Articles on Law, Science, and Engineering

PART IV: Products Liability

IN PARTS II AND III we discussed contract liability for engineers and professional malpractice. A third basis of personal liability for engineers is products liability based on strict liability in tort. This paper discusses products liability and explores some of the ways it relates to engineers. Products liability is an outgrowth of shortcomings in both contract law and negligence law. As described in Part II, contractual obligations generally exist only between individuals "in privity" through the contract. This means that third parties injured by a product usually cannot sue for breach of contract because they are not one of the contracting parties. Until recently, third parties who had been injured by a product were required to prove that the manufacturer of the product was negligent. Proving that an automobile manufacturer in Michigan was negligent is difficult for an injured consumer in California or New Jersey. Products liability law was born from these inadequacies in contract law and negligence law.

Product liability is applicable to sellers of defective products to consumers. However, the privity requirement of contract law has been eliminated: "Sellers" include anyone in the chain that creates the product or places it in the hands of the consumer, and the injured party can be anyone injured by the product-not just the consumer to whom the product was sold. Also, in the original formulation by the California and New Jersey courts, product liability was based on "strict liability," thereby eliminating any requirement that the injured party prove negligence. Recent confusion about the legal standards for products liability stems from the addition of the requirement that the defective condition of the product be "unreasonably dangerous." This negligence concept was introduced by a negligence law scholar who helped write the description of strict products liability for the prestigious American Law Institute Restatement of Torts (Second).

The important difference between negligence and products liability claims is that the former focuses on the behavior of those who created the product or placed it in the hands of the user whereas the latter focuses on the product itself. Thus, while a negligence claim would involve proving that a product was put into the stream of commerce despite unreasonable risks of harm from it that should have been anticipated at the time of production, a products liability claim would involve proving that the product was defective, regardless of whether or not the seller exercised all possible care. The definition of "defective" here is unclear. One popular definition is a product that fails to live up to the reasonable expectations of the user. However, due to the "unreasonably dangerous" language in the Restatement, the courts in the various states incorporate different levels of seller negligence in their definition. It is this variable deviation from the original concept of strict liability from state to state that is responsible for the uncertainty sellers and their insurers face in products liability litigation.

A product may be defective due to an error during its manufacture which causes it to be different from what was intended. Or, a product may be defective because an engineer designed it improperly, and it is produced as intended. Or, a product maybe defective due to a failure to warn the user about dangers associated with its use.

Hypothetical Example

A biomedical engineer (Smith) invented an electronic device for the continuous monitoring of pulse rates. Since the microelectronics is powered by a single 1.5 single volt battery, the device can be worn like a wristwatch. One of the features of the monitor is a power cell life indicator comprising a small button which, when depressed, beeps if the battery is not exhausted. Another feature is that a "normal" pulse rate range can be defined by the user. When the pulse rate drops below the selected range, the monitor automatically emits a steady buzz; when the rate exceeds the range, the monitor automatically beeps. Smith applied for and received a patent on the pulse monitoring device. Because of the nature of the device, FDA approval was not obtained. Smith found a source of venture capital and began to manufacture the device. Smith marketed the device through drug stores and other retail outlets. Jones suffered from fainting spells. The cause of the fainting spells was undiagnosed, but Jones had observed that each episode was preceded by a substantially elevated pulse rate. Jones had also observed that fainting episodes never occurred until about fifteen to thirty seconds after his pulse rate exceeded 100. Jones purchased a pulse rate monitoring device to alert him when a fainting episode was imminent. Jones set the "normal" range for pulse rate to 50-90, and began to use the device. Several weeks later, while Jones was moving the lawn, his device beeping. Jones went inside, laid down on the sofa, and fainted. About a year later, Jones was driving down a street near his home. Without warning, he fainted and lost control of the car. The car was a total loss, and Jones was seriously injured. The device, which was not damaged, was found and tested. The power cell was exhausted. When loaded with a fresh power cell, the device functioned normally. However, Jones sued Smith for providing a device which was defective and unusually dangerous because there was no warning that the device required periodic replacement of the power cell. Smith argued that batteries are commonly used in modern society, and ordinary men know, or should know that batteries become exhausted and therefore require periodic replacement. Smith pointed out that the device included a mechanism for testing the state of the power cell, and that Jones should have used that feature from time to time. The court noted that Smith intended the device for individuals with health problems and that the potential for harm to such individuals was substantial if the device failed. The court also pointed out that Smith was in the best position to realize that the device would fail if the power cell was not replaced periodically, and that a warning about the danger of not maintaining the power cell would have been simple and inexpensive. The court concluded that Smith's failure to warn users of these dangers rendered the device defective and unreasonably dangerous to the user, and awarded judgment for Jones.

Engineers are liable for injury caused by defective products to the extent they are "seller" in the stream of commerce that place the product in the hands of a consumer. It is important to realize that strict product liability does not depend on whether or not you were negligent, but rather on whether or not you are a "seller" of a product that proves to be "defective." Thus, a biomedical engineer who creates a medical device that proves to be defective and injures a patient, may be liable for the patient's injuries even if the engineer was not negligent, and the physician using the device was.

As innovators, engineers are at the very beginning of the process that places a product "for sale" in the stream of commerce. Inventors holding patents make the first "sale" in the commercial chain when they transfer their technical know-how. For example, the inventor of an improvement for a medical device makes the first sale in its commercial chain when he assigns or licenses his patent rights to a device manufacturer. Like engineers who design products, inventors are usually in the best position to understand the dangers associated with their products or inventions and to take whatever steps are necessary to warn users and to insure against risks. Engineers and inventors are also in a good position to understand the utility of their inventions and the extent to which that utility balances potentially unsafe characteristics. Finally, while engineers may claim to provide a service (rather than a product), the property nature of the ideas they create and of the final product that reaches users probably distinguishes engineers from attorneys, physicians, and other professionals who provide essentially services and are therefore not liable for products liability.

If the courts find that engineers are "sellers" of technology embodied in hardware products, engineers may be personally liable for technology "defects" in products that harm users, regardless of whether or not their conduct is negligent.

Hypothetical Example

A biomedical engineer (Smith) invented and patented a new device to be used by patients recovering from heart surgery. Smith licensed the patent to Heart, Inc. which he formed to conduct clinical trials and eventually manufacture the device. The device immediately earned the praise of heart surgeons. Five years later, it was discovered that the device interferes with the incorporation of serum copper into apoceruloplasmin. The result is that hepatolenticular degeneration could occur, especially in alcoholics or users with a genetic defect such as Wilson's Disease. Jones, a patent who used the device for three years with no apparent side effects, developed severe liver disease. Jones sued Smith and claimed that, based on the patient assignment, Smith is a "seller" of the device, and that the device is defective and unreasonably dangerous in that it causes hepatopathies. Smith defended on the basis that, at the time the device was tested, there was no way to foresee every possible side effect, and certainly no way to foresee something as farfetched as hepatolenticular degeneration. However, the court found that a patient has a right to expect a device that will not destroy his liver. The court observed that licenses for technology are often considered "sales," and that Smith, as licensor of his patent, made the first "sale" that placed the device in the stream of commerce. The court further pointed out that no one in the commercial chain was better placed than an inventor to anticipate adverse effects of an invention, no matter how farfetched. The court concluded that a medical device that destroys a patient's liver is defective and unreasonably dangerous, and since the licensor was a "seller," and Jones was injured by the device, Smith was liable to Jones for those injuries.

Engineers engaged in a joint venture with a "seller" could themselves become "sellers." The relationship between joint entrepreneurs can be very casual. If the courts find licensing agreements create joint liability, engineers engaged in a joint enterprise with a "seller" could be jointly liable for harm caused by a defective product over which they had no control.