This is the fourth and final part of the article that Klaus M. Brisch, LL.M. and Marco Müller-ter Jung, LL.M. – both lawyers with DWF Law in Germany – wrote for 3D fab+print about product liability in the field of additive manufacturing. Did you miss (any one of) the previous parts? Here you can read part one, part two and part three.
Risk Management and Recourse within the Supply Chain
As already explained when defining the term ‘product’, almost each object and possibly service can be categorised as some sort of ‘product’. Assuming that products (in the legal sense) were produced at different stages of the value chain, the result would be that various parties of the supply chain are identified as manufacturers. In principle, this rule is valid; however, there are exceptions to this rule due to the addition of disclaimers or other contractual regulations which can be agreed individually and thus give a specific characteristic regarding the respective liability obligations.
In addition to an agreement on the limitation of liability, each party is advised to take appropriate measures for excluding or limiting existing liability risk or to provide a strategy or sufficient financial means for emergency cases. This means having close collaboration with experts in the respective fields and also with other parties of the value chain. Since it is more unlikely to suffer damages from products without defects than defective products, the quality of the product should be the primary concern throughout all stages of manufacturing. In case damages still occur, it is important to already have liability concept in place before manufacturing the product or, at the very latest, before the product enters the market.
Furthermore, it is important to maintain proper documentation on quality assurance, especially documenting test results of materials and prototypes used as well as their proper production and storage. If production processes have been documented properly, it might be possible to be released from liability due to the traceability of proper production.
Following damage claims, it is crucial to examine the circumstances in order to identify sources of error and eliminate them as soon as possible. To this end, the above-mentioned, thorough documentation is of utmost importance, referring to both the production and the liability circumstances as well as any subsequent modifications to the product. It may also be necessary to recall components that caused damages (if possible) and examine them or to look into test reports, manuals, warnings, information for buyers, product lists etc. If possible, one of the defective final products should be brought in and examined or have a fault analysis carried out if the product was part of a larger production.
Substantial financial liability claims, however, are not the only claims that parties of a manufacturing chain might face. For example, it is worth considering to what extent it is necessary to control products or product components that were supplied or to control other parties of the manufacturing chain.
This could possibly lead to permanent damage to the image of the company, resulting in a rapid decline in turnover. Therefore, it is strongly advisable to consider liability issues when starting to design or produce a product. It is also recommended to take out an insurance covering potential damages. The manufacturer in particular should have insurance with enough coverage to be able to recall defective products without suffering considerable losses. However, it is important to look closely at what exclusion clauses are stipulated in the insurance conditions since they are often not tailored for modern, innovative technologies and the associated risks and damages. If applicable, one should also look closely to see if the coverage only includes liability for physical products or if it also covers digital products such as defective CAD files.