Suppliers may face producer liability when having similar names, trademarks or distinguishing features as the producer

On 19 December 2024, the European Court of Justice delivered a pivotal ruling on the liability of suppliers towards consumers in cases involving defective products. The ECJ ruled that suppliers can be regarded as the producer for product liability purposes even if they were not involved in the manufacturing process. This applies if an element placed on the product by the actual producer matches the supplier's name, trademark or distinctive feature. In that case, the supplier will be jointly and severally liable with the actual producer if the product is proven to be defective. 

The case originated from an incident in Italy, where a consumer was involved in a car accident during which the airbag malfunctioned. Seeking compensation, the consumer filed a claim against the dealer and the supplier/distributor. The supplier argued that it was not liable since it did not manufacture the vehicle, prompting the Italian Court of Cassation to seek clarification from the European Court of Justice.

In accordance with the European Product Liability Directive, all actors involved in the manufacturing process should be held liable for supplying a product, component or raw material that is defective. This applies to producers and anyone who is presenting itself as a producer. It was generally accepted that importers could be presenting themselves as a producer and therefore be liable for defective products they have imported. However, up and until now there was no guidance on whether suppliers could be presenting themselves as a producer without being actively involved in the manufacturing or importing of the products. For the first time, the European Court of Justice needed to determine whether a supplier could be considered as presenting themselves as the producer if it was not involved in the manufacturing process but a part of their name, trademark or distinctive mark is featured on the product.

Many suppliers request producers to apply their name, trademark or a distinctive mark on the products. Others may belong to the same group as the producer and use a name, trademark or distinctive mark that resembles that of the producer. 

Imagine a scenario where a company manufactures products labelled with a distinctive trademark, which are then delivered to consumers by a supplier whose name resembles this trademark. Even though the supplier did not make the products or apply its name on them, the trademark on the products matches a distinctive part of the supplier's name.

The European Court of Justice concluded that not only suppliers who physically attached the name, trademark or distinctive mark to the product can be deemed as a producer, but also the supplier whose name, trademark of distinctive element resembles that of the producer or the one featured on the product. The application of (a part of) the suppliers name, trademark or distinctive mark on the product could give consumers the impression that the product's quality is assured by the supplier, as if they produced the product themselves.

With its decision, the Court aims to protect consumers more effectively if they are confronted with a defective product. This allows consumers to direct their claims against the supplier, which is often more accessible and recognizable than the actual producers, especially when those producers are further up the supply chain or located in different jurisdictions. 

Suppliers who may suddenly be reclassified as producers could face increased legal responsibilities and potential financial liabilities, as they will be held to the same standards and obligations as the actual producer. They will need to evaluate the risk and exercise greater diligence and oversight throughout the supply chain to ensure that the products they deliver are free from defects. 

This ruling has significant implications for the interpretation of the term ‘producer’ under both the current Product Liability Directive and the new Product Liability Directive which will enter into force on 9 December 2026. For more information on the new Product Liability Directive, read: Prepare your company: the EU’s revised Product Liability Directive brings new challenges.