Interview with Dr. Arun Kapoor, Attorney-at-law
Focus on product identification: What applies now that the new Product Safety Act has come into effect?
PSI Journal: Dr. Kapoor, the new Product Safety Act came into effect last year. As an in-dustrial attorney, you have been representing a wide variety of companies in proceedings related to product safety for years. What is the new amendment to the law actually about?
Dr. Kapoor: The new Product Safety Act has replaced the former Equipment and Product Safety Act. The amendment was necessary to adjust German law to European standards. However, the legislators also used this opportunity to tighten some of the regulations which already exist.
PSI Journal: What is essentially new compared to the old Equipment and Product Safety Act?
Dr. Kapoor: There are too many changes to list them all here, especially since the Product Safety Act has twice as many paragraphs as the old Equipment and Product Safety Act. Some of the things which are of significance across all lines of business are certainly the drastic increase in fines which can be levied in the event of violations of the law, as well as the many regulations related to the GS Mark which have been tightened. However, of most interest to the promo-tional products industry in particular is probably the tightening of the obligation to identify products.
PSI Journal: That's right. The industry has been discussing these product identification ob-ligations for some time now. What does the new law stipulate with regard to product identification?
Dr. Kapoor: The law demands that all consumer products be marked with the manufac-turer's name and postal address. If the manufacturer is located outside the European Economic Area and has no representative in Europe, the contact data of the importer must be indicated. Moreover, the law demands an identi-fication mark on the product stating, for instance, a model or item number which can be used to unmistakably identify the product..
PSI Journal: Were these regulations introduced for the first time by the new Product Safety Act?
Dr. Kapoor: No. The obligation to furnish this information already existed under the Equipment and Product Safety Act. What is new is that, since 1 December 2011, the market surveillance authorities responsible can levy a fine of up to € 10,000 for a violation of these standards, and also enforce sanctions aimed at preventing the sale of the product. The old regulations left it largely up to the parties to transfer the required contact data to the product's package. This is now only permitted if the contact data cannot be applied to the product it-self.
PSI Journal: Putting the contact data of the manufacturer or importer on promotional prod-ucts is usually quite difficult. The space available for such data will as a rule be used for the trade mark of the end customer who wants to use the product for advertising. Is there no exception from the identification obligation for pro-motional products?
Dr. Kapoor: The law provides for only a few exceptions, in which lawmakers consider it justifiable to omit product identification. The data can, for instance, be omitted if they are already known to the user, which is not likely to be very often the case with promotional products or, in certain instances, where this would en-tail too much difficulty. But be careful! These exceptions are not helpful for very many promotional products. If you are technically capable of applying the data desired by the end customer, such as a logo, to a product, you will hardly be able to claim with any credibility that meeting the provisions of this law would entail undue difficulty. The fact that the space available on a promo-tional product is needed for the end customer's logo does not therefore, taken on its own, constitute an exception in this sense.
It is conceivable, however, to supply the required contact data using a sticker or a label on a product. The user can remove this label, of course, but then that is the user's own decision. At any rate, the law does not require that the contact data be indelibly applied to the product.
PSI Journal: The problem for the promotional products industry is not only that the space available on the product is needed for the end customer's data. There is also the fact that promotional products distributors as a rule do not want to reveal where they have procured the product. If the name and address of the im-porter are indicated, the end customer could take all subsequent business di-rectly to the importer. Shouldn't all importers expect to be fined immediately, considering these interests?
Dr. Kapoor: Of course, the promotional products industry can also make use of the excep-tions provided by the law. So if one of the exceptions applies, identification can be omitted from a promotional product, as well. The problem is actually that the companies involved will have to examine every single product to see if it constitutes a legal exception. Legislators want to keep anonymous con-sumer products off the market as far as possible, so that the authorities as well as users can see at once who is responsible for a product in case of a complaint. If you want to claim an exception to the identification obligation, you will have to give the authorities reasons why the conditions of an excep-tion are fulfilled in this case. If you cannot provide an acceptable reason, you will have to expect to be fined.
PSI Journal: You mentioned that the identification can in some cases also be applied to the product package if this is not possible on the product itself. Does this excep-tion also apply to bulk packaging?
Dr. Kapoor: First of all, this exception only applies if it is not possible to apply the identifi-cation as such to the product. The mere fact that the space available on the product is to be used for the logo of the end customer does not justify making an exception, as I already said. But let us return to your actual question. If the product involved is distributed exclusively in bulk packages, the required con-tact data must be indicated on this bulk packaging if it cannot be applied to the product itself. This is not always ideal in view of the intention of the law, but still better than omitting the data entirely.
PSI Journal: So in most cases, the promotional products industry will hardly be able to get around this identification obligation. Is there at least some way to present the contact data, which are often quite extensive, in an abbreviated form?
Dr. Kapoor: The name and the full postal address are required. Therefore, there can be no question of merely referring to an e-mail address. Nor is it enough to indicate a post office box as address, because it must be a legally valid postal ad-dress. Of course, you can still use a common abbreviation everyone under-stands, such as "Str." for "Straße".
PSI Journal: How likely do you think it is that the promotional products industry will soon be flooded with fines? After all, promotional products are not distributed to end customers in the usual way through the retail sector.
Dr. Kapoor: That alone is not reason enough to keep the industry out of the clutches of the market surveillance authorities. The authorities conduct inspections for this purpose at trade fairs, for instance. Customs, too, can call attention to prod-ucts which are not identified as required by law. Often competitors point out such violations to the authorities. A company which adheres to the identifica-tion obligation will naturally not be interested in saving competitors similar trouble and expense. Incidentally, companies can themselves take action against such violations of competition rules by sending a warning letter with a fee chargeable to the violator and, if appropriate, order the violator to cease and desist. Another change in the Product Safety Act will probably even fur-ther increase the likelihood that the authorities seize on faulty identification: now the authorities are for the first time required by law to examine a certain number of products each year to determine whether they comply with the law. The easiest way for the authorities to prove a violation of the law is, of course, by discovering faulty identification, since this does not require them to under-take any expensive technical testing.
PSI Journal: So what can manufacturers or importers actually do if their customers, that is, the promotional products distributors, simply do not want to see the contact data of their suppliers on the products? Can they transfer the legal obligations to the distributor in a contract?
Dr. Kapoor: No, I'm afraid that won't work. Importers are obligated to the state to apply the information to the product. They cannot simply transfer this obligation to their buyers. However, we must be sure to keep in mind the intent and purpose of the regulation: legislators want to keep anonymous consumer products off the market as far as possible. So one option for the industry could be to put the contact data of the end customer on the product. End customers will not often object, because their logo is on the product anyway. If their own contact data are put on the product along with their logo, however, then they will be re-garded by the authorities as the sole manufacturer of the product, and fully responsible for ensuring that the product meets legal requirements.
PSI Journal: Using this consideration, could the products be identified using the contact data of the promotional products distributor?
Dr. Kapoor: This too is theoretically conceivable. However, then the distributor assumes full responsibility for the product. If distributors indicate their contact data, then they are presenting themselves as manufacturers and will then be treated as manufacturers by the authorities.
PSI Journal: What action should be taken by those concerned?
Dr. Kapoor: If even after thorough examination an exception to the identification obligation cannot be justified for a specific product, and if the distributor is absolutely opposed to indicating the importer's contact data on the product, then the first thing to consider would be asking the end customer to put their contact data on the product and thereby pose as manufacturer. If the end customer re-fuses, distributors must consider presenting themselves as manufacturer by having their own contact data on the product.
Kontaktdaten:
Dr. Arun Kapoor
Rechtsanwalt
Noerr LLP
Brienner Straße 28
80333 München
www.noerr.com
arun.kapoor@noerr.com
Dr. Arun Kapoor is an attorney at the international law offices of Noerr LLP. He specializes in the areas of product liability and product safety, and repre-sents companies in matters of liability, court proceedings and disputes with the market surveillance authorities when objections to products are raised.
