As technology continues to advance within the field of agriculture, discussions over the right of a farmer to repair their own equipment have grown. Today, the nature of intellectual property law allows manufacturers of farm equipment to retain a right in that equipment’s intellectual property. For example, John Deere equipment contains an onboard central computer called an engine control unit (ECU) which only John Deere knows how to repair. John Deere is protective of its intellectual property and does not want the knowledge of how the ECU operates to be made public. As a result, only John Deere authorized dealers have the tools necessary to repair an ECU when it malfunctions. Thus, some farmers may encounter difficulties if they attempt to repair John Deere branded equipment. Farmers claim this creates a monopoly for John Deere in the repairs market and can lead to unfair pricing and unnecessary delays in their equipment’s repair. To combat this issue, stakeholders have sought to establish the “right-to-repair” through industry standards, stakeholder agreements, legislation, and litigation.
Overview of Right-to-Repair
Right-to-repair is not just an agricultural equipment issue, but rather a property rights issue that affects technology across the board. Property rights are often described as a bundle of sticks – meaning that the entire bundle itself is the property owned, but each stick describes a different legal right associated with the ownership of property. The owner of the tangible property does not always own all the sticks in the bundle. In the case of technological advancement, the intellectual property “stick” may still be owned by the manufacturer of the tangible property. For example, if you go to a music store and purchase a C.D., you may own the physical C.D., but you do not own the intellectual property right associated with the music. This means the C.D. purchaser will not be allowed to copy the music and sell it. In an agricultural equipment context, while a farmer may own the physical tractor, they are still subject to the intellectual property rights the manufacturer has on the computer system within the tractor. Because of this, there may be limitations that exist on the farmer’s ownership and use of property.
The right-to-repair movement emerged when manufacturers began placing limitations on the repair or maintenance of property. This means the owner was not allowed to repair the property themself, nor were they allowed to choose who would repair the property. Right-to-repair seeks to require manufacturers to provide materials, such as repair manuals, and tools, such as, diagnostic software to enable the property owner to repair the property themselves. For a more in depth review of right-to-repair, click here to view the NALC’s webinar “Right to Repair Statutes: Overview, Issues Presented, and Current Status of State Legislation.”
Many manufacturing companies agree with farmers’ belief that they should have the right-to-repair their agricultural equipment; however, the two sides disagree on which limitations should be implemented. Manufacturers worry that broad sweeping legislation addressing right-to-repair will stifle innovation and hinder regulatory compliance. Three industry groups, Association of Equipment Manufacturers (AEM), North American Equipment Dealers Association (NAEDA), and Associated Equipment Distributors, formed together to created R2R Solutions to address the manufacturer concerns with right-to-repair. Specifically, R2R Solutions highlights three areas of concern that overly broad right-to-repair laws could create for manufacturers – safety, sustainability, and innovation. Manufacturers worry that if equipment owners are given access to source code, they could override safety features and jeopardize the equipment’s compliance with environmental and emissions standards. Additionally, they worry that innovation in equipment development could be hindered by both a patchwork of state standards and a minimalization of value in intellectual property.
To address the right-to-repair issue in a way that includes the three manufacturer concerns, AEM and NAEDA created a Statement of Principles that expresses the industry’s commitment to provide a “toolkit of service tools available to help end users perform service and maintenance on their machinery.” The toolkit includes materials such as manuals, product guides, electronic field diagnostic service tools, and demonstrations on how to use various products and tools. The Statement of Principles commits manufacturers to provide these tools, but only by purchase, lease, or subscription through authorized dealers. While this recognizes the right to repair, it bars the “right to modify” and prohibits certain actions like resetting or reprogramming.
American Farm Bureau Federation Memorandum of Understanding
In addition to the Statement of Principles, several major agricultural equipment manufacturers have entered into memorandums of understanding (MOU) with the American Farm Bureau Federation (AFBF) to provide farmers and independent repair facilities with access to error codes, specialty tools, and information on how to repair the problems. Additionally, farmers and independent repair facilities can directly purchase diagnostic tools from the manufacturers. The companies that have signed MOUs include AGCO, CLAAS of America, CNH Industrial (including Case IH and New Holland), John Deere, and Kubota. AFBF has also created a tool for members to report disagreements with equipment operators under the MOU.
Codifying the right-to-repair
In their 2023 legislative sessions, 33 states and Puerto Rico considered right-to-repair legislation, but only four passed the measure. Of the four that enacted legislation – California, Colorado, Minnesota, and New York – only one included the right-to-repair in agricultural equipment. Colorado enacted the Consumer’s Right-to-Repair Agricultural Equipment Act and became the first state to pass legislation specifically targeting right-to-repair in agriculture equipment. Nine other states introduced agriculture equipment specific right-to-repair legislation in the 2023 session. The legislation failed in seven states including Florida, Maryland, Montana, South Dakota, Texas, Vermont, and West Virgina, but is still pending in Michigan and Utah.
Antitrust litigation against John Deere
In addition to the legislative attempts, MOUs, and industry produced standards, farmers have also sought to establish their right-to-repair through the court system. In January 2022, an antitrust action titled Forest River Farms v. Deere & Co., No. 1:22-cv-00188 (N.D. Ill., 2022) was filed against John Deere by Forest River Farms. The North Dakota farm, which owns John Deere branded equipment that contain ECUs and utilized Deere Repair Services to repair their equipment, sued under Sections 1 and 2 of the Sherman Act claiming John Deere “monopolized the market for repair and maintenance services of its agricultural equipment with ECUs by making crucial software and repair tools inaccessible to farmers.” As a result, John Deere is driving up the cost of repairs and spurring harmful delays in equipment repair timelines, according to Forest River Farms.
Over the next two months, nine other antitrust suits would be filed against John Deere, and in June 2022, they filed for centralization of the litigation into the Northern District of Illinois. These cases have been centralized into a Multi-District Litigation (MDL). An MDL is similar to a class action in that it offers an opportunity for similar claims to be brought against the same defendant but differs in a few key ways. Rather than having one plaintiff lead a class of similarly situated plaintiffs with claims asserted in one lawsuit, an MDL will transfer active cases filed in various jurisdictions into one court. MDLs can include the consolidation of both individual lawsuits and class actions. To be consolidated as an MDL, the civil actions must involve one or more common questions of fact and be pending in different jurisdictions. The Judicial Panel on Multidistrict Litigation, composed of seven circuit and district judges appointed by the Chief Justice of the United States, will decide whether to create an MDL. To read more about class actions and MDLs, click here to visit the NALC’s blogpost, “Procedures: Class Actions & Multi-district Litigations.”
Here, In Re: Deere & Co. Repair Services Antitrust Litigation, No. 3:22-cv-50188 (N.D. Ill., 2022), has a total of 18 individual lawsuits and class actions consolidated in the Northern District of Illinois. Like Forest River Farms, each of these cases alleges John Deere violated Sections 1 and 2 of the Sherman Act by monopolizing and restraining the repair service market for its branded equipment with ECUs. The Sterman Antitrust Act of 1890 is a federal statute that prohibits the restriction of interstate commerce and competition in the marketplace. 15 U.S.C. §§ 1-38. Section 1 makes illegal any contract or conspiracy that restrains “trade or commerce among the several States, or with foreign nations.” Section 2 makes the act of monopolizing or attempting to monopolize any aspect of interstate trade or commerce a felony. Plaintiffs allege John Deere violated the Sherman Act by unlawfully conspiring with authorized dealerships to “withhold necessary Repair Tools from farmers and independent repair shops” thereby forcing John Deere equipment owners to use its authorized dealer services for repair.
John Deere responded by motioning for a judgement on the pleadings. By seeking a judgement on the pleadings, John Deere is asking the court to review the contents of the plaintiffs’ pleadings and determine whether the pleadings demonstrate material issues exist between the parties. John Deere is alleging that the plaintiffs lack legal standing, have failed to state a plausible relevant market for anticompetitive behavior, and have failed to state viable claims under the Sherman Act. In February 2023, the United States Department of Judgement (DOJ) filed a statement of interest opposing John Deere’s request for dismissal. In addition to the motion for judgment on the pleadings, there is an ongoing dispute over discovery. A hearing is set for December, but it remains unclear what the ultimate outcome of this dispute will be.
As technological advancements in the agricultural industry continue to develop, the right-to-repair question will be an issue that a variety of stakeholders are interested in. Though industry standards, manufacturer agreements, legislation, and litigation have attempted to resolve the right-to-repair issue in agricultural equipment, the issue is ongoing and does not appear to be close to a resolution.
To read the plaintiff’s consolidated class action complaint from In Re: Deere & Co. Repair Services Antitrust Litigation, click here
To read defendant John Deere’s memorandum in support of its motion for judgement on the pleadings, click here
To read Farm Equipment’s ongoing coverage of the right-to-repair issue, click here