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Proposal for a European Directive on product liability

In the European Parliament, the discussion of the proposal for a Directive on liability for defective products is coming to an end without much interest from the professional public so far. The proposal is intended to regulate the issue of product liability in a completely new way. This is currently dealt with in a directive that is almost 40 years old and is therefore out of date in many areas. That is true. The question is whether the proposal does not go further in some respects than is really necessary.

The proposal for a directive should apply to all products placed on the market or put into service after 12 months from the entry into force of the proposal. Among other things, the directive will also affect medical devices and medicinal products. The primary objective of the Proposal is to ensure that any individual who has suffered damage caused by a defective product can successfully claim compensation in court.

Proving a product defect - effectively shifting the burden of proof from the plaintiff to the defendant

Under the general rules, the plaintiff must prove the defect in the product, the damage caused and the causal link between the defect and the damage. The Draft Directive enters into this basic model by providing that, in certain circumstances, the product is deemed to be defective regardless of whether the plaintiff actually proves the defect in the product. On the contrary, the manufacturer will have to prove that there was no defect.

In particular, the Proposal for a Directive effectively shifts the burden of proof from the plaintiff to the defendant by empowering national courts to order the defendant, at the request of the injured party (the plaintiff), to disclose the necessary evidence in its possession. If the defendant fails to do so, the product is deemed to be defective. Similarly, the product shall be deemed to be defective if the court considers that the plaintiff has excessive difficulties in proving the defect due to scientific or technical complexity. It is then for the manufacturer to prove otherwise.

The Directive also proposes other changes, e.g. the proposal includes a presumption of a causal link between the defect and the damage, if the damage typically corresponds to the defect in question, an extension of the limitation period to 15 years and other changes.

In the life science field, there is already very strict regulation for marketing a product. This is to guarantee the safety and efficacy of products. However, the draft directive significantly and unnecessarily interferes with the established concept.

The proposal for a directive speaks in the explanatory memorandum of the need for new regulation in view of modern technology and the difficulty of meeting the burden of proof for consumers. However, the proposal completely ignores the fact that the more complex the product, the more complex and demanding the requirements for placing such a product on the market. 

For example, in the field of pharmaceuticals, a product must comply with extremely stringent registration procedures in order to enter the market. In the field of medical devices, the product must also undergo very demanding and costly certification and conformity assessment. If a product meets these requirements, it is considered safe and effective and can be placed on the market.

The proposal for a directive fundamentally interferes with this concept. In the case of a complex product (or in the case of failure to comply with the obligation to issue documents), the Proposal will consider the product to be defective and the manufacturer will have to prove otherwise. This significantly limits one of the fundamental benefits of public regulation and undermines the degree of legal certainty that strict public regulation should provide.

The manufacturer of artificial valves will thus have to prove the safety (but also the efficacy) of the device again in court in each individual case. In order to do so, the plaintiff will effectively only need to create the impression in court that the product may have contributed to the harm and may have been defective. The presumption of efficacy and safety of the product will cease to apply. The manufacturer will have to provide the plaintiff with all the documentation and then wonder whether there is a minor error in the often several hundred pages of documentation, e.g. that the instruction manual is out of date as to the date of its last update ... even that is a non-conformity. And such a non-conformity can lead a court to conclude that the product does not meet the mandatory safety requirements and is therefore defective.

If you ask any medical device conformity assessment expert, they will confirm that there is no documentation in which they cannot find at least a few minor deficiencies and recommendations for improvement. And on the other hand: if you look at the inspection findings of the State Institute for Drug Control, they are not infrequently based more on assumptions than on actual findings of fact. Now imagine that you submit all this to a Czech court for a decision. It is more than clear that, when in doubt, the courts will often quite naturally make light of the work and reverse the burden of proof. The directive will therefore undoubtedly simplify the handling of factually complex cases, but it will almost certainly not lead to greater access to justice. We fear the exact opposite.

Regulatory requirements must remain under the control of the regulatory authorities and, unless the claimant proves otherwise, should not be re-established by the manufacturer in individual private litigation.

Summarized: Complex and sophisticated products are subject to strict regulatory rules for market entry. These are to be controlled primarily by the regulatory authority, the documentation is to be reviewed by the regulatory authority, which is to have full access to it (and may provide it to the patient to the extent necessary), and, where appropriate, the regulatory authority is to intervene appropriately if there is a threat to life or health. For simple products then we don't need such a directive by nature (if a chair breaks under me then I don't need a reversal of the burden of proof to prove a defect). Finally, procedural law today, even without a directive, knows the possibility of ordering the defendant to produce documents that are essential to the decision of the case if the plaintiff does not have them.

More minuses than pluses - the draft directive is just another unnecessary regulation that will lead to a reduction in competition and make products more expensive

In our opinion, the solution proposed by the Directive is thus completely unnecessary. As a result, it will lead to more expensive products (more expensive insurance for manufacturers, higher administrative costs, etc.), reduced supply of devices and reduced willingness of manufacturers to launch new devices. There will be fewer manufacturers, there will be less innovation, small manufacturers will be unwilling or unable to bear the increased risk of litigation and will leave the market. This will make the market less attractive again. Ultimately, therefore, it will also be a loss for consumers.

In addition to the ongoing economic downturn, European manufacturers are being hit by one regulation after another, and the implementation of these regulations is becoming increasingly difficult. It is fair to ask whether it really is not time to slow down on European regulation.