September 19, 2022

Trademark Owner Liable to Consumer for Product Defect, European Court of Justice Rules

You've Reached Your
Free Article Limit This Month
Register for free to get unlimited access to all OnPractice content.
Register Now

case that originated in Finland concerned liability for a defective product and the concept of "producer" under EU trademark law. A coffee machine (the Philips Saeco Xsmall HD8743/11) manufactured by Saeco, a Romanian subsidiary of Philips, caught fire. The machine contained trademarks of both Saeco and Philips. The unlucky consumer that got a fire instead of coffee decided - through its insurance company - to seek liability damages against Philips.

The Supreme Court of Finland referred questions to the European Court of Justice (ECJ) and asked whether a trademark owner that puts its trademark to a product should also be considered a "producer" pursuant to Article 3(1) of the EU Directive 85/374 on liability for defective products.

Philips argued it was not liable because it was not involved in actual production, and therefore could not be considered a "producer". The ECJ, which is the highest Court in Europe and can overrule national European courts, disagreed:

(…) it should be noted that, by putting his name, trademark 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.

Furthermore, the ECJ ruled that:

Accordingly, contrary to what Koninklijke Philips maintains, it must be held that, in the case in the main proceedings, a division of liability between that company and Saeco International Group has no effect in relation to consumers, who must specifically be relieved of the burden of having to determine the actual producer in order to bring claims for damages.

So, trademark owners are liable to consumers for a product defect and moreover, consumers should not have to figure out who is the actual producer of their defective product to claim damages. However, this does not mean the respective internal reciprocal liability between trademark owner and actual producer - or manufacturer - is the same.

Key Takeaway

In their contracts with manufacturer licensees, trademark owners should ensure that liability for defects is governed properly or, if such agreement on mutual liability is not agreed upon, owners should strictly monitor the quality of the products their licensees produce to reduce the risk of being held liable.

ALM expressly disclaims any express or implied warranty regarding the OnPractice Content, including any implied warranty that the OnPractice Content is accurate, has been corrected or is otherwise free from errors.

More From Greenberg Traurig

CO2 Costs for Heating: Starting 1 January 2023, Landlords in Germany Required to Pay a Share

By Dr. Martin Hamer Greenberg Traurig December 02 , 2022

On 25 November 2022, the parliamentary chamber of the German federal states (Bundesrat) cleared the way for the Carbon Dioxide Cost Sharing Act (Kohlendioxidkostenaufteilungsgesetz, CO2KostAufG), which the federal parliament (Bundestag) passed on 10 November 2022.

Deadline: 'Old' Standard Contractual Clauses (SCCs) Expire Dec. 27, 2022

By Dr. Viola Bensinger Greenberg Traurig December 02 , 2022

After an extended sunset period, time to replace the “old” SCCs runs out on Dec. 27, 2022. After that date, the old SCCs will no longer legalize data transfers to countries outside the European Economic Area (EEA).

Illinois Workers' Rights Amendment Provides Employees Fundamental Right to Organize

By Kerry Lin Davidson Greenberg Traurig December 02 , 2022

Heralded as a victory by unions and employee worker’s rights groups even before votes were confirmed, on Nov. 15, 2022, a majority of Illinois voters ushered in the Illinois Workers’ Right Amendment (IWRA).

More From Trademarks

Construing the Construction: Federal Circuit Chips Away at IPR Win

By Thomas DaMario McDermott Will & Emery November 29 , 2022

Addressing claim construction issues in inter partes review (IPR) proceedings before the Patent Trial & Appeal Board (Board), the US Court of Appeals for the Federal Circuit affirmed an obviousness finding as to some claims but reversed and remanded an obviousness finding as to another claim because of a claim construction error.

Court Uncorks New Way to Serve Trademark Complaints

By Amol Parikh McDermott Will & Emery November 29 , 2022

The US Court of Appeals for the Ninth Circuit concluded that Section 1051(e) of the Lanham Act permits a plaintiff in a district court case to serve a complaint against a foreign defendant via the Director of the US Patent & Trademark Office (PTO).

First Amendment Punches Out Alleged Lanham Act Violation

By Anisa Noorassa McDermott Will & Emery November 29 , 2022

Addressing the balance between trademark rights under the Lanham Act and the First Amendment right to protected expression, the US Court of Appeals for the Ninth Circuit affirmed a district court judgment finding that the defendant’s use of the term “Punchbowl” was not a Lanham Act violation because it was expressive and not misleading as to its source.

Featured Stories