Suppliers sharing names with producers beware - CJEU in Ford Italia (C-157/23)

 

Photo by Benjamin Scheidl on Unsplash

In December the CJEU issued the judgment in the Ford Italia case (C-157/23), which focused on the scope of the notion of an apparent producer, that is a person presenting themselves as a producer by putting their name, trade mark or another distinguishing feature on a consumer product, pursuant to Article 3(1) of the old Product Liability Directive. As the new Product Liability Directive contains the same provision (Article 4(10)(b)), this judgment is bound to shape the interpretation of an apparent producer's notion going forward. 

The CJEU followed the advice of AG Campos Sánchez-Bordona, which we commented on previously ('Unintentionally becoming an apparent producer...'). The literal interpretation of Article 3(1) of the PLD requires apparent producers to take action to mislead consumers as to their participation in the production process by 'putting' their name etc. on a product. The CJEU explains that such active steps do not need to be limited to a physical act of placing a name etc. on a consumer product. Instead, we should look into the 'conduct of a person who uses the affixing of his or her name, trade mark or other distinguishing feature on a product in order to give the impression of being involved in the production process or of assuming responsibility for it' (para 40). This is a very liberal approach, as what suffices is the sole fact of apparent producers benefiting from presenting themselves as actual producers, stemming from consumers believing the product's quality will be higher as if they have bought it directly from the actual producer (para 41).

In the given case it did not matter then that Ford Italia did not put their name or trade mark on the car that has been sold to a consumer, which car proved defective. It was sufficient that they shared (a part of) their name and trade mark with the actual producer, Ford WAG, and it was present on the car. Moreover, CJEU emphasised that apparent and actual producers are jointly and severally liable, which means consumers may choose to raise a claim against the apparent producer (para 44). National procedural rules may then allow such apparent producers to have recourse from the actual producer (para 47).

As a side note, it is worth it to note para 45 of this judgment. In it the CJEU addresses interpretation of Art. 3(3) of the PLD, which requires suppliers to promptly identify the actual producer in order not to be held liable instead of them. The CJEU recalls the historical background to this provision, which seems to suggest that more could be required from suppliers in such cases than simply 'referring' consumers to actual producers, with whom consumers may not be familiar. As Italian courts in the Ford Italia cases wanted the supplier to 'implicate' the actual producer in the actual proceedings, rather than simply identifying them, this may indeed prove to be the proper course of action.

Unintentionally becoming an apparent producer - AG Campos Sánchez-Bordona's opinion in Ford Italia (C-157/23)

Photo by Benjamin Scheidl on Unsplash

AG Campos Sánchez-Bordona elaborated today on the notion of a producer under the Product Liability Directive (Directive 85/374) in the case Ford Italia (C-157/23). A consumer in this case purchased a Ford Mondeo car from Stracciari, Ford's dealer in Italy. The car itself was manufactured by Ford WAG, a German company, which used another company, belonging to the same company group, - Ford Italia - to distribute it to Stracciari. After the consumer was involved in a traffic accident, during which the airbag did not work, they brought a claim against the seller - Stracciari, and Ford Italia. The latter claimed their 'supplier' status and identified Ford WAG as the producer. Still, Italian courts allocated producer's liability to Ford Italia in the cases before them in both instances. 

As AG Campos Sánchez-Bordona also agrees here with, using Art. 3(1) PLD that is considering Ford Italia as an 'apparent producer' instead of Art. 3(3) PLD, which only allows to hold the supplier liable if they did not timely identify the producer, is what the CJEU should consider here. The referred question asks then whether if the supplier has not physically placed its own name, trader mark or other distinguishing feature on the consumer product, they could be held liable as a producer on the ground that they share in whole or in part the same name, trader mark or other distinguishing feature as the producer. How broad then is the concept of an 'apparent producer'?

AG Campos Sánchez-Bordona advises the CJEU to consider that in the given case not only the producer and the supplier share the same name (which allows the supplier, Ford Italia, to raise consumer confidence, taking advantage of the reputation of Ford brand - para 39) , but that they also belong to the same group of companies, operating under the same emblem (para 50), and that the car bears the trade mark the characterises both companies. As such, the consumer could have considered Ford Italia as presenting itself as a producer, which could lead to their liability under the PLD. '(...) the consumer cannot be expected to discover, by his or her own means, who the (actual) producer is, where that producer is distinct from the supplier which presents itself with those characteristics." (para 41). This according to AG Campos Sánchez-Bordona could lead to to joint and several liability of actual producer and apparent producer (para 48).

The AG Campos Sánchez-Bordona draws parallels to the recent Fennia v Philips case (C-264/21 - with our comment), however, in that case both Saeco and Phillips names were placed on the consumer product, which made the reference to the 'apparent producer' easier. The second invoked case, O'Byrne (C-127/04), made it easier to consider as a producer another company, a distributor, belonging to the same company group. However, there, the distinction with the current case was that in O'Byrne the actual producer could no longer have been sued, due to the time limits having passed. 

As AG Campos Sánchez-Bordona mentions in para 31 the given case requires careful weighing of the consumer protection interests, which the broader interpretation of the notion provides, against interests of traders involved in the production and supply chain. 

I am not fully convinced whether in the current case the latter should not have prevailed. Considering that the supplier, Ford Italia, promptly identified the actual producer, it seems that the consumer interests could have been protected by national procedural laws allowing either adding to the procedure another party (Ford WAG) or raising a new claim against them. However, holding the supplier liable as an apparent producer under the circumstances of this case may expose suppliers to claims they have not accounted for either by insurance or in their B2B agreements within the production and supply chain. Let's see what the CJEU decides in this case.

Throwback to last summer: the notion of producer clarified by the Court (C-264/21, Keskinäinen Vakuutusyhtiö Fennia)

Our last two posts concerned the notion of the consumer in the context of two judgments issued earlier this week (CJEU confirms..., Financial benefits...). Today we would like to draw your attention to an older judgment, which we have not yet had a chance to comment on, C-264/21, Keskinäinen Vakuutusyhtiö Fennia. The ruling similarly involves one of the basic concepts of consumer law - this time the concept of the producer. 

Facts of the case

The preliminary reference was made by a Finish court in the context of a dispute between an insurer and Koninklijke Philips, a known Dutch corporation offering electronics. The background is unfortunate: a consumer bought a coffee machine and on the following day their house caught fire. The insurer paid for the damage and sought compensation from Philips under product liability law. The defendant argued, however, that it could not be considered a 'producer' of the defective product. While Philips' logo was visible on the product, the packaging also made clear that the coffee machine was manufactured in Romania by Saeco International Group SpA, a Philips subsidiary. Against this background, the referring court expressed its doubts whether the very fact that a person has put his trademark on the product or authorised it to be put on the product is sufficient to qualify that person as a producer, or whether additional criteria must be fulfilled.

No additional conditions required

To recall, pursuant to Article 3(1) of the Product Liability Directive (PLD) a 'producer' is defined as the manufacturer of a finished product, the producer of any raw material or the manufacturer of a component part and any person who, by putting his name, trade mark or other distinguishing feature on the product presents himself as its producer. The Court considered that definition to be formulated in a clear and unambiguous manner, noting that it can also include persons who are not involved in the process of manufacturing (para. 27). Referring to the objective of the directive, namely to protect the consumer, the Court concluded that the producer's definition should be given a broad interpretation (para. 31). By placing the liability of a person who presents himself as a producer on the same level as that of the actual producer, the EU legislature intended to ease the burden of having to determine the actual producer of the defective product (para. 33). Accordingly, it cannot be required that the person who has put his name, trade mark or other distinguishing feature on the product, or who has authorised those particulars to be put on the product, also present himself as the producer in some other way in order to be regarded as a 'producer'.

Lessons for online marketplaces?

The conclusion of the Court is not surprising considering the circumstances of the case at hand. Some parts of the reasoning are nevertheless interesting, keeping the broader landscape of market transactions in view. In particular, it is worth drawing attention to para. 34 of the judgment which is formulated as follows:

Furthermore, it should be noted that, by putting his name, trade mark or other distinguishing feature on the product at issue, the person who presents himself as a producer gives the impression that he is involved in the production process or assumes responsibility for it. Accordingly, by using such particulars, that person is effectively using his reputation in order to make that product more attractive in the eyes of consumers which, in return, justifies his liability being incurred in respect of that use.

The Court therefore acknowledges the importance of reputation in market transactions and links it to liability. This brings to mind other situations in which an involvement of a third party makes products appear more attractive/reliable, as in the case of online marketplaces. Article 6(3) of the Digital Services Act takes account of this very scenario, at least to some extent. Similarly, the potential liability of online marketplace providers has been the subject of discussions concerning product liability. However, the proposal for a new product liability directive, presented last year, provides for platform liability only in a narrow set of cases. It remains to be seen whether that liability will be extended as part of legislative negotiations. The reasoning of the Court in C-264/21, Keskinäinen Vakuutusyhtiö Fennia, could arguably support a more daring approach.