Product Liability in Connection with Suspected Defects – The Scope of Liability for Damages

The European Court of Justice (“ECJ”) has in a much noted case ruled that, pursuant to product liability rules, manufacturers of high-risk products are liable for damages even if product defects have not been proven. A suspicion as to the existence of such defects is sufficient. In addition, the ECJ has clarified that, pursuant to the German Product Liability Act (Produkthaftungsgesetz), manufacturers are also responsible for reimbursing installation and dismantling costs.

Background and Decision

The plaintiff was a distributor of cardiac pacemakers in Germany. The manufacturer of the cardiac pacemakers, a US company, had warned doctors in writing that the cardiac pacemakers might contain a component which could, without prior warning, cause premature battery depletion and loss of the cardiac stimulation therapy function. The manufacturer recommended that the doctors replace the cardiac pacemakers and also provided replacement devices free of charge. The doctors replaced the devices of some patients. The health insurance companies of those patients brought a claim against the distributor (Boston Scientific) for the reimbursement of their costs. The Local Court (Amtsgericht) upheld the claim, and dismissed an appeal against its decision. Boston Scientific thereafter brought an appeal before the German Federal Court of Justice (Bundesgerichtshof – “BGH”), which referred the matter to the ECJ, which had to decide the case because the German Product Liability Act is based on the European Product Liability Directive.

The ECJ affirmed the rulings of the lower-instance courts to the effect that a suspicion as to the existence of defects is sufficient to establish product liability. Given that any malfunctioning of the devices could result in extensive personal injury, the discovery of a potential defect in other products within the same product group or production series is sufficient. Proof of the actual existence of a defect is not necessary. However, the ECJ findings were limited to the following product groups: Cardiac pacemakers and implantable cardioverter defibrillators.
Moreover, the ECJ held that the scope of liability for damages in case of medical devices such as cardiac pacemakers includes, but is not necessarily limited to, any costs arising in connection with the replacement of the defective product.

Comment

The judgment of the ECJ clarifies the issue of suspected defects which has long been the subject of some controversy. However, it also increases the liability risk to which manufacturers of high-risk products are subject. Although it did not specify any other products or product groups with respect to which merely a suspicion as to the existence of a product defect is sufficient to establish product liability, the ECJ did emphasise that the consequences of any potential defect is of material relevance for its assessment. The decision makes sense, given that the fact that a product that does not meet the necessary safety standards is a fault per se.

Especially manufacturers of high-risk medical products should, if necessary, adapt their insurance policies to reflect these risks. These and other manufacturers must bear in mind the legal consequences and costs of a recommendation of precautionary corrective measures. This will often be unavoidable in the interests of the patients' or customers' well-being.