February 2001 Publisher's Page
Encryption and Licensing: Who's on First?

The issues of data encryption and restrictive licensing of parts-related information are rearing their ugly heads. For shop owners, insurers, OEs, dot-coms, and aftermarket parts sources the impact is felt in many different ways.

Today’s estimating systems create a file that holds all the information relating to the estimate. This is called the EMS file. Using CIECA standards, this file can be sent to an internal business system or externally to an insurer, to a dot-com company, to a CSI provider, or to anybody, with the assurance that, because the file is unencrypted and written to CIECA standards, that the file can be read by anybody with a receiving program incorporating CIECA standards.

That’s today...If the data providers, namely ADP, CCC and Mitchell, encrypt the data going into the EMS file only those with the decryption code will be able to read and use that file.

Of course, if everybody who has a legitimate reason to use the information were given the code for decryption we would be right where we are today with this advantage: that the data would be secure while being transmitted.

Well, then what’s the big fuss? Well, the big fuss is about who gets the "magic decoder ring," e.g. the decryption key.

Should the EMS file written to CIECA standards truly be open to all? Let’s look at the possible scenarios if it is:

Dot-com companies such as Ensera, ProcessClaims, AutoVista, or ChoiceParts, will have downloaded the EMS file from the shop for one of several purposes. While the dot-com companies have not talked about it, confidential data, such as vehicle owner name, address, phone, etc., etc., could be sold to insurers, car dealers, finance companies, etc. as prospect lists.

Parts information could be provided to parts distributors who are subscribers to the dot-com company, but not the sources intended by the repair facility, covering parts specified OE or salvage, allowing the parts distributor to contact the shop to solicit an order.

Potentially copyrighted materials, such as OE part numbers, part descriptions, labor times and descriptions, could be resold to just about anybody, given the laxity of today’s agreements.

So much for the issue of encryption of the EMS file generated from the estimate. Let’s look at the part number, part description data, and supercession information provided by the OEs. Is this public information, or do the OEs have a right to license its use?

Historically, the OEs have provided this data to the information providers on a licensed basis at low cost, and have provided the information on the same basis to others as well.

These agreements between the OEs and their licensees typically stipulate that the information will be used only in a way that is supportive of their dealer organizations. Thus, the faxing of a part order to a dealer based on data licensed to ADP, for example, was well and good.

When that part order got faxed to an aftermarket parts distributor or to a salvage yard no one objected because the relationship was between the distributor and/or salvage yard and the individual shop. The information was not being resold to the distributor or yard by a third party as a part of a service or parts ordering system, as is the intention of the dot-com companies entering the parts arena.

Now the plot thickens. The OEs obviously want to capture all the parts business they can through their dealers. To this end, the Big Three, Ford, DaimlerChrysler, and GM, with Bell and Howell, set up a new company, as yet unnamed, to facilitate the ordering of parts directly from a dealer by a bodyshop, with no capabilities for either salvage or aftermarket parts ordering.

Further thickening the plot is a decision by DaimlerChrysler to increase the cost of its license to data providers such as ADP by a reported 200+ times, which would impact the number and profitability of companies licensing data from DaimlerChrysler.

Now comes the kicker. ChoiceParts.com, a company founded by and owned equally by ADP, Reynolds and Reynolds, and CCC Information Services, approaches the OEs for a license to use the parts data provided today separately to all three companies, in their new venture. They are rebuffed.

ChoiceParts then sits like a newly built steel mill with no source of iron ore. What to do?

In the best tradition of American business, ChoiceParts files a lawsuit in the Federal District Court in Chicago asking for an injunction "directing each of the Big Three OEs and all those acting in concert with them to provide parts data to ChoiceParts in accordance with the ordinary and customary terms followed heretofore in the marketplace." In other words, treat us the same way you treat our parent companies and everybody else.

Bottom line to all this is that with a combination of perhaps well-intended encryption and a refusal on the part of the OEs to license those who may use the parts information in a way not in the best interests of the OE dealers, e.g. ordering aftermarket parts, the OEs and the data providers have dropped a large monkey wrench into the dot-com gears, including in the case of collision repair industry data providers ADP and CCC, a wrench in the gears of a company they just founded.

In the meantime, Mitchell announces that they will neither encrypt the EMS file generated by their estimating system nor participate directly through a financial/investment interest in the parts sourcing arena.

There is a logical solution to both the encryption and licensing conundrums, I believe, and that is for the OEs to license ChoiceParts on the same basis as they do ADP, MOTOR, and Mitchell, and enforce all of the provisions of that license.

When it comes to encryption, the VIN (Vehicle Identification Number) and parts data need to be separated from the rest of the information in the EMS file. The dot-com company needing the data for claims processing, for example, must agree in writing with the collision repair facility not to use or sell the information for any other than the agreed upon purpose, e.g. no sale to car dealers or finance houses for prospecting, no sale to insurers for marketing purposes, nor for any other use which could be construed as an invasion of privacy of either the vehicle owner or the shop.

v

Who Wants What?
1.) Data Provider	Continuation/expansion of estimating and business-related systems for both shops and insurers
2.) OE	Preference for original equipment replacement parts purchased from OE dealers Control over licensees' use of parts information
3.) Insurer	Expanded access to sources of reasonably priced replacement parts and electronic communication capabilities focused on cycle time and severity reduction
4.) Repair Facility	Easy-to-use low cost systems to communicate with all parties on an equal basis
5.) Aftermarket Parts Distributor	Access to parts orders
6.) Dot-com	Free access to all EMS file information providing a variety of e-commerce opportunities
7.) Attorney	Confusion, suspicion on all sides Lengthy legal wrangling and hefty legal fees
8.) CIECA	Continued use of standards