In our previous article of the 9th of December 2024, titled “TIPPING THE BALANCE: THE NEW EU DIRECTIVE ON PRODUCT LIABILITY”, we dismantled the key changes to EU product liability law brought about by the ratification of EU Directive 2024/2853. However, the provisions of this directive are not due to apply to any products placed on the market or put into service before the 9th of December 2026. Until then, we will surely continue to see litigation in this area relating to the interpretation of the provisions of its legislative predecessor, Council Directive 85/374. Indeed, on the 19th of December 2024, the Fifth Chamber of the Court of Justice of the European Union (“CJEU”) delivered its judgment in respect of a request for preliminary ruling made by the Supreme Court of Cassation (Italy) in March 2023, in the proceedings between Ford Italia SpA (the appellant), on the one hand, and ZP and Stracciari SpA (the respondents), on the other (Case C-157/23) (the “Judgment”). At the heart of this 23-year dispute is the following point of law: whether the supplier of a defective product who shares the “name, trademark or other distinguishing feature” of its manufacturer, may be deemed “a person who […] presents himself as its producer”, and, therefore, jointly and severally liable with the manufacturer in respect of said defect. The following is a summary of this Judgment.

The facts and legal development of the case may be summarised chronologically:

  • 4 July 2001: ZP purchases a Ford motor vehicle from Italian car dealer Stracciari. The vehicle was manufactured by German company Ford WAG, and supplied to Stracciari through Ford Italia, its Italian distributor.
  • 27 December 2001: ZP suffers a road traffic accident in which the airbag of the vehicle fails to deploy.
  • 8 January 2004: ZP brings legal action before the District Court of Bologna, Italy, against both Stracciari and Ford Italia, seeking damages as a result of their injury caused by the defect in the vehicle. Ford Italia submits that, being a mere supplier of Ford vehicles in Italy, and not their manufacturer, it could not be considered a “producer” in the terms of Article 3 of Directive 85/374 (“the Directive”) and, consequently, could not assume any liability for the defective airbag.
  • 5 November 2012: the District Court of Bologna holds that Ford Italia incurred non-contractual liability on account of the manufacturing defect in the vehicle. Ford Italia appeals this decision before the Court of Appeal of Bologna, Italy.
  • 21 December 2018: Ford Italia’s appeal is dismissed, on the grounds that, since Ford Italia had failed to implicate the manufacturer (Ford WAG) in the legal proceedings, Ford Italia could not claim exemption from liability, pursuant to Article 3(3) of the Directive on the assimilation of the identity of supplier and manufacturer in case the latter is not identified. Ford Italia brings an appeal before the Supreme Court of Cassation of Italy.

In its analysis, the Supreme Court of Cassation raised questions as to the precise scope of the phrase “by putting his name […on the product]”, found in Article 3(1) of the Directive. In light of this ambiguity, the court decided to stay proceedings and refer the following question to the CJEU for a preliminary ruling:

Where the supplier of a defective product shares, in whole or in part, the name, trademark or distinguishing feature of its manufacturer, despite not having physically placed said feature thereon, should the liability of the manufacturer be extended to the supplier, in accordance with Article 3(1) of the Directive?

The legal backdrop of the case, as discussed in the Judgment, is as following:

  • Article 3 of the Directive serves to indicate which of the operators in the manufacturing chain of a defective product may be held liable (par. 33).
  • Article 3(1) provides that a person who “presents himself” as the manufacturer of the defective product “by putting his name, trademark or other distinguishing feature” thereon, may also be held out as the manufacturer of the defective product, for the purpose of apportioning liability (paras. 34-35). In other words, it is not necessary to be involved in the manufacturing process of a product to be held liable for its defectiveness.
  • The person who “puts his name, trademark or other distinguishing feature” on the defective product gives the impression that they are involved in the production process, or at the very least assumes responsibility for it, and, therefore, is effectively leveraging their reputation in order to make that product more attractive in the eyes of consumers (par. 37).
  • The key ambiguity, as raised by the Supreme Court of Cassation of Italy, is whether the fact that said branding corresponds to that of the manufacturer, without having been actively placed on the defective product by the supplier, is sufficient for that supplier to be classified as a person who “presents himself” as its manufacturer (para. 38). In short: doesthe wording of Article 3(1) of the Directive imply that active steps must be taken by the supplier in order to hold themselves out as the manufacturer of the defective product, by placing their trademark thereon?

The conclusions drawn by the CJEU are as follows:

  • It makes no difference whether the manufacturer actively placed their “name, trademark or other distinguishing feature” on the defective product at issue, or whether there is a mere coincidence with that of its manufacturer. In either case, the supplier is taking advantage of said similarity in branding as a guarantee of product quality in the eyes of the consumer, as if they had bought the product directly from the manufacturer at source (para. 41).
  • When interpreting a provision of EU law, its context and objective is of equal importance to its literal wording (Cafpi and Aviva assurances, C-691/21, para. 37). Article 5 of the Directive, read in conjunction with its Recitals IV and V, make clear that the EU legislature deliberately adopts a broad definition of ‘producer’ for the sake of protecting consumers (paras. 42-43).
  • Indeed, pursuant to Article 5 of the Directive, the liability of a person deemed a ‘producer’ in the terms of the Directive is no different to that of the ‘actual’ manufacturer of the defective product; since the liability is joint and several, the injured consumer may choose to claim full compensation from either of them (para. 44).

All in all, the conclusion to this protracted legal dispute is relatively simple: the consumer would be insufficiently protected if the supplier could ‘refer’ them to the manufacturer as a way of avoiding their own liability. Therefore, the phraseology of Article 3(1) of the Directive cannot refer exclusively to the person who has physically placed their branding on the defective product; such a restrictive interpretation would unduly limit the definition of ‘producer’ and compromise consumer protection. It must necessarily include any supplier who also happens to have similar branding – whether in whole or in part – to that of the manufacturer.

 

 

Sebastian Ricks

Vilá Abogados

 

For more information, please contact:

va@vila.es

 

17th January 2025