The Gazette 1980

GAZETTE

JANUARY-FEBRUARY 1980

Practical Aspects of E.E.C. Law

By P. J. FARRELL

(I) Advising your Client on Liability for Defective

Products

In October 1979 the Commission published its

amendments to the proposal for a Council Directive

concerning liability for defective products (OJ. No.

C271/3, 26.10.79). It proposes some significant changes.

The following is a summary of its main provisions.

(1) Basis of Liability

A producer is to be liable for damage caused by a

defect in an article, whether or not he knew or could have

known of the defect.

In other words, liability irrespective of fault. Liability

extends only to moveables which have been industrially

produced. Primary agricultural products, a craft or

artistic products have been excluded.

(2) Meaning of Producer?

A "producer" is not only the person who produces the

finished article but, includes the producer of any material

or component of it, and any person who represents

himself as its producer, by putting his name, trademark,

or other distinguishing feature on the article.

(3) When is a Product Defective?

A product is defective when, being used for the purpose

for which it is apparently intended, it does not provide for

persons or property the safety which a person is entitled

to expect. The emphasis is on the safety of the product

and not that it is unfit for use.

(4) When is a Producer not Liable?

A producer will not be liable if he can prove that he did

not put the article into circulation; having regard to all the

circumstances, it was not defective when he put it into

circulation; or, it was not produced and distributed within

the course of his business activities.

(5) Meaning of "Damage"

"Damage" means death or personal injuries; damage

to or destruction of any item of property and of a type

ordinarily required for private use; and, damages for pain

and suffering and other non-material damage.

(6) Limit on amount of Damages Recoverable

The total liability of the producer for all

personal

injuries

caused by identical articles having the same

defect is to be limited to a maximum amount. Pending the

determination of this amount by the Council, the limit is

25 million units of account.

Further, the liability of the producer for damage to

property

is to be limited per capita, in the case of move-

able property, to 15,000 units of account and, in the case

of immoveable property, to 50,000 units of account.

(7) Limitation Period

There will be a limitation period of three years within

which proceedings for the recovery of damages are to be

taken. Time begins to run from the day the injured person

became aware, or should reasonably have become aware

of the damage, the defect and the identity of the producer.

However, the liability of a producer will be extinguished

upon the expiry of ten years from the end of the calendar

year in which the defective article was put into

circulation.

(II)

Drafting a Patent Licence Agreement

The legislation in Ireland governing patents is the

Patents Act, 1964. E.E.C. law has intervened in this area

of law through Articles 30 to 36 (free movement of

goods) and Articles 85 and 86 (competition policy) of the

E.E.C. Treaty. When drafting a patent licence agreement

a practitioner should consider the implications of:

(a) Regulation 17/62, Article 4 (2) (b), and Regulation

19/65, Article 1 (b), both of which exempt from

notification to the Commission agreements which

impose certain restrictions which are permitted by the

Regulations; and

(b) the Commission Notice on Patent Licensing Agree-

ments of December 1962, which provides that, in the

view of the Commission, certain clauses in patent

licensing agreements are not affected by Article 85

(1) of the E.E.C. Treaty.

Practitioners should take note that in March 1979 the

Commission published a Draft Block Exemption Regula-

tion concerning certain categories of patent licensing

agreements (O.J. No. C58/12, 3.3.79). It sets out the

types of patent licensing agreements which need not be

notified to the Commission and which will therefore be

automatically exempted under Article 85. The Draft

Regulation does not apply to, for example, patent pools.

It lists a large number of types of clauses which, if

included in an agreement, will not entitle the agreement to

benefit from the exemption.

Some amendments are expected to be made to the

Draft Regulation and a revised Draft is to be published by

the Commission.

(III)

Unactionable Debts and the E.E.C.

It was held in the case of

Societe Generate Alsacienne

de Banque S.A. v. Walter Koestler

(Case 23/78) that

Articles 59 and 60 of the E.E.C. Treaty, relating to the

freedom to provide services in Member States, "do not

affect the application of legislative provisions whereby a

Member State bars the recovery by legal action of certain

debts, such as debts arising out of a wagering contract

and similar debts, provided always that such provisions

are not applied in a discriminatory manner, either in law

or in fact, compared with the way in which similar debts

contracted within the territory of the Member State in

question are treated" (extract from

Information on the

Court of Justice of the European Communities).

The permission of the Stationery Office and of the Press and

Information Office in Ireland of the Commission of the European

Communities to reproduce material is kindly acknowledged. Regula-

tions, Directives and Official Journals can be purchased from The

Stationery Office, St. Martin's House (3rd Floor), Waterloo Road,

Dublin 4. Tel. 789644. Reports of proceedings of the Court of Justice

can be purchased through Greene & Co., Bookshop, 16 Clare Street,

Dublin 2.