Trademark proprietor always bears product liability

The Court of Justice of the European Union (CJEU) has confirmed in a preliminary ruling requested by the Supreme Court of Finland (KKO) that the proprietor of a trademark appearing on a product is liable under the Finnish Product Liability Act for any damage caused by the product, regardless of whether the trademark proprietor was involved in manufacturing or marketing the product in practice.

It was undisputed that the product was manufactured by a subsidiary of the proprietor of the PHILIPS trademark. KKO had considered it ambiguous whether the holder of a trademark was liable under the Product Liability Act for damage caused by a product bearing its trademark. KKO considered whether, in addition to placing the trademark, any other criteria were required for a trademark proprietor to be held to have represented itself as the producer of a product. Under the legislation, product liability attaches to each “manufacturer” involved in production, and the preliminary ruling specified the conditions under which the trademark proprietor is deemed to be a “manufacturer”.

The preliminary ruling of the CJEU confirmed that the concept of a “producer” within the meaning of product liability law does not require a party that has affixed or permitted the affixing of its name, trademark or other distinguishing feature to a product to also serve as a manufacturer of the product in any other way. The producer of a product is therefore, automatically and with no further conditions, always deemed to be the party whose trademark appears on the product.

A trademark proprietor accordingly does not have to participate in the practical manufacturing process of the product in any way, but mere ownership of the trademark placed on the product confers liability for the safety of the product and for any damage caused by the product.

Trademark proprietors should take this into account when granting rights to use their trademarks to third parties. A licensor must be prepared for the eventuality that claims for compensation can always be addressed to the trademark holder if the product causes damage.

The full CJEU judgement in Case C ‑264/21 is available online at https://curia.europa.eu/juris/document/document.jsf?text=&docid=262430&pageIndex=0&doclang=EN