POMONA, Calif., Dec. 7, 2006 (PRIME NEWSWIRE) -- Keystone Automotive Industries, Inc. (Nasdaq:KEYS) today said the company and other respondents intend to vigorously contest portions of a preliminary ruling issued on Monday, December 4, 2006, by an administrative law judge of the United States International Trade Commission in a complaint initiated by Ford Global Technologies, LLC against the company, another distributor and certain manufacturers.
The judge ruled that seven of ten design patents directed to parts for the Ford F-150 truck were enforceable and infringed Ford's design patents, but agreed with Keystone and the other respondents that three patents are invalid due to Ford's prior public use of the designs. The judge did not accept the respondents' further arguments that Ford's prior public use and other conduct also render the remaining seven patents invalid and unenforceable, and that even if valid, none of the ten patents is infringed. Consequently, he ruled that the importation of automotive parts covered by these seven patents violates Section 337 of the Tariff Act of 1930, as amended. Ford initially alleged that Keystone and the other respondents infringed 14 design patents directed to various exterior parts of Ford's 2004/2005 F-150 truck, but dropped four additional design patents before the trial commenced.
This ruling will be reviewed by the International Trade Commission, which must issue its ruling on or before March 5, 2007. Keystone and the other respondents believe the judge correctly found an invalidating public use and properly invalidated three of Ford's patents. The respondents, however, will shortly file a petition urging the Commission to review and reverse other portions of the initial determination, as well as earlier rulings by the administrative law judge. The Commission has 45 days from the date of service of the initial determination to decide whether or not it will grant, in whole or in part, a petition for review. If the petition is granted, the Commission will then set a briefing schedule.
If the Commission, nonetheless, ultimately finds a violation of Section 337, it will issue an order prohibiting further importation of the covered parts into the United States. The Commission's actions are subject to the review by the President of the United States, who has the authority to approve or disapprove the Commission's action. The Commission's final decision can then be appealed to the United States Circuit Court of Appeals for the Federal Circuit
"We believe the decision invalidating three of Ford's patents is correct, but incomplete and that all of the patents are invalid, unenforceable, and not infringed. We, therefore, intend to vigorously pursue our appeal rights," said Richard Keister, president and chief executive officer of Keystone Automotive.
The Commission's Office of Unfair Import Investigations, an independent party to the litigation representing the public interest, supported Keystone and the other respondents on all issues in the investigation, including their position that all of the patents are invalid, not infringed, and unenforceable because Ford fraudulently obtained its patents by intentionally hiding the invalidating public use from the United States Patent and Trademark Office. The Commission's Office of Unfair Import Investigations' position paper can be read in its entirety on the United States International Trade Commission's web site: http://edisweb.usitc.gov/edismirror/337-557/Violation/263913/300975/f1c/7cb92c.pdf
The seven patents in question cover 13 parts sold by Keystone, which represents less than 0.1 percent of sales on a trailing 12-month basis. It is not anticipated that the aggregate loss of sales of these parts over time would be material to the financial condition or results of operations of Keystone. However, depending upon the nature and extent of any adverse future rulings, Ford and other automobile manufacturers may attempt to assert similar allegations based upon design patents on a significant number of parts for other models, which over time could have a material adverse impact on the entire aftermarket collision parts industry.
The collision repair parts market is a $16 billion industry that is estimated to be 72 percent controlled by automobile manufacturers. The utilization of aftermarket collision repair parts by the collision repair industry represents an important alternative for consumers -- providing an estimated 20 to 40 percent savings over those parts supplied by the automobile manufacturers.
About Keystone
Keystone Automotive Industries, Inc. distributes its products primarily to collision repair shops through its 136 distribution facilities, of which 22 serve as regional hubs, located in 38 states and Canada. Its product lines consist of automotive body parts, bumpers, and remanufactured alloy wheels, as well as paint and other materials used in repairing a damaged vehicle. Its products are sold to more than 25,000 repair shops throughout the United States and Canada.
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for certain forward-looking statements. The statements contained in this press release that are not historical facts are forward-looking statements based on the company's current expectations and beliefs concerning future developments and their potential effects on the company. There can be no assurance that future developments affecting the company will be those anticipated by the company. Actual results may differ from those projected in the forward-looking statements. These forward-looking statements involve significant risks and uncertainties (some of which are beyond the control of the company) and are subject to change based upon various factors, including but not limited to litigation related to the Ford/ITC design patent proceeding; and other potential aggressive actions being taken by certain car manufacturers to negatively impact the aftermarket collision replacement parts industry, including patenting vehicle parts sold by the aftermarket, instituting litigation relating to alleged trademark violations and lobbying state legislature to adopt legislation favoring the OEM's; the impact on the company as a result of actions which have been, or in the future may be, taken by insurance companies with respect to the use of aftermarket products in the repair of vehicles; the effect of policies adopted by CAPA; and the costs of litigation. Reference is also specifically made to the "Risk Factors" section set forth in the company's Form 10-K Annual Report filed with the Securities and Exchange Commission (SEC) for the fiscal year ended March 31, 2006 and in Part II, Item 1A of its Form 10-Qs filed with the SEC thereafter, including its Form 10-Q for the quarter ended September 29, 2006, for additional information on the risks and uncertainties facing the company. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as the result of new information, future events or otherwise.