 365 U.S. at 343.

Accordingly, the Court rejected the factor analysis approach of lower courts to repair and reconstruction.

Opinion of the Court

The Court reviewed the prior case law concerning repair and reconstruction, with a principal focus on its own rather than lower court opinions. It rejected the analysis of those lower courts using a many-factor, balancing test and instead held the proper test to be this:

The decisions of this Court require the conclusion that reconstruction of a patented entity, unpatented elements, is limited to such a true reconstruction of the entity as to "in fact make a new article," after the entity, viewed as a whole, has become spent. In order to call the monopoly, conferred by the patent grant, into play for a second time, it must, indeed, be a second creation of the patented entity. …Mere replacement of individual unpatented parts, one at a time, whether of the same part repeatedly or different parts successively, is no more than the lawful right of the owner to repair his property. Measured by this test, the replacement of the fabric involved in this case must be characterized as permissible "repair," not "reconstruction."Aro I, 365 U.S. at 346.

The Court emphasized that an infringement analysis for making the subject matter claimed in a combination patent could not single out one element of the combination as "essential," but could find infringement only when all elements were made:

No element, not itself separately patented, that constitutes one of the elements of a combination patent is entitled to patent monopoly, however essential it may be to the patented combination and no matter how costly or difficult replacement may be. While there is language in some lower court opinions indicating that "repair" or "reconstruction" depends on a number of factors, it is significant that each of the three cases of this Court, cited for that proposition, holds that a license to use a patented combination includes the right "to preserve its fitness for use so far as it may be affected by wear or breakage."Aro I, 365 U.S. at 345.

On that basis, the replacement of the old fabric top was permissible repair rather than impermissible reconstruction. The opinion for the majority, by Justice Whittaker, largely accepted the arguments that the U.S. Justice Department made as amicus curiae.

UK repair law

A comparable result to that of Aro has been reached under UK law, although the latter goes somewhat further by allowing automobile repair to extend to the replacement of worn out parts subject to intellectual property protection.The fabric top in the Aro case was an unpatented component of a patented combination. In British Leyland Motor Corp v Armstrong Patents Co, the House of Lords held that Leyland could not prevent a third party (Armstrong) from supplying replacement tailpipes to purchasers of Leyland motor cars. despite the existence of an intellectual property right (copyright) in the tailpipe design. To allow Leyland the relief it sought would have the effect of derogating from the title Leyland had conveyed to car owners when they purchased the cars. This rationale is comparable to the doctrine of legal estoppel under US law.

Although Armstrong was a third party not in privity with Leyland, and a stranger to the car purchase transaction, nonetheless Armstrong was permitted to rely on the non-derogation rights of the car owners relative to Leyland (as Aro was permitted to rely on the rights of car owners to repair their property and keep it in good order). In his speech, Lord Bridge stated, “What the owner needs, if his right to repair is to be of value to him, is the freedom to acquire a previously manufactured replacement exhaust system in an unrestricted market.” In this regard, he observed that it was infeasible for the general public to make their own tailpipes or go to the village blacksmith to have them specially made. A comparable principle allowing third-party assertion of another's rights has been recognized in US law when the rights owner is not in a position effectively to assert his rights for himself.See, e.g., .

Commentary

Some commentary approved the Aro decision as providing more certainty and better balance of the public's and original equipment manufacturers' interests. Other commentators disapproved of the decision's "short shrift" for the contributory infringement claims of manufacturers to the exclusive right to sell repair parts for their products.

Bageman James C. Bageman explains the issue of repair vs. reconstruction as "another aspect of the problem of how far to extend the patent monopoly," because "to decide whether or not the repair doctrine is a defense to an allegation of contributory infringement is to decide whether the patentee should receive any additional compensation over and above what he received through the initial sale of his invention during the functional life of that device." The Aro test largely denies patentees this source of income. The issue then is providing sufficient incentive to inventors so that they will create and disclose inventions. "Compensation beyond this 'sufficiency' level is arguably unwarranted." Bageman considers it "doubtful that by removing this source of compensation, prospective inventors will lose the economic incentive to create." He therefore concludes: "The Aro I test seems to provide a dearer, more well-defined standard. The resulting benefit to the producer and consumer of unpatented parts seems to outweigh the risk of loss of creative incentive resulting from the rejection of the [prior, multi-factor] test."James C. Bageman, Note, Contributory Infringement and the "Repair" Doctrine, 38 S. 363, 370–71 (1965).

Caffrey

Thomas F. Caffrey sees Aro as setting a standard under which repair will be the usual result and reconstruction a rare case. He observes that Justice Black, concurring in a separate opinion, is quite outspoken in describing the disadvantages of a "several-factor" test found in prior lower court opinions. Black "makes every effort to point up the deleterious effect that the rule advocated by the minority would have on small business enterprises" by "deterring small businessmen from engaging in activities that would have been found, if pursued, to be non-infringing." Caffrey then asks: "is the single test, propounded by the majority, as vague for its simplicity as the 'several-factor' test allegedly is for its complexity?" He responds that "the answer is decidedly no." In his view, inexplicitness is a virtue:

Any attempts to clarify the "making" test, be it by example or description or otherwise, would necessarily have the effect of dispelling any vestiges of simplicity that might surround it. Such attempts would undo all which the Court set out to accomplish in this opinion. . . . Thus, significantly, the Court has laid down an unequivocal test, unhampered by confusing, weakening qualifications. As a result, combination patent holders and small business entrepreneurs will better appreciate the limits of their respective offices, and the courts will less frequently find before them an issue of repair or reconstruction.Thomas F. Caffrey, Case Note, 7 149, 152 (1961).

Schafran

Julius Schafran criticized the decision because "at present it appears that the rights afforded by a combination patent have been diminished, and it seems likely that findings of forbidden reconstruction will in the future become exceedingly scarce."Julius A. Shafran, Note, 49 988, 993 (1961).

Sease

Edmund Sease reviews the post-Aro case law. He classifies the cases into four categories: those cases where the part replaced made the combination patentable over the prior art;