CJEU expands definition of producer in product liability law: key takeaways from the Ford Italia case

With its judgment in case C-157/23 – Ford Italia, the Court of Justice of the European Union (CJEU) significantly expands the definition of the ‘producer’ in the terms of product liability law. It ruled that even suppliers who have not been involved in the manufacturing process and have not physically affixed their name or trademark to the product can still be considered the producer if the trademark affixed to that product by the manufacturer is the same as the name of the supplier or a distinctive element thereof.

The case

In the underlying case, a purchaser bought a Ford car from Stracciari, an authorised Ford dealer based in Italy. The car had been produced by Ford WAG, a company established in Germany, and then supplied to Stracciari through Ford Italia, which distributes the vehicles produced by Ford WAG in Italy. After being involved in a road traffic accident in which the airbags of the vehicle did not work, the purchaser brought an action before the Tribunale di Bologna (District Court of Bologna) against Stracciari and Ford Italia for compensation for the damage which he claims to have suffered as a result of the defective airbags.

In these proceedings, Ford Italia argued that it could not be held liable as the producer, since the vehicle was manufactured by Ford WAG, and not by Ford Italia. Ford Italia also argued that it did not present itself to be the producer, since the invoice for the vehicle identified Ford WAG as the manufacturer of the car.

The Tribunale di Bologna did not, however, accept these arguments and still ordered Ford Italia to pay damages. Following an unsuccessful appeal by Ford Italia, the case went to the Corte Suprema di Cassazione (Supreme Court of Cassation), which decided to stay the proceedings and to refer the following question to the CJEU for a preliminary ruling:

“Is an interpretation that extends the producer’s liability to the supplier, even where the latter has not physically placed its own name, trade mark or other distinguishing feature on the item, on the sole ground that the supplier has a name, trade mark or other distinguishing feature that is in whole or in part the same as that of the producer, consistent with Article 3(1) of [Directive 85/374]? If it is not consistent with that provision, why is that the case?”

The CJEU’s ruling

The CJEU answered in the affirmative, ruling that Ford Italia can be classified as the producer, even though it did not physically manufacture the vehicle or physically affix its trademark to the vehicle. It considered it sufficient that Ford Italia acted as the supplier and used the Ford trademark which was also affixed to the car.

In a first step, the CJEU correctly recognised that, “by referring to a person ‘who … presents him[-or her]self as … [a] producer’ ‘by putting’ his or her name, trade mark or other distinguishing feature on the product, the wording of [Article 3(1) of [Directive 85/374] might suggest that that classification requires active steps on the part of that person, consisting in putting that wording on the product in question him- or herself.”

However, based on the following arguments, the court still concluded that such active steps are not necessary to establish the status of producer:

• The CJEU states that even if the supplier has not physically affixed the trademark itself, it can leverage the similarity between the trademark and its own company name to present itself to the consumer as responsible for the product’s quality. According to the CJEU, this induces consumer confidence comparable to the situation where a consumer acquires the product directly from the (main) manufacturer.
• Furthermore, the CJEU emphasises that the purpose of Article 3(1) of Directive 85/374 (“Directive”) is to protect the consumer by simplifying the process of identifying the actual producer of a defective product. The CJEU asserts that when a supplier uses a trademark which is also affixed to the product, the consumer can reasonably assume that the supplier is the producer. The court believes that dismissing the supplier’s role as the producer merely because they did not affix the trademark themselves would limit the consumer protection intended by the Directive.

Comment

In light of the Directive’s clear wording, the reasoning is neither convincing nor expected, even when considering the CJEU’s typically consumer-friendly approach. By unnecessarily broadening the definition of ‘producer’, the judgment disregards the European legislator’s decision that a distributor can generally only be held liable if they fail to provide the producer’s name to the consumer under Article 3(3) of the Directive (Article 8(3) of the new Product Liability Directive contains the same provision). This interpretation is not covered by the Directive’s wording, leads to an unforeseeable broadening of supplier liability for companies and raises significant concerns regarding the principle of legal certainty.

Practical implications

The CJEU ruling has significant practical implications: If a manufacturer distributes products through affiliated companies that use the same trademark as the manufacturer, there is a significant risk that these affiliates may be held liable as producers. Going forward, even greater diligence will be necessary in planning the supply chain, creating product labels, and – in some cases – even choosing company names. Otherwise, distribution companies may be deemed liable as producers, regardless of their actual involvement in the production process.