Legal andarketplace Incentives for Suppliers Declaration of Conformity
George T. Willingmyre, P.E.
At a meeting of the WTO Technical Barriers to Trade (TBT) Committee in 1998, in Geneva, the U.S. Government put forward a paper for discussion on the use of supplier’s declaration of conformity as a cost-effective tool for regulators to meet legitimate policy objectives, such as ensuring safety and health. The paper intended to provide additional background on the use of suppliers’ declaration of conformity for possible use in reducing technical barriers to trade as well as information on the US experience. The US submission stated in part:
The Figure incorporated by reference Incentives for SDoC under conditions of Post Market Surveillance and Sanctions for False Statements portrays key marketplace factors in Europe and in the United States which support the use of SDoC.
The Figure and the descriptions of product labeling, market surveillance and product liability considerations in bringing a product to market in the United States and Europe are intended as basic introduction to the legal and marketplace incentives encouraging manufacturers to build products complying with relevant mandatory and voluntary marketplace requirements and labeling them so when appropriate. This paper does not provide legal advice or counsel. Readers are strongly advised to consult their attorneys for specific legal interpretations.
George T. Willingmyre, P.E. March 28, 2000
A variety of laws and regulations in the United States call for products to be accurately labeled. Such laws and regulations carry severe penalties for those businesses that would falsely claim conformity to a standard. Accompanying government and private sector marketplace surveillance programs help the marketplace self police itself against both products that should be meeting appropriate standards, but are not so labeled and products that are falsely claiming conformity to standards. Product labeling regulations and marketplace surveillance activities are covered in many specific pieces of legislation within the jurisdiction of many different agencies. One would have to determine which agency has jurisdiction of the specific product or even the specific product characteristic in some cases and then would have to research those regulations for the applicable requirements in any given product field.
direct product liability considerations and both regulatory and product
liability considerations related to product recalls act together to
encourage manufacturers to build products to the relevant safety
standards in order to minimize these risks of defending against
claims of defective products or calls for mandatory or voluntary product
One recent US example of a manufacturer
running afoul of a specific regulatory requirement for producing
accurate testing results is that of
the Clean Air Act and Saybolt. Saybolt Inc. agreed to plead
guilty in Federal Court to charges of falsely certifying results of
qualitative test of reformulated gasoline as required under the Clean
Air Act. As part of the
penalty, Saybolt agreed to publicly announce in the news media; “…
As a result of a pattern of data falsification, our company has agreed
to pay a fine of $3,400,000 and to be placed on probation for five
years. We also agree to
publish this announcement. Accurate reporting of test results … is
essential. Failure to do so
will expose you to severe penalties.
It is also smart business.” [ASTM Standardization News, November 1998 page 62]
In addition to specific regulatory oversight,
In the U.S., the performance of products in the market place is
typically monitored by competitors, who do so to protect the market
share for their products. Industry
reports on false claims are given to the Federal Trade Commission (FTC)
and the Food and drug Administration (FDA) which have the capability,
through the Fair Package and Labeling Act, to take action against those
who present false and misleading information.
These requirements, implementing the Fair
Packaging and Labeling Act, are found in Title 15 – Commerce and
Trade; Chapter 39 –Fair Packaging and Labeling Program.
Section 1451 states the Congressional declaration of policy as
Informed consumers are essential to the fair and efficient functioning
of a free market economy. Packages
and their labels should enable consumers to obtain accurate information
as to the quantity of the contents and should facilitate value
comparisons. Therefore, it
is hereby declared to be the policy of the Congress to assist consumers
and manufacturers in reaching these goals in the marketing of consumer
goods. (Pub. Las 89-755,
Sec.2, Nov3, 1966, 80 Stat 1296)
Section 13 of Pub. Law 89-755 distributes the
responsibilities between the Food and Drug Administration
and the Federal Trade Commission
As implemented, these requirements are that all
advertising claims must be substantiated.
Labels are construed as claims; therefore everything on the label
must be able to be substantiated. The
requirements include methods of substantiation. Claiming conformity to or compliance with a standard, code or
regulation must be substantiated.
In a typical month, a half dozen FTC actions are
listed in the Federal Register. FTC
does not have the staff to do much inquiry but depends upon competitors
and consumers to identify false claims.
If a product does not meet the requirement claimed on the label
of if the label is just miss
worded, FTC may be notified.
There are tough consequences for false
certification of test results. Increasing
regulatory agency use of “suppliers declaration of conformity” to
relevant requirements in standards and the associated transfer of
responsibilities for conducting tests from the public to the private
sector is often accompanied with a fear that businesses will not
actually perform the cited tests or will otherwise falsely claim to
for such illegal actions can be severe.
another case involving misleading advertising and product claims, Telxon Corporation announced that the U.S. District Court, Northern
District of Ohio granted
its request for a preliminary injunction against Symbol Technologies,
Inc. (NYSE: SBL) of Holtsville, New York, enjoining Symbol from continuing to make false and
misleading statements about its frequency hopping wireless network; namely, Spectrum 24. [Akron,
Ohio. December 19, 1996 PR Newswire] In addition, the court
ordered a public retraction of the false and misleading statements which
have appeared in various forms of advertising and public communications
made by Symbol.
The court's ruling stems from a lawsuit filed by Telxon on September 4,
1996, charging that Symbol engaged in violations of the federal Lanham
Act and the Ohio Deceptive Trade Practices Act by making false and
misleading statements concerning, among other things, issues of
standards compliance, interoperability, and open systems in connection
with Spectrum 24. Frank Brick, Telxon's President and Chief Operating
Officer, stated, "We are pleased by the court's decision and hope
that this will clarify for customers and the marketplace any confusion
the judgment entry issued by the court, enjoins Symbol as follows:
making statements (expressly or in substance) that Spectrum 24 is
compliant, meets, conforms or is compatible with the IEEE 802.11
standard or draft standard.
making statements (expressly or in substance) that Spectrum 24 is an
making statements (expressly or in substance) that:
IEEE 802.11 is a
standard for interoperability;
compliance with the IEEE 802.11 will result in interoperability;
Spectrum 24 is interoperable; and
IEEE 802.11 will provide interoperability between access points.
an additional component of injunctive relief, Symbol was ordered by the
court to issue a public retraction stating as follows:
has made false and misleading statements that Spectrum 24 (Symbol's
frequency hopping network) is compliant with the IEEE 802.11 standard.
The truth is that the IEEE 802.11 standard has not been finalized.
Spectrum 24 is not compliant with the IEEE 802.11 draft standard. And in
the first available edition, Symbol shall publish the retraction in a
full one page advertisement in each magazine where it published its
advertisement [that contained its false and misleading statements],
Liability considerations in the United States lead
manufacturers to reduce their exposure to liability suits by
building products complying to
applicable regulatory requirements and to the most relevant applicable voluntary safety and warning
labeling standards. Meeting
such standards and declaring conformity of their products to such
standards can be used as a defense although not a guaranteed shield
against a plaintiff’s claim of damages and injuries due to a
defective product. Not
meeting a relevant regulatory requirement or applicable voluntary
standard is certain to be used as evidence that a manufacturer did not
meet reasonable expectations to produce a safe product.
The Restatement of Torts (Third) is a comprehensive general statement of the tort law in the United States governing liability for defective products. Even as a general statement, however, it is subject to interpretation and variations in individual states and courts. The third edition states in section 2 with respect to product defects:
product is defective when, at the time of sale or distribution, it
contains a manufacturing defect, is defective in design, or is defective
because of inadequate instructions or warnings. A product:
contains a manufacturing defect when the product departs from its
intended design even though all possible care was exercised in the
preparation and marketing of the product;
is defective in design when the foreseeable risks of harm posed by the
product could have been reduced or avoided by the adoption of a
reasonable alternative design by the seller or other distributor, or a
predecessor in the commercial chain of distribution, and the omission of
the alternative design renders the product not reasonably safe;
is defective because of inadequate instructions or warnings when the
foreseeable risks of harm posed by the product could have been reduced
or avoided by the provision of reasonable instructions or warnings by
the seller or other distributor, or a predecessor in the commercial
chain of distribution, and the omission of the instructions or warnings
renders the product not reasonably safe.
allegation that a product is defective in design is the most common
allegation asserted in a products liability action. Section 2(b)
adopts what is essentially a
negligence analysis for design defect claims. The Restatement
requires the plaintiff to establish that the foreseeable risks of
harm could have been prevented by a "reasonable alternative
design," and the absence of that alternative design renders the
product "not reasonably safe." Furthermore, the plaintiff must
prove that such a reasonable alternative design was, or reasonably could
have been, available at the time of sale or distribution of the product.
many products liability actions involve allegations of inadequate
warnings. Section 2(c) addresses
warning defects and adopts a reasonableness test for judging the
adequacy of product instructions and warnings. The reasonableness
standard is more difficult to apply in the context of warnings and
instructions than it is in the area of design defects. Too many warnings
or warnings that are too detailed may not be read by consumers;
determining the optimum number and type of warnings and instructions for
a given product is complicated.
connection with liability for defective design or inadequate
instructions or warnings:
(a) A product’s
noncompliance with an applicable product safety statute or
administrative regulation renders the product defective with respect to
the risks sought to be reduced by the statute or regulation; and
A product’s compliance with an applicable product safety statute or
administrative regulation is properly considered in determining whether
the product is defective with respect to the risks sought to be reduced
by the statute or regulation, but such compliance does not preclude as a
matter of law a finding of product defect.
American National Standards institute (ANSI) estimates that its
standards were cited in 400 product liability cases over a recent 15
year period. Several
court cases illustrate the variety of outcomes possible with regard to
defendant’s and plaintiff’s reference to relevant regulations and
In the case Wagner
v. Clark Equipment Co, Inc., 243 Conn. 168, 700 A.2d 38 (1997). the
Connecticut Supreme Court decided
that evidence of compliance with OSHA regulations may be considered in
design defect cases and the court went so far as to state that where a
product complies with and exceeds OSHA standards, the jury may
permissibly draw the inference that the product is not defective and
that the manufacturer acted with due care in its design.
Illustrating a contrary conclusion, the Georgia Supreme Court ruled in a 6-1 decision that Georgia law permits a personal
injury product liability claim when an auto maker sells a car to a
Georgia citizen and the vehicle is in compliance with the National
Automobile Safety Act. Doyle et al. v. Volkswagenwerk
Aktiengesellschaft et al, No. S96Q1529
(March 3, 1997).
the case of I. Potter v. Chicago Pneumatic Tool Co.
Conn. 199, 694 A.2d 1319 (1997),, it
that it is up to a plaintiff to prove that, at the time the defendants
manufactured their products, a feasible alternative design existed which
was safer than the defendants’ design. The existence
of a regulation or a voluntary standard would be compelling evidence in
such a situation
Illustrating the principal that compliance with a voluntary
standard is not a completely sufficient defense against a product
liability claim is the case of King v. National Spa & Pool
Institute (NSPI), Inc., 570 So. 2d 612 (Ala. 1990) (hereafter "King").
from Products Liability Claims against voluntary standards
developers—an update on recent developments
In this case the Supreme Court in Alabama held that even the group that
prepares a relevant voluntary
safety standard owes a duty to consumers and may be found liable.
product can be "unreasonably dangerous" for purposes of strict
products liability if it lacks adequate directions or warnings. It is a
fundamental principle of the law of product liability
that a manufacturer has a responsibility to instruct consumers as
to the safe use of its product and to warn consumers of dangers
associated with its product of which the seller either knows or should
know at the time the product is sold.
In assessing what hazards are foreseeable, a manufacturer is held to the
status of an expert. The lack of adequate warnings renders a product
defective and unreasonably dangerous even if there is no manufacturing
or design defect in the product.
Many courts have recognized the failure to warn as a type of
"defect" upon which recovery in both strict liability and
negligence may be grounded. Failure to warn has led to recovery when
there was a complete absence of warning where one was needed to prevent
the product from being unreasonably dangerous.
In Torres-Rios v. LPS Laboratories Inc., 1998 WL
429337 (1st Cir. 1998), The United States Court of Appeals for the First
Circuit recently affirmed summary judgment in favor of the manufacturer
of a product used to clean electrical equipment, holding that the
product's English-language warning label met federal standards and,
therefore, a jury could not find the product to be unreasonably
case of Product Liability in
Japan: The Exploding T.V. Case Taishi Kensetsu Kogyo Ltd. v.
Matsushita Electric Industrial Co., Ltd
available at http://www.law.kyushu-u.ac.jp/~luke/tvcase.html
illustrates what appears to be the
counterpart situation in Japan where the
negligence of the manufacturer is presumed when a defect is found in the
product, the user doesn't have any duty further to elucidate the
specifics of cause of the defect or of breach of the duty of care, and
the manufacturer has to rebut the presumption by clarifying the cause of
defects, in order to be released from the liability.
In this case the defendant argued that the product in question
met the relevant type testing standards of MITI:
Restatement of Torts (Third) also provided that entities
engaged in the business of selling or otherwise distributing
products are subject to liability for harm to persons or property caused
by the seller’s failure to recall a product after the time of sale or
(1) a statute or other governmental regulation specifically requires the
seller or distributor to recall the product; or
The seller or distributor, in the absence of a recall requirement under
Subsection (1) undertakes to recall the product; and
The seller or distributor fails to act as a reasonable person in
recalling the product.
a regulatory or products liability context the term "recall"
is a term of art. It refers to a very specific device by which a
manufacturer, seller, licensee, importer, distributor, retailer, or
other entity in the chain of commerce of a product, advises purchasers
that certain actions/activities should be undertaken with respect to
that product. Of course, a recall can be effected in any number of ways.
Recall may consist merely of the addition of a warning to a given
product; it could entail repair, replacement or retrofit of that
product; or it could require repurchase by the manufacturer and a refund
of the purchase price to the buyer/consumer.
years, recalls have become fairly pervasive and have received
considerable attention from the media and various business and consumer
groups. Several federal administrative agencies, such as the National
Highway Traffic Safety Administration, Consumer Products Safety
Commission, Food and Drug Administration, Department of Housing and
Urban Development, Federal Trade Commission, Federal Aviation
Administration ("FAA"), and other entities, have statutory
authority to recall products or take action so that a recall or what
amounts to a recall. Where the government has ordered a recall, there is
no question about the manufacturer's duty to comply -- it must.
case of the Consumer Product Safety Commission Section 15(b) of the
Consumer Product Safety Act establishes reporting requirements for
manufacturers, importers, distributors and retailers of consumer
products. Each must notify the Commission immediately if it obtains
information which reasonably supports the conclusion that a product
distributed in commerce (1) fails to meet a consumer product safety
standard or banning regulation, (2) contains a defect which could create
a substantial product hazard to consumers, (3) creates an unreasonable
risk of serious injury or death, or (4) fails to comply with a voluntary
standard upon which the Commission has relied under the CPSA.
Companies that distribute products that violate regulations issued under
the other laws that the Commission administers -- the Flammable Fabrics
Act, 15 U.S.C. § 1193-1204; the Federal Hazardous Substances Act, 15
U.S.C. § 1261-1278; the Poison Prevention Packaging Act, 15 U.S.C. §
1471-1476; and the Refrigerator Safety Act; 15 U.S.C. §1211-1214 --
must also report, if the violations may also constitute product defects
that could create a substantial risk of injury to the public or may
create an unreasonable risk of serious injury or death. The
CPSC has released a helpful and comprehensive RECALL
Guide for Manufacturers, Importers, Distributors and Retailers on
Reporting Under Sections 15 and 37 of the Consumer Product Safety Act
and Section 102 of the Child Safety Protection Act and Preparing for,
Initiating and Implementing Product Safety Recalls that clarifies the
Commission review of whether a product recall may be necessary. Available at http://www.cpsc.gov/businfo/8002.html
recent examples of CPSC-required product recalls are the following:
Michael's Stores Inc. Announce Recall of Lighters WASHINGTON D.C March 9,
23000 - In cooperation with the U.S. Consumer Product Safety
Commission (CPSC), Michael's Stores Inc., of Irving, Texas, is recalling
about 213,000 all-purpose lighters. These lighters can leak butane when
they are ignited, causing an excessive burst of flame from the tip or
other areas of the lighter. This presents a risk of fire and burn
injuries to consumers. Details at http://www.cpsc.gov/cpscpub/prerel/prhtml00/00076.html
New Cole Sewell Corp. Announce Recall of Storm Doors WASHINGTON, D.C. -
In cooperation with the U.S. Consumer Product Safety Commission (CPSC),
New Cole Sewell Corp., of St. Paul, Minn., is recalling about 23,000
storm doors manufactured without retaining pins in the upper windows.
The upper window can fall out and could injure nearby consumers. New
Cole Sewell Corp. has received 15 reports of upper windows falling out
of the storm doors. No injuries have been reported. The recall involves
storm doors manufactured from June 1, 1999, through August 16, 1999
Details at http://www.cpsc.gov/cpscpub/prerel/prhtml00/00066.html
most cases a product recall is carried out as the result of a regulatory
scheme, it is not always so. There exist many situations where there
is no requirement that a product must be recalled pursuant to a statute, rule
or regulation. At times, a manufacturer, in the interest of safety,
might institute a recall in the absence of a regulatory scheme requiring
the case law in the area of "recall" law reveals that there
are no hard and fast rules. Some jurisdictions require that, upon
learning of a defect, a manufacturer recall/retrofit that product; other
jurisdictions leave recall to regulatory authority.
A company that has designed and manufactured a product to a
relevant safety standard and subsequently truthfully declared the
product’s conformity to the relevant standard will necessarily be less
likely to find himself in the situation of having to perform either a
regulatory-required or voluntarily imposed product recall at the very
minimum with respect to the safety considerations addressed in the
relevant standard compared to a similar company which has not done
This Section Extracted in entirety from
TO THE IMPLEMENTATION OF DIRECTIVES
BASED ON NEW APPROACH AND GLOBAL APPROACH New Approach Guide -
1999 Edition (Draft) This Guide is intended to contribute to better understanding of
directives based on the New Approach and the Global Approach, and to
their more uniform and coherent application across different sectors and
throughout the Single Market. The
"New Approach Guide - 1999 Edition (Draft)" is available
on line and for download: http://www.eotc.be/News/EC/EC_Guide/NA_Guide99.htm
Marketplace Surveillance as part of Member
State Responsibility for implementation of New Approach directives
Enforcement of Community legislation is an obligation on Member States: Art. 10 of the EC Treaty requires Member States to take all appropriate measures to ensure fulfillment of their obligation arising out of the Treaty. Market surveillance is an essential tool for enforcing New Approach directives, in particular by taking measures to check that products meet requirements of the applicable directives, that action is taken to bring non-compliant products into compliance, and that sanctions are applied when necessary.
A high level of protection is envisaged in the New Approach directives. This requires Member States to take all necessary measures to ensure that products may be placed on the market and put into service only if they do not endanger the safety and health of persons, or other interests covered by the applicable New Approach directives, when correctly constructed, installed and maintained, and used in accordance with their purpose. This implies an obligation for Member States to organize and carry out market surveillance, in a way that is effective and sufficiently extensive to discover non-compliant products. This is to protect not only the interests of consumers, workers and other users, but also the interests of economic operators from unfair competition.
Market surveillance is the responsibility of public authorities. This is, in particular, to guarantee the impartiality of market surveillance operations. Each Member State can decide upon the market surveillance infrastructure, for example there is no limitation to allocate responsibilities between authorities on a functional or geographical basis as long as surveillance is efficient and covers the whole territory. As a result, the legal and administrative market surveillance infrastructures differ from one Member State to another. This requires, in particular, that efficient administrative co-operation between competent national authorities is in place so that an equivalent level of protection can be ensured throughout the Community, in spite of the competence for market surveillance being limited to each Member State’s territory.
Market surveillance authorities should have the necessary resources and powers to conduct their surveillance activities. This is to monitor products placed on the market and, in case of non-compliance, to take appropriate action to enforce conformity. As regards personnel resources, the authority needs to have, or have access to, a sufficient number of suitably qualified and experienced staff, which has the necessary professional integrity. To guarantee the quality of the test data, the testing facility used by the authority should comply with the relevant criteria of the EN 45001 standard. The authority should also be independent, and carry out its operations in an impartial and non-discriminatory way. Further, the authority should carry out market surveillance respecting the principle of proportionality, for example action must be in accordance with the degree of risk or non-compliance and the impact on the free circulation of products may not be more than is necessary for achieving the objectives of market surveillance.
The surveillance authority may subcontract technical tasks (such as testing or inspection) to another body, provided that it retains the responsibility for its decisions, and provided there is no conflict of interest between the other body’s conformity assessment activities and its surveillance tasks. In doing so the authority should exercise great care to ensure that the impartiality of the advice it receives is beyond reproach. The responsibility for any decision to be taken on the basis of such advice shall reside in the surveillance authority.
As a general rule, it is inappropriate for notified bodies to be responsible for market surveillance. In order to avoid a conflict of interest it is necessary to make a clear distinction between conformity assessment (which takes place before the product is placed on the market) and market surveillance (which takes place after the product has been placed on the market). As an exception, where a notified body and a market surveillance authority come under the same superior authority in a Member State, the lines of responsibility should be so organized that there is no conflict of interest between these activities.
Approach directives and the Directive on general product safety
The Directive on general product safety requires manufacturers to place only safe products on the market. They are obliged, within the limits of their respective activities, to provide consumers with the relevant information to enable them to assess the risks inherent in a product, where such risks are not immediately obvious without adequate warnings, and to take precautions against those risks. They are also obliged to adopt measures commensurate with the characteristics of the product in order to be informed of possible risks, and to take appropriate action including, if necessary, withdrawing the product from the market.
The Directive on general product safety (92/59/EEC) aims to ensure that consumer products placed on the market do not present a risk under conditions of use that are normal or can be reasonably foreseen. It requires producers to place only safe products on the market, and to inform about risks. It also obliges Member States to survey products on the market, and to inform the Commission about actions taken through either a safeguard clause procedure or the information system for serious and immediate risks. The Directive on general product safety covers new, used and reconditioned products intended for consumers or likely to be used by consumers, supplied in the course of commercial activity. According to this definition, products within the scope of several New Approach directives are to be considered as consumer products (such as toys, recreational craft, refrigeration appliances, and to certain extent electrical equipment, gas appliances, machinery, personal protective equipment and pressure equipment).
The Directive on general product safety is applicable insofar as there are no specific provisions in rules of Community law governing all the safety aspects of the products concerned. Further, where specific rules of Community law contain provisions governing only certain aspects of product safety or categories of risk for the product concerned, these provisions are applicable to the products in question with regard to the relevant safety aspects or risks. This rule gives priority to the application of New Approach directives for all aspects of product safety and categories of risk they cover. Further, for products covered by New Approach directives the objective has been to cover all foreseeable risks, if necessary by means of simultaneous application of these directives and other relevant provisions of Community legislation
New Approach directives and the Directive on product liability
The objective of New Approach directives is to protect the public interest (for example health and safety of persons, consumer protection, protection of business transactions, environmental protection). Thus, they intend to prevent, as far as possible, the placing on the market and putting into service of unsafe or otherwise non-compliant products. The Directive on product liability (85/374/EEC), which is applicable to all products covered by New Approach directives, provides a powerful incentive to guarantee the safety of products. It is in the interest of the manufacturer, the importer and the distributor to supply safe products in order to avoid the costs that liability places on them for defective products causing damages to individual or property. Consequently, New Approach directives and the Directive on product liability are complementary elements in ensuring an adequate level of protection.
World Trade G/TBT/W/63