Product liability of the quasi-manufacturer

Proprietors of trademarks should closely examine the judgment of 7 July 2022 (C-264/21), in which the ECJ commented on the product liability of the so-called ‘quasi-manufacturer’. Namely the person who does not actually manufacture a product but is nevertheless liable as the producer because he presents himself as its producer by putting his name, trademark or other distinguishing feature on the product, Art 3 (1) Product Liability Directive 85/374/EEC (implemented in Germany in Sec. 4 (1) ProdHaftG).  

Facts of the case

Subject to the preliminary ruling of the ECJ was the question of liability for a fire damage caused by a defective coffee machine. The coffee machine was manufactured in Romania by the Italian company Saeco, a subsidiary of the Dutch company Koninklijke Philips. Two trademarks had been affixed to the coffee machine and its packaging, Saeco and Philipps, both registered by Koninklijke Philips. Next to the CE mark on the product was the Saeco sign, and on the product an Italian address and the words "Made in Romania" were mentioned.  

After the insurance company had reimbursed the consumer for the costs of the fire damage, it sued the owner of the trademarks, Koninklijke Philips, for damages based on product liability.  

The decision of the ECJ

Regarding the first question, the ECJ held that the term ‘producer’ within the meaning of Art 3(1) of the Product Liability Directive "does not require that the person who has put his name, trade mark or other distinctive feature on the product, or who has authorised those particulars to be put on the product, also presents himself as the producer of the product in some other way."  

The ECJ justified this conclusion with three arguments: The wording of Art 3(1), the objective of the Directive, and a normative liability assessment:  

• Art 3(1) of the Product Liability Directive states that the producer within the meaning of the Directive is not only the actual producer, but also "any person who, by putting his name, trade mark or other distinguishing feature on the product, presents himself as its producer." Thus, according to the wording, it is not necessary that the quasi-manufacturer is involved in the process of manufacturing in any way. Putting the name or trademark on the product alone fulfils the required action.
• The purpose of the broad definition ‘producer’ is to ensure consumer protection. The various persons liable as producers (the actual manufacturer, the quasi-manufacturer, and the importer) are on the same level and are liable jointly and severally. The consumer therefore may freely choose as to whom to claim full compensation for the damage. The inclusion of the quasi-manufacturer is aimed at alleviating the consumer's burden of having to identify the actual producer of the defective product, who may not even be known.
• From a normative point of view, the ECJ further stated that putting the trademark on the product gives the impression that the trademark owner is involved in the production process or assumes responsibility for it. The inclusion of the trademark proprietor in the group of liable persons can therefore be justified by the fact that he uses his reputation to make the product more attractive.

Since the ECJ had thus answered the first question with "no" (apart from putting the trademark, it is not necessary to present oneself as a manufacturer in some other way), it did not comment on question 2, namely the aspects to be taken into account for presenting oneself as a producer. Question 2 had been filed with the proviso that question 1 would be answered in the affirmative.  

Assessment

As regards to the necessary action of the quasi-manufacturer, the ECJ is certainly correct. The wording is unambiguous in this respect: putting the name, trademark or another distinctive sign is decisive, while other actions, such as a participation in the production process, are not required. However, this interpretation has never been significantly different, at least in German case law and legal literature.  

Nevertheless, the judgment is likely to be followed by discussions on its broader significance. Namely, whether the judgment solely has a clarifying character – or whether the ECJ possibly even intended to broaden the liability of the quasi-manufacturer. This is because it has also been accepted that a trademark proprietor is not always liable as a quasi-manufacturer, but only if the trademark actually gives the impression that its proprietor might be the producer of the product. Although this may often be assumed, there are also significant exceptions. In particular, the is no such an impression if the public knows that the trademark owner solely acts as a trading company and does manufacture any products, e.g. supermarket chains that sell certain products under the trademark of their stores. It remains to be seen whether such a restriction remains to be accepted after the ECJ ruling.  

The ECJ does neither clarify whether and how an appearance, established by affixing the trademark, can be destroyed. In particular, based on the ECJ’s normative assessment (liability in return for the use of a well-known trademark to increase the product’s attractiveness) could suggest that the trademark proprietor is liable at all times and without any exceptions. This is not convincing, however. In particular, if the actual producer is labelled so clearly that he is immediately recognizable to the consumer without any further investigation (e.g., with the statement "manufactured by: ..."), the trademark proprietor does not present himself as the producer and there is neither any burden on the consumer to determine the actual producer. Therefore, in such a situation, the trademark owner is not liable as a quasi-manufacturer. Generally, it is to be suggested not only to indicate the name of the actual producer but also its address - however, as in the case of the burning coffee machine, mere references to the place of manufacture ("made in") or the address are not sufficient.  

Conclusion

For owners of brand names and of trademarks used within a corporate group who do not want to assume liability for a product’s defectiveness, it is advisable to clearly label and identify the actual producer. This suggestion has been valid ever since, but it will become even more sig-nificant after the ECJ ruling, especially as it can be expected that injured parties will increasingly assert product liability claims against trademark proprietors in the future.