Navigating the global liability defence agenda
Analyzing how right to repair legislation may affect insurance coverage and litigation
Tractors, ventilators, and iPhones are at the center of a growing dispute between consumers and manufacturers. For nearly a decade, organizations such as the Repair Association and iFixit have lobbied legislators to enact laws that would make it easier for consumers to repair electronic products. Industry giants such as Apple and John Deere have expressed a willingness to ease the process for repairs, but most manufacturers have refused to disclose digital information over intellectual property, consumer privacy, and safety concerns.
To date, twenty-seven states have introduced right to repair legislation, and Democrats in Congress have proposed a similar bill aimed at easing restrictions on medical device repairs. While no state has passed an electronic right to repair law, over the next 18 months this issue is primed for debate on Capitol Hill and in a majority of statehouses. Accordingly, this article aims to provide an overview of the right to repair movement, and examine the potential impact of legislation on insurance litigation and coverage issues.
Shifting the antenna back-and-forth may have helped “fix” problems in the 1950s, but today it is much more difficult to repair a television. Whether it is a cell phone, computer, or medical device, most people rely on electronic devices to get through the day. But repairing these devices is rarely as simple as moving an antenna or opening a user’s manual and replacing faulty parts. Instead, often times when an electronic device is damaged, consumers must use repair providers that have been approved by the manufacturer.
As technology has evolved, manufacturers have become increasingly concerned over the amount of digital information available about their products. Intellectual property and safety issues can arise if a competitor acquires a critical line of source code, or if a consumer mishandles a dangerous piece of equipment and causes a device to catch fire. To protect their property and ensure devices are properly handled, most manufacturers only provide specialized repair tools and access codes to authorized repair providers.
In 2013, Massachusetts became the first state to pass a bill that required manufacturers to provide independent repair shops with software and diagnostic information. Specifically, the Massachusetts automotive law forced car manufacturers to give independent repair providers the information necessary to diagnose and repair issues that previously could only be resolved at a dealership. Supporters of the bill argued that it would increase competition and benefit consumers by giving them more options for repairs.
The passage of the Massachusetts automotive law sparked a larger right to repair movement. In July 2013, the Digital Right to Repair Coalition (now known as the Repair Association) was formed with the goal of advocating for “repair-friendly policies.” The Repair Association crafted a right to repair Legislative Template based on the 2013 Massachusetts automotive law that it now uses to lobby legislators across the United States.
Despite the efforts of the Repair Association and other advocacy groups, no state has passed an electronic right to repair law. Unlike the 2013 Massachusetts bill that was limited to automotive information, electronic right to repair laws would require all manufacturers of digital electronic equipment to make information available to independent repair providers and consumers, unless the bill provides specific exceptions.
While the scope of these bills is very broad, there are three products that are frequently mentioned in right to repair discussions: tractors, ventilators, and iPhones.
How right to repair legislation could affect farmers, hospital workers, and cell phone users
Farmers are often cited as a group of consumers that would benefit from the passage of right to repair laws. John Deere, one of the world’s leading manufacturers of tractors and farming equipment, generally requires their products be repaired only by an authorized provider. Some of the equipment cannot be restarted or repaired without specific software codes, and the codes are generally only available to authorized providers. Additionally, farmers who repair their own equipment or use an unauthorized provider run the risk of losing their warranty. Right to
repair advocates claim that practices like these are unfair and unduly burdensome, particularly for farmers who are often in rural areas where access to authorized providers may be limited.
As a result of the COVID-19 pandemic, hospital equipment has been increasingly mentioned in right to repair debates. As hospitals work to maintain enough supplies and equipment to treat patients, medical workers have reportedly been frustrated at times with how difficult it is to repair ventilators. Like tractors, some ventilators require software codes for repairs, which may only be available to authorized providers.
Advocates and legislators claim that this presents unnecessary hurdles for hospital employees who rely on effective equipment to meet their patients’ needs.
Cell phones are the most ubiquitous product mentioned in the right to repair debate. Some smartphones contain terms and conditions that prohibit any modifications to the device unless expressly approved by the manufacturer. If users disregard those conditions, they risk voiding their warranty. Advocates claim this promotes a culture of waste, as consumers tend to opt for new devices rather than repair older models.
Apple has taken steps to ease independent iPhone repairs. The company announced that in early 2022, it will provide more than 200 individual parts and tools available for purchase that customers can use “to complete the most common repairs on iPhone 12 and iPhone 13.” However, the announcement noted that the new Self Service Repair is intended only for technicians with knowledge and experience to perform electronic repairs.
How right to repair legislation may affect manufacturers
Manufacturers argue that widespread dissemination of the information required by right to repair laws could negatively affect consumers. Cameron Demetre, the regional executive director for TechNet, a group that represents companies such as Apple and Hewlett-Packard, explained that there are concerns over information that would be provided to “unvetted third parties.” Additionally, Mr. Demetre argued that right to repair legislation, if passed, could have “the potential for troubling unintended consequences, including serious adverse security, privacy and safety risks.”
Manufacturers have also expressed concerns over potential intellectual property violations. In 2017, the Supreme Court cemented the doctrine of patent exhaustion and ruled that “[o]nce a patentee decides to sell—whether on its own or through a licensee—that sale exhausts its patent rights, regardless of any post-sale restrictions the patentee purports to impose.” However, the Court explained that contract law was still a useful vessel for protecting the rights of a patentee.
Currently, manufacturers can use contract law to protect their intellectual property in at least two ways. First, terms and conditions that restrict a consumer’s repair options limits the pool of repairers that can access or modify a device’s software. While some consumers may ultimately disregard the terms and conditions, it nonetheless acts as a deterrent against a competitor modifying a device. If a consumer experiences issues with a device and needs repair, the consumer will likely go to the authorized provider to maintain their warranty, rather than go to an unauthorized provider that may fail to fix the device. This helps the manufacturer ensure its product is not being misused by a competitor.
Second, manufacturers enter into contracts with authorized providers that restrict the provider’s ability to use the manufacturers data and information. These contracts protect manufacturers by providing a remedy at contract law if the repair provider breaches the agreement and misappropriates intellectual property.
Arguably, right to repair laws could produce intellectual property violations with questionable means of recourse, because contracts would no longer be tethered to the dissemination of manufacturer information.
Consumers aren’t the only ones championing right to repair legislation. Environmentalists opine that if repairs become more affordable and accessible, consumers will use their devices longer. In turn, manufacturing—and the amount of natural resources it requires—would decrease, and greater energy efficiency could be promoted throughout multiple phases of production.
Similarly, manufacturers aren’t the only ones opposing right to repair legislation. Major tech companies such as Amazon, Google, and Facebook have devoted considerable resources to defeating right to repair legislation in New York, Washington, and elsewhere. While these companies manufacture electronic devices, protecting consumers from the physical dangers of repairing Amazon’s Alexa or Google Play likely is not the motivation behind the lobbying of these tech behemoths. Rather, it seems more likely that these companies that have invested billions of dollars into the development of artificial intelligence are concerned about the potential ramifications of mass dissemination of their digital information.
If right to repair legislation is adopted across the United States, there will likely be legal issues in the fields of environmental, privacy and security, and intellectual property law that have yet to be fully conceived. However, if an electronic right to repair statute was enacted tomorrow, product liability litigation and coverage would likely be immediately affected.
Product liability claims
There are still a number of questions regarding the implications of right to repair laws. The scope of the proposed bills varies from state to state, but the Legislative Template from the Repair Association provides insight on how right to repair laws could affect product liability claims.
The Repair Association’s Legislative Template proposes that states require manufacturers “make available, for purposes of diagnosis, maintenance, or repair of such equipment, to any independent repair provider, or to the owner of digital electronic equipment manufactured by or on behalf of [the manufacturer] . . . documentation, parts, and tools, inclusive of any updates to information or embedded software.” The template includes a Limitations section, which explains “[n]othing in this Act shall be construed to require an original equipment manufacturer to divulge a trade secret . . . except as necessary to provide documentation, parts, and tools on fair and reasonable terms.” The debate over what trade secrets, if any, fall into the exception of this limitation is likely to be the subject of future litigation. For now, the proposition that independent repair providers may have access to a breadth of manufacturing information has implications for future product liability claims.
The elements of a product liability claim are well-settled. In order to be successful, a plaintiff must prove that the product was
- defective when sold
- unreasonably dangerous,
- proximately caused plaintiff’s injuries, and
- not substantially changed between the time it was distributed and when the injury occurred.
A repair provider cannot be held strictly liable for a defective product if it did not make or design the product. However, a manufacturer cannot be held liable for a defective product where the product is made unsafe by subsequent changes.
Judging whether a product has been substantially altered is not a particularly complicated task. For example, if a repair provider ignores a manufacturer’s warning and performs an alteration the manufacturer has explicitly warned against, that is a substantial alteration. Accordingly, the manufacturer is unlikely to be held liable.
Ultimately, courts rely on the testimony of experts to determine whether a manufacturer or repair provider is liable for injuries caused by a defective product.
Assigning liability becomes more difficult when it is unclear how a product has been altered. In situations where either a manufacturer or repair provider is responsible for a defective product, the burden of proving which party is at fault shifts from the plaintiff to the defendants.
Assuming right to repair legislation were to pass, it is easy to envision the following scenario. A consumer is injured when the lithium battery in their smartphone malfunctions. The consumer previously visited an independent repair provider who, using the information and parts available from the manufacturer, repaired the battery. The consumer then brings suit against the manufacturer and independent repair provider.
Prior to the passage of right to repair laws, the independent repair provider likely could be dismissed from the case by demonstrating that it did not significantly alter the smartphone or act carelessly in performing the repairs. However, where the independent repair provider has access to much of the same information as the manufacturer, it may be more difficult to avoid costly products liability litigation. It will be easier for manufacturers to present a question of fact as to whether an independent repair provider significantly altered a device because, in theory, there will be little preventing an independent repair provider from doing so.
If an independent repair provider has access to software codes and other diagnostic data, then products liability claims will become even more of a battle of experts.
This presents potentially costly, drawn out litigation where a smaller, independent repair provider is pitted against a large manufacturer with significant resources.
Insurance coverage issues
Large businesses that offer repair services likely have product liability insurance. While many general liability policies offer some product liability coverage, large repair providers typically obtain additional product liability insurance. Often times, manufacturers will refuse to contract with a repair provider that does not have a minimum amount of product liability coverage. Naturally, a manufacturer’s insurer does not want to be left defending a claim where an injury occurred because of faulty repairs, but the repair provider has little or no insurance coverage.
The enactment of right to repair laws likely would force manufacturers to pay increased costs for product liability insurance. In the status quo, a manufacturer’s insurer is afforded a level of security when the manufacturer only contracts with repair providers that have product liability insurance. If a lawsuit presents the issue of whether an injury was caused by manufacturing defect or faulty repair, the covered parties can appear and put forth a defense. That security ceases to exist if manufacturers are required to disclose repair information to any independent repair provider. Insurers would need to account for the possibility of a manufacturer being forced to pay an entire claim because the repair provider lacked coverage and failed to appear. Even if the manufacturer is later able to obtain a judgment against the repair provider for all or some of the claim, enforcing the judgment could prove difficult or impossible. Meanwhile, the manufacturer engaged in prolonged litigation and incurred additional expenses because the repair provider lacked adequate coverage.
This increased risk will likely cause insurers to raise product liability premiums for manufacturers.
Small businesses may also incur additional insurance costs. One goal of right to repair legislation is to “promote consumer choice and competition” by expanding the pool of capable repair providers. However, the cost of additional insurance may deter businesses from opening independent repair centers. While product liability insurance can be relatively inexpensive (many plans start as low as $0.25 for every $100 in revenue), most insurers calculate costs based on the type of products that are covered. Thus, some businesses may refrain from providing repairs for $1,000 iPhones and $40,000 John Deere tractors due to the added insurance expenses that would be required.
On October 19, 2021, the US Copyright Office (USCO) took steps to ease restrictions on repairs of cell phones and other consumer devices. The USCO proposed exemptions to the Digital Millennium Copyright Act (subsequently approved by the Librarian of Congress) which included a consumer’s right to access their device for diagnostic, repair, and maintenance purposes. While the exemptions granted consumers additional rights to modify or repair their devices, the new regulations are unlikely to appease right to repair advocates.
First, the new exemptions apply only to consumer devices. Farming and hospital equipment, as well as most other commercial and industrial products, do not benefit from the exemptions. Second, manufacturers are not required to provide additional tools or information. In essence, the exemptions give consumers the right, but not the tools or information, to try and repair their devices. Third, manufacturers may be able to block independent repairs by tethering certain functionality to the manufacturer’s products. For example, while a consumer may now have the right to replace a broken iPhone screen, Apple will likely continue to tether face identification to its screens. Thus, in order to replace a broken screen, a consumer likely will still need to go to an Apple store or authorized dealer to ensure that the new screen functions properly with Apple’s face ID technology.
Arguably, the new exemptions signal an increased appetite for government consideration of right to repair legislation. However, regulatory actions alone are unlikely to substantially affect an individual’s right to repair their products. Significant change likely will come only if Congress or states pass legislation similar to that championed by the Repair Association and other advocacy groups.
Right to repair legislation could spring litigation in a number of areas of law. However, as Congress and state legislators continue to evaluate proposed legislation, manufacturers, independent repair providers, and their insurers, should consider how these bills could increase the cost of product liability litigation and insurance coverage. It is likely that the passage of these bills would make it more difficult to determine who is at fault for a defective product that has been repaired by an independent provider.
Accordingly, what may have previously seemed like a fairly straightforward argument over whether an alteration was substantial will likely become more convoluted.
This could lead to exponentially more expert fees, extended litigation, and the need for additional insurance coverage.
 Rest. Second of Torts § 433(B)(3) (1965).
 Hutchinson v. Penske Truck Leasing Co., 876 A.2d 978, 982 (Pa. Super. 2005).
 Ayala v. V& O Press Co., 126 A.D.2d 229, 235 (2d Dep’t 1987).
 Reese v. Ford Motor Co., 499 Fed.Appx. 163, 166 (3d Cir. 2012).
 Pichardo v. C.S. Brown Co., Inc., 35 A.D.3d 303, 304 (1st Dep’t 2006).
 Impression Products, Inc. v. Lexmark Intern., Inc., 137 S.Ct. 1523, 1535 (2017).