The Copyright Office Renewed Every Repair Exemption but One: Hospitals

Every three years, Americans have to ask the government for permission to fix things they already own. Yesterday the Copyright Office told the hospital repair industry its permission is no longer automatic. In a 21-page notice, the Office said it intends to fast-track the renewal of every existing repair and access exemption under the Digital Millennium Copyright Act except one: the exemption that lets hospitals and independent technicians get into the software of medical devices to fix them.¹ That reopens a fight the device makers lost in court eight weeks ago, and I think it is the most important thing in the notice.

Key Highlights

• The action: The tenth triennial review under DMCA section 1201 drew 43 renewal petitions and 25 petitions for new or expanded exemptions, which the Office grouped into 10 proposed classes.²
• The exception: The Office "will not grant this exemption through the streamlined renewal process" for medical device repair, after AdvaMed, Philips and a group of entertainment trade associations opposed it. It intends to recommend readoption of each of the other existing exemptions in their current form.³
• The court backdrop: On Sept. 1, the D.C. Circuit affirmed dismissal of the device makers' challenge to the same exemption in Medical Imaging & Technology Alliance v. Library of Congress, No. 25-5328.⁴
• The calendar: Initial comments are due Dec. 7, 2026, opposition comments Feb. 22, 2027, and replies March 22, 2027, with public hearings in spring 2027.³
• The idea: Philips (PHG), one of the named opponents, closed at $27.03 on Oct. 28, flat for the year while the S&P 500 ETF rose 13.3%, and reports third-quarter results on Nov. 3.^{5, 6}

Start with the strange premise. You own an MRI machine. It breaks. The software that controls it is protected by a digital lock. Under section 1201 of the DMCA, breaking that lock can be illegal even if all you want to do is fix your own machine. The only way around it is an exemption granted by the Librarian of Congress, and those exemptions expire unless they are renewed every three years.

That is a permission slip system for property you already paid for. I think it is one of the oddest regulatory structures in American law. Most people have never heard of it.

What The Notice Actually Does

The notice does two things. It renews nearly everything quickly, and it opens a full fight on a short list of new or contested classes.

On the fast track, the Office intends to recommend renewal of the exemption for diagnosing, repairing and modifying motorized land vehicles, marine vessels and mechanized agricultural vehicles, despite concerns from the Alliance for Automotive Innovation.³ It intends to renew the vehicle operational-data exemption, the good-faith security research exemption and both text-and-data-mining exemptions for nonprofit academic researchers.³

One line on artificial intelligence stood out to me. Responding to the Association of American Publishers, the Office wrote: "As AAP acknowledges, circumventing TPMs to compile AI model training data sets is permitted by the exemption".³ That applies to researchers at nonprofit institutions under the exemption's limits, not to everyone. Still, it is a regulator saying in writing that an existing exemption covers a use publishers wanted to fence off.

Then there are the 10 proposed classes that go through three rounds of comment. They include captioning, disc playback, jailbreaking smart TVs to remove automatic content recognition software, two video game classes and a broad repair class.³

The Hospital Exception

Medical device repair is the only existing exemption pulled out of the fast lane.

Eight petitions asked to renew it, from Brown's Medical Imaging, Caylor Equipment Services, Crothall Facilities Management, East Coast Medical Systems, iFixit, ImageOne Medical Group, Marshall Shannon and Trimedx. The Office set aside Crothall's because it ran only two brief sentences. It received one comment supporting renewal and four opposing it.³

The opponents were AdvaMed, Philips North America and the Joint Creators, meaning the Entertainment Software Association, the Motion Picture Association and the Recording Industry Association of America.³ AdvaMed filed sworn declarations from device executives. It argued that "System Servicing/Diagnostic Software" and "Maintenance-Related Documentation" are different works from "Clinical Operation Software," protected by different locks, and that manufacturers license and sell servicing materials separately from the device.³

Read that last point carefully. It is the whole business model in one sentence. The hospital buys the machine. The manufacturer sells the right to service it.

The Office found that the new evidence "may cast uncertainty on the current reliability of the existing administrative record".³ So the existing exemption and the proposed expansions now go into Proposed Class 8(b), Medical Device Repair, through the full process.³

What does that look like on the ground? Trimedx described a case where locks "prevented access to [the] necessary software keys required" for a repair, leaving it "to choose between accepting [manufacturer]-only servicing at inflated costs or leaving the device inoperable".³ AMT Imaging Solutions, an independent service organization, warned that without lawful access, "hospitals and imaging centers lose a competitive service option, and patients face longer downtime when equipment fails".³

The Court Already Ruled

Here is the part that bothers me. The device makers already took this exemption to court and lost.

On Sept. 1, the D.C. Circuit affirmed dismissal of the challenge brought by the Medical Imaging & Technology Alliance. It held that "the Librarian's adoption of the medical device repair exemption was lawful, reasonable, and supported by 'thorough and well-reasoned explanations from the Eighth and Ninth Triennial Rulemaking procedures'".⁷

But the court declined to rule on the repair-software versus clinical-software distinction because the challengers "did not demonstrate before the agency the existence of this distinction that it now presses" and addressed it "only in vague terms".⁷ So the manufacturers went back to the agency with the evidence they had not filed the first time.

The Office says the ruling "did not change the legal framework," but that it highlighted a disputed factual question: whether "there is a distinct body of repair software independent from the clinical-operation software and that it occupies its own standalone market".³ That is a fair question to ask. It is also exactly the question that decides who gets paid to fix a scanner.

The Free-Market Read

Let me give the manufacturers their best case. Copyright is property too. If a company writes service software and licenses it separately, that is a product, and the law should not let competitors take it for free. Patient safety is a real concern with complex machines. And the record matters: the Office should not renew an exemption if the evidence underneath it has changed.

I take that seriously. But I land in a different place.

The hospital already owns the device. The question is not whether a competitor can copy and sell the manufacturer's software. It is whether the owner, or someone the owner hires, can get past a lock to diagnose and repair the owner's own equipment. Treating that as copyright infringement turns a copy-protection statute into a service monopoly. That is not a property right. It is a regulatory moat.

The deeper problem is the structure. A right to repair your own property should not have to be re-earned every three years before a government office, with the burden on the owner. Look at the notice: every other existing exemption sails through. The one that threatens a specific revenue stream gets a second trial eight weeks after a court upheld it.

This is the same pattern I flagged when HHS cut 14 health IT rules, not 34. The retreat is often where the signal is. In this case the Office did not retreat from deregulation everywhere. It held the line almost everywhere, and stepped back on exactly one exemption.

The Repair Class Nobody Is Talking About

The hospital fight is the headline. Proposed Class 8(a) may be the bigger economic story.

The Repair Association, iFixit and the Bull Moose Project asked for access to software running industrial and manufacturing equipment, naming programmable logic controllers, process-control systems, production-line controls, industrial robots, additive-manufacturing equipment and semiconductor-fabrication equipment. A separate proposal covers commercial HVAC, battery energy-storage systems, elevators and building-management systems.³

The Office has turned versions of this down before. In 2024 it found the record did not support a broad class covering all commercial and industrial equipment and was inconclusive on programmable logic controllers.³ If you own a factory, Dec. 7 is your deadline to put evidence on the record. If nobody files, the answer will likely be the same.

The Numbers The Market Is Watching

Philips is the cleanest public company tied to this notice, because it filed in opposition by name.³

Its Diagnosis & Treatment segment, which includes imaging, grew comparable sales 2% in the second quarter. Its adjusted EBITA margin was 13.9%, but that included a U.S. tariff refund benefit of about 4.6%.⁸ Excluding the refund, the segment margin was 9.3%.⁹ Philips guides 2026 comparable sales growth of 3% to 4.5%, with Diagnosis & Treatment at the lower end.⁹

The stock has gone nowhere. Philips was down 0.2% for the year through Oct. 28 and GE HealthCare was down 7.6%, while the S&P 500 ETF rose 13.3%.^{5, 10, 11} Analysts sit at a consensus Hold, and Morgan Stanley recently cut its target to EUR 22 from EUR 24.⁵

The Bear Case

I could be wrong on this. Here is how.

First, the notice is a procedural win for Philips, not a final one. The court has already sided with the exemption once, and the Office could readopt it, or broaden it, after the full record comes in. If you buy Philips for a narrower repair exemption, you are betting on an outcome that a court has already leaned against.

Second, servicing rules are a small input next to China, tariffs and imaging demand. Philips itself pointed to "continued pressure in China" in Precision Diagnosis.⁹ Nov. 3 results will matter more than any comment deadline.

Third, the underlying margin is thin. A 9.3% segment margin without the tariff refund leaves little room for error.⁹

Fourth, the politics can turn. Repair access is not a one-party cause. One of the petitioners for the industrial class is the Bull Moose Project.³

The Idea: Philips (PHG)

My idea is Philips, framed honestly. I want an exemption that lets owners repair their own equipment. That outcome would hurt Philips at the margin. So this is not an idea built on the outcome I prefer. It is built on what the market is pricing.

Why the policy helps: For at least the next two comment rounds and the spring 2027 hearings, the medical-device exemption is contested rather than renewed on autopilot, and Philips is on the record arguing that servicing software is a separate, licensed product.³

The data point: PHG closed at $27.03 on Oct. 28, about 14.4 times forward earnings, with a dividend yield near 3.8% and a 52-week range of $23.62 to $33.44.⁵ Third-quarter consensus is roughly $0.37 of earnings per share on $5.02 billion of revenue.⁵

What the market may be missing: the stock trades as a turnaround with a China problem. The notice is a reminder that part of what Philips owns is a legal position over who services its installed base, and that position just got a longer hearing.

Risks: a weak Nov. 3 report, China, tariffs, and a final rule that readopts or widens the exemption.

What would prove me wrong: if Philips cuts its comparable sales outlook on Nov. 3, the repair fight is irrelevant to the stock. And if the Register's eventual recommendation readopts the medical exemption unchanged, the narrow thesis is gone.

I keep score on every idea, winners and losers (FMR Idea Scorecard).

What To Watch Next

Four dates. Philips reports on Nov. 3.⁶ Initial comments are due Dec. 7. Opponents file by Feb. 22, 2027, and supporters reply by March 22, 2027, before hearings in the spring.³ I will add the comment deadlines to the Deregulation Investor's Catalyst Calendar.

Watch who files. If hospitals, not just independent repair shops, put cost and downtime evidence on the record, the exemption likely survives. If the record stays thin, the manufacturers' second trial could go differently from the first.

Related analysis

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• The FCC Is About to Put Drones on Cell Networks. Wall Street Is Selling the Networks.
• The FCC Never Had the Power to Build USAC, a Court Says

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