The manufacturer must reimburse the product replacement costs where such replacement is necessary to restore the level of safety which a person is entitled to expect.
The decision extends the liability of manufacturers of implantable medical devices, such as pacemakers and implantable cardioverter defibrillators. It was previously thought that liability would only arise if the specific product used by the consumer was shown to be unsafe, not merely potentially so. However, the facts and circumstances of each individual case will be crucial, and it may be that on the facts of a particular case the perceived danger does not extend to all products in the class or that, as with the defibrillators in this case, replacement is not required.
Article 1 of the Product Liability Directive 85/374 (the Directive) provides that the producer is liable for damage caused by a defect in his product.
Article 6(1) provides that a product is "defective" when it does not provide the safety which a person is entitled to expect, taking all circumstances into account.
Article 9 provides that "damage" means: (a) damage caused by death or by personal injuries; (b) damage to, or destruction of, any item of property other than the defective product itself.
A German manufacturer of pacemakers and implantable cardioverter defibrillators wrote to treating physicians indicating that its quality control system had established that there was a risk of both products being defective. It recommended that physicians consider replacing the pacemakers in affected patients, free of charge, and deactivating a switch in the defibrillators.
The patients' insurers claimed compensation in respect of the replacement costs from the manufacturer.
The German Federal Court noted that the outcome between the insurers and the manufacturer depended on whether the pacemakers and cardio defibrillator implanted in the insureds were defective products within the meaning of Article 6(1) of the Directive.
The Court referred two questions to the CJEU for a preliminary ruling:
(1) Is Article 6(1) to be interpreted as meaning that a medical device implanted in a human body is defective if medical devices in the same product group have a significantly increased risk of failure but a defect has not been detected in the device which has been implanted in the specific case in point?
(2) If yes, do the costs of the operation to remove the product and to implant another medical device constitute damage caused by personal injury, for the purposes of Article 1 and Article 9(a) of the Directive?
The CJEU answered both questions in the affirmative.
Consideration of Question 1
The CJEU held that an assessment as to the defectiveness of a product, under Article 6(1), must be carried out having regard to the reasonable expectations of the public (in accordance with the sixth recital to the Directive). The CJEU emphasised that the safety which the public is entitled to expect must be assessed by taking into account, inter alia, the intended purpose, the objective characteristics and properties of the product and the specific requirements of the intended users.
It found: "With regard to medical devices…it is clear that, in light of their function and the particularly vulnerable situation of patients using such devices, the safety requirements for those devices which such patients are entitled to expect are particularly high." The CJEU held that "the potential lack of safety which would give rise to liability on the part of the producer under Directive 85/374 stems…from the abnormal potential for damage which those products might cause to the person concerned."
Accordingly, the CJEU concluded that Article 6(1) 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, it is possible to classify as defective all the products in that group or series, without there being any need to show that the product in question is defective.
Consideration of Question 2
The CJEU found that compensation for damage relates to all that is necessary to eliminate the harmful consequences of the potential defect and to restore the level of safety which a person is entitled to expect. In the case of medical devices, such as pacemakers and implantable cardioverter defibrillators, which are defective, compensation for damage must cover the costs relating to the replacement of the defective product.
Therefore, the CJEU found that the replacement costs, including the costs of the surgical operations, constitute damage within the meaning of Article 9(a) of the Directive, for which the producer is liable.
It held that that finding may be different in the case of implantable cardioverter defibrillators, as the manufacturer recommended that the switch on those medical devices should simply be deactivated. It was for the national court to determine, having regard to the particularly vulnerable situation of patients using such a device, whether the deactivation of the switch is sufficient for the purpose of overcoming the defect in that product, or whether it is necessary to replace the product.
This is an important decision with significant implications for manufacturers of medical devices and medical insurers. However, it is worth noting that the CJEU limited its interpretation of the Directive to medical devices such as pacemakers and implantable cardioverter defibrillators. The CJEU highlighted the vulnerable situation of patients using these medical devices, their abnormal potential to cause damage, and the high safety standards which such patients are entitled to expect.
It remains to be seen whether the national courts will interpret the decision more broadly. It is arguable that it might be sufficient to prove that a product is one of a group of potentially defective products, rather than an actually defective product, in circumstances where a product meets the particular qualities set out in the judgment. However, the facts and circumstances of each individual case will be crucial, and it may be possible on the facts of a particular case that the perceived danger does not extend to all products in the class or that, as with the cardioverter defibrillators, replacement was not required.