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.

No strict liability for injuries resulting from published wrong health advice - CJEU in Krone (C-65/20)

In our previous post (What's the worst that could happen?...) we have commented on the opinion of AG Hogan in the case Krone (C-65/20). The case concerned an incorrect health advice having been published in a newspaper, which led to a consumer's injury. The national court asked the CJEU whether Product Liability Directive was applicable in this case.

CJEU confirms on June 10 the assessment of AG Hogan that a printed copy of a newspaper providing consumers with an inaccurate health advice, which, if followed, could lead to a consumer's injury, should not be perceived as a 'defective product'. This means that the strict liability of Product Liability Directive does not apply in this case to the newspaper (their publishers, printers or even author of the health advice - para 39). Provision of a health advice is considered as a service by the CJEU, which is excluded from the scope of the PLD (para 32). Incorporation of the advice into a product - a physical copy of a newspaper - does not change this assessment, as 'the defective nature of a product is determined on the basis of certain characteristics inherent to the product itself...' (para 35). Here, the newspaper is only a medium for the provision of the service - health advice - which means that the service does not impact the inherent characteristics of the printed newspaper (para 36).

What's the worst that could happen? Toxic horseradish! - AG Hogan in Krone (C-65/20)

AG Hogan issued an opinion in Krone (C-65/20) case last Thursday, critically examining the concept of a defective product under the Product Liability Directive (Directive 85/374). In this case the national court asked whether a physical copy of a daily newspaper could be considered to be a product under PLD. Its defect would then consist of providing consumers (readers) with an inaccurate health tip, which health tip when followed led to damage to health. 

Specifically, for those of our readers who are interested in the facts, an Austrian daily newspaper Kronen-Zeitung published advice of Kräuterpfarrer Benedikt (Herbalist Priest Benedikt) that to alleviate rheumatic pain you should apply 'fresh coarsely grated horseradish' over a layer of lard for 2-5 hours (please do not try this at home!). The advice turned out to be wrong, as it meant to recommend this application for 2-5 minutes instead of hours. The newspaper did not question its correctness, relying on the expertise of its contributor. Should a consumer have known better than to try a health tip from a newspaper? Well, my guess would be that most of us follow some sort of tip/recipe we find in some media. With a possibly relevant health tip, we would think of trying it out, thinking 'What's the worst that could happen?'. Well, a consumer who tried this homeopathic remedy at home ended up with severe pain due to a toxic contact reaction. The legal issue was whether she could claim damages for pain and suffering from the newspaper and one of the avenues to get them would be under the Austrian implementation of the PLD.

AG Hogan does not consider a physical copy of a daily newspaper with an inaccurate health tip printed in it to fall within the scope of a notion of a 'defective product'. First, he looks at the text of the PLD provisions which all seem to refer to physical things (as products) and a physical defect in them (para 24). He gives an example of a physical copy of a newspaper being able to actually harm consumers - through a protruding staple or toxic printing ink - but concludes that here the defect was caused due to the fault in the intellectual content rather than the physical product (para 26). Therefore, what he considers to have occurred is a defective service rather than a defective product. He then proceeds to claim that he is unconvinced by academic writing suggesting that PLD could apply to defects in intangible content as well as in tangible products (esp. relevant with relation to software) (paras 28-29), and that the fact that a line between products and services is blurred should not matter for the application of the PLD (para 30). He states that the PLD does not provide for strict liability for mere advice (paras 29, 34), which suggests that in case of incorrect information on the packaging of a product or in its manuals, but also incorrect legal or medical advice, consumers would need to prove at least negligence on the side of the producer to obtain damages. This part is quite interesting, considering that provided instructions and warnings are part of the product safety assessment. How to differentiate between the importance of instructions in the product safety test and not assigning product liability on the basis of faulty instructions? AG Hogan does not ask nor answers this question. He also stresses that allowing consumers to claim strict liability for an incorrect health tip published in a newspaper, could introduce a significant hindrance to the freedom of press, especially compared to the obligations of radio or TV media.

This is an interesting case, as it considers the scope of application of the PLD to a broader range of consumer products (and potentially consumer services). As the PLD is currently under review, its applicability in such situations as occurred in this case could be further clarified by the legislator. For now, let us see whether the Court agrees with AG Hogan.

Follow-up reading on W and Others in Nature

Further comments and considerations on the W and Others judgment may be found in the just published article "Vaccine ruling from Europe's highest court isn't as crazy as scientists think", authored by Laura Castells & Declan Butler for Nature. Following our blog post ("If scientists quarrel..."), we have provided comments to the authors, and some of them have been included in the article.

If scientists quarrel whether a vaccine caused a disease, it's left to the courts - CJEU in W and Others (C-621/15)

On June 21 the CJEU decided in the case of product liability related to a potentially defective vaccine - W and Others (C-621/15). Mr W was vaccinated against hepatitis B in the years 1998-1999 with a vaccine produced by Sanofi Pasteur. He was diagnosed with MS in November 2000, which first led to his disability from work, then needing round-the-clock care, and finally his death in October 2011. Together with his three family members he raised a claim against Sanofi Pasteur in 2006, arguing that his illness resulted from the administration of the vaccination.

Vaccinations have long been a controversial topic as the available medical research has not been able to either conclusively prove their detrimental effects to human health or to conclusively disprove them. This is at least confirmed in this case with respect to the lack of medical research establishing a relationship or lack thereof between the hepatitis B vaccination and the multiple sclerosis disease (par. 30). Article 4 of the Product Liability Directive requires the consumer to be able to prove not only the damage, and its cause but also the causal link between the two. What evidence was submitted in this case? Mr W and Others claimed that the short period between the vaccination and the appearance of first symptoms of MS should be considered, as well as the fact that there was no trace of family history of this disease. These facts "are such as to give rise to serious, specific and consistent presumptions as to the existence of a defect in the vaccine and as to there being a causal link between the injection of the vaccine and the occurrence of the multiple sclerosis." (par. 11) 

In French law, which was applicable to this case, the Cour de cassation stated previously that with regard to the defective vaccines and the liability of pharmaceutical companies for their production, the causal link could be derived from "serious, specific and consistent presumptions". So even if the medical research does not confirm a relationship between the vaccination and the occurrence of the disease, the court could establish the defect in the vaccine and the causal link between it and the damage based on, indeed, the lack of medical family history with this disease and the short time that passed between the vaccination and the occurrence of the disease (par. 13). I think it bears repeating: despite the lack of medical research evidencing this relationship.

Considering that the PLD does not specify what should be considered a sufficient proof of the causal link between the defect and the damage that the consumer needs to establish, it is left to the Member States to decide what evidence is admissible, the level of proof required and the rules for national courts how to evaluate it (par. 25). The established procedural rules should comply with the principle of effectiveness, of course (par. 26), which cannot lead, e.g., to the shift in the burden of proof pursuant to Article 4 PLD or undermine the effectiveness of the strict liability system adopted by this Directive (par. 27). The CJEU confirms that the French procedural rules do not lead to such a shift in the burden of proof but rather just alleviate it by making it easier for consumers to establish the causal link - without having to "produce, in all circumstances, certain and irrefutable evidence of a defect in the product and of a causal link between the defect and the damage suffered" (par. 28). The national court may then conclude that "such a defect has been proven to exist, on the basis of a set of evidence the seriousness, specificity and consistency of which allows it to consider, with a sufficiently high degree of probability, that such a conclusion corresponds to the reality of the situation." (par. 28). Furthermore, the possibility to ban the use of circumstantial methods in proving the causal link would be contrary to the PLD, esp. in situations like here: where the medical research is inconclusive (par. 30), as it would disallow consumers' successful claims of product liability due to excessively difficult burden of proof (par. 31). 

Generally then, the CJEU accepts a possibility that national law establishes producers' liability only on the basis of circumstantial evidence. However, it continues to observe that procedural rules may not harm producers by accepting "unjustified presumptions" (par. 34). When would this occur? For example, if national courts are overly rigorous in their application of these evidentiary rules and start accepting irrelevant or insufficient evidence, as a consequence (par. 35). The CJEU goes even further, if national court would draw an automatic presumption on the existence of the defect and of causal link, just because "one or more types of factual evidence were presented together" - this would lead to the disregard of the burden of proof as "the producer could then find itself, even before the courts ruling on the merits of the case had the opportunity to familiarise themselves with the producer’s evidence and arguments, in the position of having to rebut that presumption in order to defend itself successfully against the claim" (par. 36). Therefore, the producer's right to defense needs to be respected.

Concluding, the national court may use circumstantial evidence - if it is sufficiently serious, specific and consistent - to conclude that despite the producer's arguments and evidence presented by him "a defect in the product appears to be the most plausible explanation for the occurrence of the damage, with the result that the defect and the causal link may reasonably be considered to be established." (par. 37).

The CJEU actually addresses the facts of this particular case in the par. 41-42 of the judgment. It seems to advise the national court that in the given case it could be likely to establish a defect and causal link, considering the lack of medical family history of the disease, temporal proximity between the vaccination and the occurrence of the disease, but also the existence of a significant number of reported cases of the disease following such vaccines being administered. This could make it the most plausible explanation for the national court that the administration of the vaccine led to the disease and that the vaccine, therefore, did not offer the safety it should have. But such conclusions have to be drawn "in a fully enlightened manner in each specific case" - the producer's rebuttal being the most important evidence to the contrary.

I think this judgment may lead to quite some disputes. On the one hand, supporters of medical research may feel that the lack of conclusive evidence of the harmful effects of the vaccination should not lead to producers' liability. On the other hand, considering the difficulties consumers would have in acquiring conclusive proof based on medical research, that's contrary, of the harmful effects of the vaccine, the alleviation of the burden of proof might seem reasonable to others.

Strict product liability for recall of medicinal devices - CJEU in Boston Scientific Medizintechnik GmbH (C-503/13 and C-504/13)

5 March 2015: CJEU judgment in Boston Scientific Medizintechnik GmbH (C-503/13 and C-504/13)

Previously, we discussed the opinion of AG Bot in this case (see Medicinal product recall allows to claim damages for surgical removal thereof? - AG Bot in case Boston Scientific Medizintechnik GmbH (C-503/13 & C-504/13)). Briefly, the case brought up interesting issues of whether the special product liability regime introdued by the Product Liability Directive could apply in cases of product recall. That is to say, when a specific product has not (yet) proven to be defective (but the group of products to which it belongs showed a tendency of particular defect appearing) nor did it cause any damage due to its defect (but certain damage was caused as a result of this product's recall). It may be important that this case pertained to a specific class of products, namely, medicinal devices that have been installed inside human body, and, therefore, their recall involved surgical procedures. 

The Court of Justice agrees with AG Bot that the notion of 'defect' should be broadly understood, in accordance with Recital 6 of the Directive that requires that not only expectations of the consumers as to the safety of the product would be taken into account, but also of the public at large (Par. 37). With regard to medicial devices, this safety threshold is quite high, since their defect may cause significant damage to consumers (Par. 38-40).

"Accordingly, where it is found that such products belonging to the same group or forming part of the same production series have a potential defect, it is possible to classify as defective all the products in that group or series, without there being any need to show that the product in question is defective." (Par. 41)

 Whether the patient could claim compensation for the costs of the surgery removing the malfunctioning device and installing a new one, would depend among other on whether such a surgery was "necessary to eliminate harmful consequences and to restore the level of safety which a person is entitled to expect" (Par. 49).

The CJEU had no doubt that the costs for the replacement of the defective pacemakers should be paid by its producers, but with regard to defribillators it left the decision to the national court - since pursuant to the producers these defective devices instead of being replaced could have also been just deactivated. The national court needs to determine whether that would be sufficient to "overcome the defect in that product, bearing in mind the abnormal risk of damage to which it subjects the patients concerned". (Par. 54)

Producers of medicines must share information on their adverse effects - CJEU in Novo Nordisk Pharma (C-310/13)

20 November 2014: CJEU judgment in Novo Nordisk Pharma GmbH (C-310/13)

We wrote before on this blog about the problem presented in the case Novo Nordisk Pharma (Consumer's right to information about medicine's side effects - AG Szpunar in Novo Nordisk Pharma (C-310/13)). Yesterday, the CJEU gave its judgment, deciding that the Product Liability Directive and its maximum harmonisation character do not preclude such national legislation that imposes on trader's information duties not mentioned in this Directive. (Par. 33)

As a brief reminder, Article 13 of the Directive allows Member States to uphold such national special systems of liability that existed in a given Member State at the moment of notification of this Directive to the Member State. Germany has a special system of liability applicable to cases when consumers' health is damaged due to the use of medicines. This special liability system was, however, amended after the Directive has been notified by introducing a consumer's right to request from the producer of the medicinal product information on the adverse effects of that product. The German courts were unsure whether this requirement was, therefore, compliant with the Directive.

The CJEU confirms one of the views expressed by AG Szpunar, namely, that since the Directive does not regulate information duties of the producers, the consumer's right to request such information falls outside its scope (Par. 25, 29). Recital 18 of the Directive confirms that it doesn't aim to exhaustively harmonise the sphere of liability for defective products beyond the matters regulated by it (Par. 24). While the Directive places the burden of proof that the product was defective and caused damage on the consumer, the national legislation allowing consumers to request information on side effects of the medicinal products does not reverse that burden of proof but rather may only alleviate it (Par. 26-29). The CJEU does not see a possibility for the German provision to distort the effectiveness of the Directive's system of liability either (Par. 30-31).

All in all, this is good news for German consumers who may continue to require producers of medicinal products to send them detailed information on adverse effects of their medicines, which may enable consumers' claims for damages.

Medicinal product recall allows to claim damages for surgical removal thereof? - AG Bot in case Boston Scientific Medizintechnik GmbH (C-503/13 & C-504/13)

21 October 2014: Opinion AG Bot in case Boston Scientific Medizintechnik GmbH (C-503/13 & C-504/13)

Imagine you had a pacemaker installed. It's already quite a stressful and invasive procedure, but then you find out from your doctor that the type of pacemaker that was used in your surgery has been found out to fail "from time to time". Since the producer of the pacemaker advises your doctor to think about exchanging your pacemaker due to a defect in their design for another one, with less chances of a failure, you agree to a new surgery. Who's going to pay for it though? The German courts were pretty certain that it should be the producer of the faulty product (a faulty pacemaker in case C-503/13 and a faulty defibrillator in case C-504/13) but some questions have been asked to the CJEU to ascertain the rules of the Product Liability Directive in such cases.

First, to claim damages under the Product Liability Directive the consumer needs to prove that the product he acquired was faulty. In the given case, there was a presumption that the medical products could fail working at one point (based on the extensive testing of copies of this product) and due to the increased risk of such a failure these products were deactivated. This means, however, that in these specific cases the defect did not manifest itself, since the removal of the medicinal products prevented this occurrence. The AG Bot nonetheless considers such medicinal product to fulfill the requirements posed in the Product Liability Directive to a faulty product. (Par. 26) Art. 6 of this Directive states that when the product does not offer consumers expected by them safety standards, it should be perceived as faulty. Recital 6 determines that "to protect the physical well-being and property of the consumer, the defectiveness of the product should be determined by reference not to its fitness for use but to the lack of the safety which the public at large is entitled to expect". The AG Both is, therefore, convinced that the test is an abstract one, not necessarily relying on the specific consumer's case, but rather during which it is justified to assume that if a consumer has a product identical to the one that already showed serious defects, he may reasonably question the safety of his product as well. (Par. 29, 33) Additionally, AG Bot claims that effective consumer protection requires that consumers could claim liability for defective products also prior to these products causing any damage. (Par. 38) While this statement is true, it needs to be said that this effective protection could be granted to consumers through measures other than Product Liability Directive, which is very much focused on compensating consumers for specific damage that was caused by a defective product. This opinion seems to be broadening the scope of application of the Directive, which until now was very narrowly interpreted.

Second, as mentioned above, the Product Liability Directive is meant to facilitate easy compensation of consumer's damage resulting from the defective product. The question was whether the costs of a surgery to remove a defective product (removal of a pacemaker or a defibrillator) could be seen as damage caused by personal injury. (Par. 56) While not all language versions of the Directive used a term with the same meaning of a 'personal injury', the theological interpretation points out that the Directive aims at protecting, in general, the 'health' of the consumer as well as his 'physical integrity'. (Par. 61) Therefore, excluding from the scope of the notion of 'damage' such damage that is caused due to a surgical intervention to remove a defective medical product would undermine this legislative purpose. (Par. 63) The causal link between the damage and the defect would then be for the national courts to prove (Par. 70) but the fact that the producer of the defective products recommended their removal to the doctors could be perceived as such evidence. (Par. 71)

It's a very interesting case that may influence the scope of application of the Product Liability Directive. Considering its limited application in practice and the fact that in such important cases as product recall due to increased risk to consumer health the compensation rules in the EU should be harmonized, it is clear why the AG Bot took the stand he did. It remains to be seen whether the CJEU shares this point of view.

Consumer's right to information about medicine's side effects - AG Szpunar in Novo Nordisk Pharma (C-310/13)

11 June 2014: AG Szpunar in case Novo Nordisk Pharma (C-310/13)

Today, AG Szpunar issued an opinion regarding interpretation of Article 13 of the Product Liability Directive (No 85/374). Article 13 determines the scope of the Directive's application, where it should not affect any rights that an injured person may have pursuant to a national special liability system existing at the moment of this Directive's notification to the Member States.

In the given case, Ms. S, domiciled in Germany, claimed that she was injured through the use of a medicinal product (Levemir) introduced on the market by Novo Nordisk Pharma. German law excludes the application of the Directive in cases of damage to consumer's health resulting from a use of medicines, since to these cases a special system of liability applies, as established by the Arzneimittelgesetz ("AMG") prior to the implementation of the Directive in German law (Par. 84 and Par. 84a AMG). To claim compensation under this liability system the consumer may demand from the pharma company information on the known to the pharma company side effects of that medicine, potential interactions, and all other test results as well as data about consequences of using this medicine on human health, as long as this data may influence the assessment of whether the health damage resulted from the use of the medicine in the given case. Novo Nordisk Pharma refused to comply with its obligation to provide this information and appealed the need to do so. BGH asks the CJEU whether the German system of liability applicable to damage to consumer's health resulting from the use of medicines falls outside the scope of the Directive and, therefore, may be regulated independently from its provisions. Clearly, without her right to this information Mrs. S would be unlikely to prove that she suffered any damage due to her use of the medicine, since it would be hard for her to find sufficient scientific evidence. Therefore, if the CJEU would exclude the application of the AMG's provisions to this case, consumers could be devoid of necessary protection against faulty medicines.

AG Szpunar looks at the text of Article 13 and concludes that it means to allow consumers to use an alternative compensation scheme that predated the Directive. (Par. 28) However, pursuant to AG Szpunar literal interpretation of this provision points out that with regards to the special liability systems (like AMG), the Directive limits the possibility to use them only to circumstances when the rights of consumers under such special liability systems existed at the time of the Directive's implementation. It is not, therefore, the special liability system that needed to be in force prior to the Directive's implementation but consumer's entitlement to claim certain rights under this system. (Par. 30-32) Due to such interpretation, it will not be possible for one Member State (Germany) with regards to one production sector (medicine products) to differentiate and further develop a liability system. (Par. 37) This would mean that since Mrs S rights under the AMG system arose after the Directive's implementation, she could not claim her damages using AMG's provisions.

At the same time, however, AG Szpunar remarks that the duty to inform by a pharma company as established in Par. 84a AMG has not been subject to any direct regulation in the Directive. (Par. 45) If a consumer is given a right to information it will enable her to easier prove the defect in a medicine that could have contributed to the health damage. The burden of proof is regulated by Article 4 of the Directive. This Article specifies what the consumer needs to prove to claim damages in product liability cases but it does not determine the methods thereof. The consumer's right to information as established in Par. 84a AMG does not reverse the burden of proof but is only meant to alleviate it, by balancing the information asymmetry between consumers and pharma companies. (Par. 46) As unregulated by the Directive, this matter may, therefore, be left to the national law's discretion. (Par. 47) Consequently, even if Mrs S would now be forced to claim her damages under the Product Liability Directive's scheme, she should still be able to benefit from the right of information as established in Par. 84a AMG to help her prove her damage.

Manufacturer's jurisdiction in product liability cases - CJEU judgment in Kainz (C-45/13)

16 January 2014: CJEU judgment in Kainz (C-45/13)

Mr Kainz, resident of Salzburg (Austria), bought a bicycle from a company Funbike, established in Austria, but the bike was manufactured by a German company Pantherwerke. While he was riding that bike in Germany he fell and injured himself. The bike turned out to be defective and based on the product liability rules Mr Kainz claimed compensation of more than 21.000 Euro from the manufacturer - Pantherwerke. The parties differed as to their opinion on which courts should have jurisdiction over this claim - pursuant to the Regulation No 44/2001 it should be the place of the harmful event - Austrian (bicycle was made available to the end user there) or German (where product was manufactured and where to the product was dispatched). Obviously, the consumer had an interest in claiming Austrian jurisdiction while the company wanted to defend themselves in Germany.

The CJEU needed to answer a question what should be considered as a place of the event giving rise to the damage in the product liability cases. The CJEU reminds that the main principle of the Regulation is to provide the defendant with an opportunity to protect himself in the courts of his country of domicile (Art. 2). (Par. 21) Special jurisdiction rules of Art. 5 should be interpreted restrictively. (Par. 22) However, in tort liability cases the Regulation gives a possibility to a claimant to choose to sue either in the courts of a country where the the damage occurred or where the place of the event giving rise to it was. (Par. 23) The CJEU determiners in this case that in principle in product liability cases the place where the event which damaged the product itself occurred is the place where the defective product was manufactured. (Par. 26) In this respect, Art. 5(3) of the Regulation does not intend to give special protection to the weaker party by allowing it to claim in courts of his own domicile (Par. 31), but rather to protect the legal certainty (Par. 28). 

As a result of this judgment two out of three possibilities will always point out to the jurisdiction of the courts of the manufacturer's domicile. Unless the damage occurred in the consumer's country of domicile, which in this case did not take place, the consumer has to sue in a foreign court for his damages.

Total recall?

Product safety is an emotional subject that is being brought up more often nowadays. Since technology and communication keeps on improving, it is no wonder that in the legal world we tend to focus our attention nowadays more on preventing product defaults (therefore, regulating product safety and promoting unsafe product recall) rather than on product liability (regulating consequences of product defaults). Anyone who has heard stories about laptops overheating on their users' thighs (How the heat from a laptop can 'toast' the skin on your thighs) or children choking on toy parts (Two Children's Toys Recalled Due to Choking Hazards) would be happy to hear that yesterday the European Parliament's Consumer Protection Committee adopted two reports on: product safety and market surveillance. These reports aim to contribute to the review of current European product safety rules, by strengthening consumers' information rights and further regulating product safety requirements. (see our previous post: Product Safety in 2013) 

Some of the introduced by the MEPs changes in the current Product Safety Directive promote a new, voluntary, third-party issued safety label (EU Safety Tested mark) as well as make a label on product's country of origin mandatory, in order to increase transparency.

"Where a good was produced in more than one country, the country of origin will be where it underwent its "last, substantial, economically justified processing or working in an undertaking equipped for that purpose and resulting in the manufacture of a new product or representing an important stage of manufacture"." (Internal Market MEPs tighten up product safety and market surveillance rules)

 

The MEPs also brought back to the draft the 'precautionary principle' that Commission's Members wanted to remove from the currently binding rules. Pursuant to this principle, some products may need to be removed from the market faster, since consumers are given the benefit of the doubt as to their safety. Another interesting addition is a provision pursuant to which a pan-European database on product-related injuries suffered by consumers would be created. This could make it easier to monitor a product that enters a few different European markets at the same time. It was also suggested to introduce a public EU-wide blacklist that would name all firms that have been 'repeatedly found to have intentionally breached' EU product safety rules.

The vote in the plenary on these two new regulations is planned for December this year. (Interview: how new product rules will improve safety for consumers)

Keeping European consumers safe

European Commission published an annual RAPEX report for 2012 "Keeping European consumers safe" (on the operation of the Rapid Alert System for non-food dangerous products). The comparison of the report with the one from 2011 shows an increase of 26% in reported alerts. The main products that raised issues of safety were clothing, textiles and fashion items (34%), toys (19%) with the main risks such as: chemical risks (e.g., in plastic dolls), risk of strangulation (e.g., in children swimwear due to drawstrings) and risk of injury. Once more, most products that were notified as posing risks to consumers came from China. (Stronger EU cooperation leads to higher consumer safety)

Lack of EU collective redress weakens position of defective breast implants' victims

EU consumer organisation BEUC issued a press release on the 17th of April lamenting the constant lack of a possibility to claim consumer collective redress in Europe (Victims of breast implants scandal flight for compensation - need for EU to better protect with Collective Redress). Even though for years now the European Commission and other parties expressed their concern about the lack of effective enforcement of consumer rights when an individual consumer suffers damage of little monetary value but the harm to the society could be great, no laws have yet been introduced. There are only a few countries in the EU who allow consumers to bring a collective claim to court or in front of a tribunal, mostly in the form of a representative action. Not only is there lack of harmonisation of these measures among the Member States, but also rarely these proceedings give consumers all advances that a EU class action/ representative action system could. This issue became relevant again with more than 5000 women (victims from various EU countries since the device was sent across Europe) seeking compensation due to damage they have suffered from defective breast implants.

Does fake equal bad? European Commission thinks so.

Last year we posted about the EU Customs trying to protect consumers from counterfeit goods by strengthening the examination of products entering the EU market etc. (EU helps to keep it real) Now the European Commission published another memo (Too good to be true: the real price of fake products) in which it gives an update on recent data of counterfeit market, as well as calls upon consumers to stop buying such goods. There is a hope that a campaign that would raise consumers awareness about the dangers of counterfeit goods, would deter them from purchasing such products - even if it would have saved them significant money to do so. Despite all the actions taken so far by the EU and national governments, the trade in fake articles grew by 11% between 2010 and 2011. What should scare consumers (or at least make them think twice about buying counterfeit goods) is that almost one third of the articles detained by EU customs in 2011 was found to be potentially dangerous to the health and safety. What other argument is the Commission planning to use? They will try to convince consumers that it is not a bargain to buy a fake product, since the consumer would not get the same quality nor guarantee of durability for less money. Also, even if consumers won't usually think about it, trade in fake goods is likely to lead to the increase of taxes, loss of jobs (in legitimate trade sector that suffers losses), unemployment and higher welfare bills.

Colour your hair to feel European

Today the European Commission amended an old Directive 76/768/EEC relating to cosmetic products. The new Directive 2012/21/EU concerns... hair dyeing products.

Did you know that ca 60% of European women and ca 10% of European men colour their hair? It seems that with every year Europeans become more concerned with their looks and the sale of hair dye products increases. Nowadays, it does not take much to go overnight from being a blonde to becoming a redhead, etc., and such decisions are often (sadly) not thoroughly thought through. Sadly, since as any cosmetic products hair dyes may contain unsafe (or even toxic) for consumers substances. On the one hand it may be worth it to invest in keeping consumers' hair healthy and pay for a good hairdresser and a good hair dye. However, how are even professionals to know which of the substances contained in the hair dyes could be dangerous? The EC helps out here by taking into account recent scientific knowledge and restricting the use of 24 substances often included in hair dyes (additionally to already existing bans on the use of certain substances). The Scientific Committee on Consumer Safety (SCCS) still needs to assess 45 substances that are suspect of having an adversary effect on consumers. More on hair dye products may be read here.

Safe Toys' Story

The safety of consumer products is seen as one of the key consumer rights and its proper enforcement is especially needed when products are meant to be used by vulnerable consumers, such as children. The EU provides for strict safety requirements for toys, but aside the producers' and marketers' (of toys) compliance with these requirements, it is also necessary that EU consumers know what to look for when they buy goodies for their children. For example:

• the EU consumers should always look for the "CE mark" which means that the toy is in compliance with the strict EU safety rules,

• they should also pay attention to the age symbols which determine for what age the given toy is suitable (preventing choking hazards etc.).

More toy tips may be found on a campaign website. Within the "European Toy Safety" campaign, the European Commission launched a new video informing consumers how to buy safe toys and how to use them safely. (European Toy Safety Campaign: don't let accidents ruin your summer!)

EU helps to keep it real

"Got a real bargain when I bought this Louis Vuitton wallet for 10 euro". Well, who doesn't like a bargain? Some bargains are too good to be true, though, and it's unlikely that you would get an original product for price that is not anywhere close to the shop price. With certain products a bargain is also not what consumers should be looking for. Spending more money on a product usually guarantees its better quality, its authenticity, which is crucial for the health and safety of consumers when products such as medicines, food etc. are concerned. In order to protect consumers, as well as to protect intellectual property rights, the EU Customs department diligently examines products entering the EU market in order to comply with the EU's 2020 Strategy. In 2011, they detained almost 115 million products suspected of violating IPR (in 2010 that number was just 103 million) valued at 1,3 billion euro. (Report on EU customs enforcement of IPR) Out of these products 24% were medicines, 21% packaging material, 18% cigarettes, products for daily use that could potentially be dangerous to consumers - 28,6%. The main offender is still China (73% of all infringing articles come from there). Fake foodstuff comes usually from Turkey, alcoholic drinks - Panama, soft drinks - Thailand, mobile phones - Hong Kong. (EU customs detain over 100 million fake goods at EU borders)

RAPEX - keeping the danger at bay

RAPEX a is a rapid alert system that has been set up to detect dangerous non-food products that enter the European market from third countries. RAPEX functioning in the past years (it was set up in 2004) has greatly improved allowing for earlier detection of risky products (even at the point of entry) and effective removal of such products from the EU market. (Consumers: latest report on safety of products shows fewer dangerous items reaching the EU market)

The report on the functioning of RAPEX in 2011 shows that China remained the number one country who triggers the alert (with more than half of RAPEX notifications). Most significant is the decline from 23% in 2004 to 8% last year of notifying risky products of unknown origin. The RAPEX system allows for more precise identification with every year. The most frequently notified products are: clothing, textiles, toys and motor vehicles. The countries who notify the most are: Spain, Bulgaria, Hungary, Germany and the United Kingdom.

In order to improve product safety the European Commission is busy creating a new system of 'Seamless Surveillance' that would allow for tracking a product down the length of the industrial chain, from the manufacturer all the way to the consumer.