The Court of Justice of the European Union has held that the probability of a defect can make a product defective.
The Court of Justice does not often decide cases arising under the Product Liability Directive (85/374/EEC). Some of the rulings it does issue involve formal issues such as implementation of the directive by the member states, and there are few rulings interpreting the substantive provisions of the directive.
This makes the court’s ruling in Boston Scientific Medizintechnik GmbH (Joined Cases C-503/13 and C-504/13, judgment of 5 March 2015), issued pursuant to requests for a preliminary ruling, all the more interesting. The court interpreted the concept of a defective product (Art. 6(1)) as well as the concept of damage (Art. 9(a)) and the responsible party. The court also addressed key concepts in the area of the safety of products offered to consumers and the scope of liability for defective products, i.e. products that do not provide the safety a person is entitled to expect.
While the case decided by the court involved the safety of medical devices, for which the requirements are particularly demanding, the rules of interpretation will no doubt be applicable to other types of products which are expected to be failsafe. The rapporteur for the case was Judge Marek Safjan from Poland.
Need to exchange medical device
The judgment was issued pursuant to two requests for a preliminary ruling from the German Federal Court of Justice (Bundesgerichtshof), which was considering cassation appeals from the producer and seller of two medical devices, namely a pacemaker and an implantable cardioverter defibrillator which were sold in Germany.
The producer realised that the hermetic seal in the pacemaker could be subject to degradation, resulting in loss of pacing output. In the case of the defibrillator, an issue was discovered with a magnetic switch which could limit the device’s therapeutic efficacy. If either situation occurred, the safety of the patients using the device could be endangered, which in the case of the pacemaker could even result in the patient’s death.
In accordance with the rules, the manufacturer sent letters to doctors recommending that they consider replacement of pacemakers implanted in patients or deactivation of the magnetic switch of the defibrillator, and offered replacement devices free of charge. The costs of the replacement operations for two patients were covered by German healthcare funds which then sought reimbursement of the cost from the manufacturer. The German lower courts in both cases issued judgments against the producer for reimbursement of the costs of the operations and treatment, but reduced the amount awarded for replacement of the defibrillator.
Considering allegations raised in cassation appeals by the producer, the federal court had doubts whether in each case the medical device was defective because it did not ensure the patient the safety he or she should expect. The court took the view that with medical devices implanted in a patient’s body, such as a pacemaker, the patient should expect the device to be nearly failsafe.
The removed devices were destroyed as medical waste, which prevented a determination of whether these specific devices were affected by the problems identified by the manufacturer. Thus the German court was unsure whether when interpreting Art. 6(1) of the directive it should find that the devices were defective because they belonged to a group of defective devices, because the use of these specific devices bore an increased risk of failure, even though the defectiveness of the specific devices could not be determined. This was the first question to the Court of Justice.
The second question would depend on the response to the first question. In other words, assuming the devices should be regarded as defective, would the replacement cost constitute damage caused by personal injuries for purposes of Art. 1 and 9(a) of the directive?
Proof of defectiveness of individual device not always required
Interpreting Art. 6(1) of the directive, the Court of Justice reasoned that “the safety which the public at large is entitled to expect” must be assessed by considering “the intended purpose, the objective characteristics and properties of the product in question and the specific requirements of the group of users for whom the product is intended” (par. 38). An analysis of all these aspects with respect to the medical devices in question led the court to conclude that the safety requirements in this case are particularly high. Therefore the finding of a defect in a group or series of devices is sufficient to regard all of the devices in the same group or series as defective. Evidence of the defectiveness of the specific product from the group or series is then not necessary. The court thus introduced a new criterion for evaluation of product safety, namely the probability that the product will cause personal injury.
The German court had found that the pacemakers in question had a 17 to 20 times greater likelihood of failure than normal for devices of this type. This excessively high probability of damage (personal injury) in the case of a medical device was, in the view of the Court of Justice, sufficient to regard the device as not ensuring the expected safety and therefore defective. The court stressed that this view is consistent with the objective of the directive, particularly “a fair apportionment of the risks inherent in modern technological production between the injured person and the producer.”
In response to the first question, the court held that Art. 6(1) of Directive 85/364/EEC “must be interpreted as meaning that, where it is found that products belonging to the same group or forming part of the same production series, such as pacemakers and implantable cardioverter defibrillators, have a potential defect, such a product may be classified as defective without there being any need to establish that that product has such a defect.”
The judgment by the Court of Justice fully upheld the proposal by advocate general Yves Bot, although not all of his arguments made it into the court’s decision. The advocate general’s opinion also relied on considerations of consumer protection. In this context, a great role is played by the preventive function of the proposed resolution, i.e. a finding of defectiveness without evidence of causation of damage but based solely on the high probability of damage. The advocate general also sought support for his position in Art. 168 of the Treaty on the Functioning of the European Union and Art. 35 of the Charter of Fundamental Rights of the European Union, “which require a high level of human health protection in the definition and implementation of all Union policies and activities,” including the specifications for medical devices.
Scope of compensation for damage
In addressing the second question, the Court of Justice adopted an expansive interpretation of the concept of “damage caused by death or personal injuries,” in line with the purposes of the directive stated in the preamble and the earlier case law (Veedfald, Case C-203/99). Under this interpretation, the injured party is entitled to full and adequate compensation for the damage caused by the defective product. For the court, it was clear in this case that the cost of replacement of the defective pacemaker fell within the scope of compensation for damage. As the court held, “Compensation for damage thus relates to all that is necessary to eliminate harmful consequences and to restore the level of safety which a person is entitled to expect” (par. 49).
With respect to the cardioverter defibrillators for which the producer had recommended deactivation of the magnetic switches, the court held it is up to the court hearing the case to determine, after considering all the relevant circumstances, whether it is necessary to address the defect consisting of an excessive risk of damage by deactivating the switch or replacing the device.
The court held in response to the second question that Art. 1 and Art. 9(a) of Directive 85/374/EEC “are to be interpreted as meaning that the damage caused by a surgical operation for the replacement of a defective product, such as a pacemaker or an implantable cardioverter defibrillator, constitutes ‘damage caused by death or personal injuries’ for which the producer is liable, if such an operation is necessary to overcome the defect in the product in question. It is for the national court to verify whether that condition is satisfied in the main proceedings.”
The role of the national court in similar cases in the future will thus be to determine what measures are necessary to restore the expected degree of safety in use of the product and potentially impose an obligation on the producer to pay compensation in an amount appropriate to those measures. Nonetheless, a condition for the producer to be held liable for compensation is a causal relationship between the defect resulting from the risk of failure of the device and the damage suffered.
Practical significance of judgment
As a consequence of introduction of the criterion for determining product safety through a degree of probability of product failure, this ruling increases the risk to manufacturers, in particular manufacturers of products satisfying sensitive social needs such as healthcare. In the eyes of the public such products must be failsafe, which in light of this judgment means free of defects. But such a degree of safety is difficult to achieve and certainly requires great investment.
The courts also will not have an easy task deciding on the amount of compensation to award for the application of measures to cure a defect in a product only within the necessary scope, because they will have to weigh the reliability of often conflicting opinions of experts filed in the case to show what is necessary and what is excessive to restore the expected degree of product safety.
The ruling should be particularly welcome to consumers, as it seeks to raise the level of product safety and makes it easier to seek compensation when that level is not maintained.
Dr Ewa Butkiewicz, Life Science and Regulatory Practice, Wardyński & Partners