The problem that had to be solved was to define at what point a product was "put into circulation" according to Article 11 of Council Directive 85/374/EEC of July 25th, 1985 on the approximation of the laws, regulations and administrative provisions of the Member States concerning liability for defective products. That provision provides:
"Member States shall provide in their legislation that the rights conferred upon the injured person pursuant to this Directive shall be extinguished upon the expiry of a period of 10 years from the date on which the producer put into circulation the actual product which caused the damage, unless the injured person has in the meantime instituted proceedings against the producer."In other words, the ten year period during which the producer of a defect product is strictly liable for any loss and damage caused by the defect starts when the product is "put into circulation". But when is that ? No definition of "put into circulation" is given in the Directive. It is defined by Article 2 d) of the 1977 Strasbourg Convention on Products Liability in regard to Personal Injury and Death. Granted that is not a great deal of help either but paragraph 43 of the Explanatory Report states :
"Paragraph d defines the term "put into circulation". This definition indicates the moment when the producer becomes liable under the convention, and so separates this type of liability from that which is provided by the ordinary rules of law. For example, in certain States the producer will be liable as the "keeper" of the product until it is put into circulation and liable under the -products liability" system after it has been put into circulation."
In Case C-127/04 the Court of Justice was faced with an antihaemophilus vaccine manufactured in France, distributed in England by the wholly owned subsidiary of the producer and administered in England. So when was the vaccine put into circulation ? When it left the French company, when it reached the English subsidiary, when it left the English subsidiary or when it was received by the English health care organization, ready for administration ?
The point was important in the actual case because it seemed that the plaintiff may have sued too late to benefit from the ten year strict liability regime according to which starting point was taken for it.
The Court of Justice held that a product must be considered as having been put into circulation, according to Article 11 of the Directive, when it leaves the production process operated by the producer and enters a marketing process in the form in which it is offered to the public in order to be used or consumed. But when is that ? The Court gives some guidance, but whether it is enough remains to be seen. The Court stated that :
"when one of the links in the distribution chain is closely connected to the producer, for example, in the case of a wholly-owned subsidiary of the latter, it is necessary to establish whether it is a consequence of that link that that entity is in reality involved in the manufacturing process of the product concerned."And the Court went on that it was relevant whether those are companies carrying out different production activities or are, on the contrary, companies one of which, i.e. the subsidiary company, acts simply as a distributor or depository for the product manufactured by the parent company. So, if we understand that correctly, a wholly owned subsidiary that does nothing more than distribute the product is not involved in the manufacturing process. Thus, the product is put into circulation when it leaves the producer in a state ready to be used or consumed. In any event, the matter is for the national courts to determine on the facts of each case.