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.

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