3d printing: evaluating product safety and liability risks...
TRANSCRIPT
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Presenting a live 90-minute webinar with interactive Q&A
3D Printing: Evaluating Product Safety and
Liability Risks, Avoiding and Defending Claims Mitigating Manufacturer Risks With Quality Control Measures,
Product Monitoring, Insurance Coverage and Contract Provisions
Today’s faculty features:
1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific
THURSDAY, JANUARY 28, 2016
Matthew D. Jacobson, Reed Smith, Washington, D.C.
Colin K. Kelly, Partner, Alston & Bird, Atlanta
Brandan P. Mueller, Partner, Husch Blackwell, St. Louis
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3D Printing Background and Basics
5
Brandan Mueller
Partner
HUSCH BLACKWELL LLP
State of 3D Printing
Fashion: Jewelry
Dresses
Shoes
Food
Aerospace
Homes
Prototyping
3D Printing Applications
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State of 3D Printing
Pharmaceutical
Medical Orthopedics/prosthetics
Dental implants
Prototyping surgical operations/surgical planning
Skeletal reconstruction
Tissue and organ replication (ear, nose, body parts)
Hobby
3D Printing Applications
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State of 3D Printing
As of 2014:
80,000 industrial printers worldwide since 1988
140,000 desktop printers sold in 2014 alone
38% of industrial printers are in U.S.
Japan is 2nd
China is 3rd
Total market as of 2014: $4.1B (includes prototyping + other non-commercial uses)
$2B in products
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State of 3D Printing
Standards being formulated
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State of 3D Printing
3D Printing Technologies
Blown Powder: Metal powder blown coaxially to
the laser beam which melts the particles on a
base metal to form a metallurgical bond when
cooled
Thermal Extrusion: Thermoplastic filaments
heated through a nozzle
Stereolithography: UV-light
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State of 3D Printing
3D Printing Technologies (cont’d)
Selective Laser Melting (SLM); Selective
Laser Sintering (SLS); Electron Beam
Melting (EBM)
Ink-jetting Photopolymer process: Tiny
droplets of liquid photopolymer onto a
tray & cured with UV-light
A laser or
electron beam
melts or sinters
powder (metal or
plastic parts)
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State of 3D Printing Snapshot of the 3D Printer Players
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3D Printer Materials
State of 3D Printing
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State of 3D Printing
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State of 3D Printing
Impact on
Manufacturing No entry barriers
Digital scans/digital
blueprints replace
products
Mass customization
possible
File sharing
ramifications
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State of 3D Printing Impact on
Manufacturing Reduced shipping
and production
costs
Reduced logistic
footprint
Potential
applications
(limitless)
Customers replace
manufacturers
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State of 3D Printing
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Legal Issues $
Intellectual Property
Tax Treatment & Accounting of
Print-to-Order Revenue
Packaging &
Transportation
Commercial
Contracts
Licensing
Agreements
Imports/Exports
Higher Education
Healthcare
Food and Drug
Administration (FDA)
Regulatory
Products Liability
Product & Environmental
Regulations
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Are Existing Product Liability Laws
Adequate for 3D Printed Products? Different Perspectives:
§Printer Manufacturer
§End User
§Software Company/Designer
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3D Printer Manufacturer Perspective
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Printer Manufacturers
The new boss is the same
as the old boss…for the
most part.
3D Printer manufacturers
most likely to:
Be a “seller” of goods; and
Fall within traditional
warranty considerations.
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Printer Manufacturers A Good Fit (But Not Perfect) for Traditional PL
Concepts:
Printer likely:
to be used as intended and marketed
To require/contain warnings
Printer not likely:
to be altered
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Printer Manufacturers Clearer Picture….
Liability possible with:
the operation of the printer
the warnings/instructions
Murkiness Comes in with….
The product that is printed!
Most likely to be the cause of
any harm.
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Printer Manufacturers Why May Current PL
Concepts Not Apply?
Printer makes the
product as intended
Printer makes the
product according to
specification
Defect in the Printer vs.
Defect in the Product
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Printer Manufacturers Why May Current PL
Concepts Not Apply?
Foreseeability
Product
User
Misuse
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End User Perspective
Colin K. Kelly, Partner
ALSTON & BIRD LLP
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“[O]ver time, [] hobbyist inventors will start selling some of the complex, sophisticated, and dangerous products they create, and certain individuals who purchase their creations will, unfortunately but inevitably, sustain injuries. . . . [I]n many instances, no one will be strictly liable for these injuries under current [product liability] doctrine.” Nora Freeman Engstrom, 3-D Printing and Product Liability: Identifying the Obstacles, 162 U. PA. L. REV. ONLINE 35, 37 (2013).
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Current Strict Liability Laws
Restatement (Second) of Torts § 402A
“One who sells any product in a defective condition
unreasonably dangerous to the user or consumer or to his
property is subject to liability for physical harm thereby
caused . . . if the seller is engaged in the business of selling
such a product . . . .”
Restatement (Third) of Torts § 1
“One engaged in the business of selling or otherwise
distributing products who sells or distributes a defective
product is subject to liability for harm to persons or property
caused by the defect.”
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Consumer Expectations Test
A product is “defective” under the
Restatement (Second) of Torts
§ 402A if it is “in a condition not
contemplated by the ultimate
consumer.” (Comment g)
The product must be “dangerous
to an extent beyond that which
would be contemplated by the
ordinary consumer who purchases
it, with the ordinary knowledge
common to the community as to
its characteristics.” (Comment i)
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Risk-Utility Test: Negligence
A product is “defective” under the Restatement (Third) of Torts § § 1, 2 if it has a manufacturing or design defect, or if it is accompanied by an inadequate instruction or warning.
Despite its “strict liability” title, determining whether a product has a defective design or an inadequate warning mimics the negligence inquiry.
The Restatement (Third) “adopts a reasonableness (‘risk-utility balancing’) test as the standard for judging the defectiveness of product[s].” (Comments d and i)
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States Applying Each Test
Consumer expectations
Arkansas, Indiana, Kansas, Maryland, Nebraska, New Hampshire, North Dakota, Oklahoma, Oregon, Rhode Island, Tennessee, Utah, Vermont, Wisconsin, Wyoming
Either test
Alaska, Arizona, California, Connecticut, Florida*, Hawaii, Illinois, Mississippi, Washington
Risk-utility
Alabama, Colorado, Georgia, Idaho, Kentucky, Louisiana, Massachusetts, Michigan, Minnesota, New Jersey, New Mexico, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, West Virginia
Neither test
Delaware, Iowa, Maine, Missouri, Montana, Nevada, South Dakota, Virginia
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3D Suppliers/Manufacturers Remain Ripe Targets for Strict Liability Claims
33
Users Still Have Component Part Supplier Obstacles
A supplier of a component part has no duty to warn end-users of possible dangers from integrating the part into another product
Exceptions:
The component itself is defective
The supplier “substantially participates” in the design of the integrated product
Can rely on an intermediary manufacturer to transmit an appropriate warning
Places legal responsibility with the party best suited to prevent the harm
Prevents the inefficiency of requiring component part suppliers to warn end-users about products they did not make, market, or package
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“Unique” Obstacles for End Users of 3D Printed Products?
Existing product liability laws provide compensation for the majority of those who would be injured by 3D printed products
End users may actually have a deeper bench of responsible parties to sue since most parts/products are still being fabricated in-house
For example, an auto company that contracts out 3D printing of certain parts rather than doing in-house fabrication opens up 2-3 more potential defendants (and additional insurance)
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Key Issue: “Are you a seller?”
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§ 402A: “Engaged in the business of selling”
The following are “sellers” under the Restatement (Second) of Torts § 402A:
Manufacturer of a product for use or consumption
Wholesale or retail dealer or distributor
Strict liability does not apply to the “occasional seller” who does not manufacture or distribute a product as part of its business.
The basis for strict liability is “the special responsibility for the safety of the public undertaken by one who enters into the business of supplying human beings with products which may endanger the safety of their persons and property . . . . This basis is lacking in the case of the ordinary individual who makes the isolated sale, and he is not liable . . . in the absence of his negligence.” (Comment f)
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§1: “Engaged in the business of selling”
Under Restatement (Third) of Torts § 1, strict liability “applies only to manufacturers and other commercial sellers and distributors who are engaged in the business of selling or otherwise distributing the type of product that harmed the plaintiff.”
“It is not necessary that a commercial seller or distributor be engaged exclusively or even primarily in selling or otherwise distributing the type of product that injured the plaintiff, so long as the sale of the product is other than occasional or casual.”
Whether a defendant is a commercial seller or distributor is a question of law to be determined by the court. (Comment c)
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Predictions…
How many EBay or Amazon sales does an individual with a 3D printer selling products have to have before they are subject to strict liability?
Over time the distance between commercial and casual sellers will shrink dramatically.
Solution will not require a change in law-- only a change in interpretation.
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Broad Definitions of “Seller” Courts and New York and Pennsylvania have already applied broad
definitions of “seller”
“Under the strict products liability doctrine as it exists in New York, defendants can be manufacturers, distributors, retailers, processors and makers of component parts who sell the product alleged to have caused injury, in essence, those responsible for placing the defective product in the marketplace.” Nickel v. Hyster Co., 97 Misc. 2d 770, 771 (N.Y. Sup. Ct. 1978) (internal citations omitted).
“Under our products liability law, all suppliers of a defective product in the chain of distribution, whether retailers, partmakers, assemblers, owners, sellers, lessors, or any other relevant category, are potentially liable to the ultimate user injured by the defect. This rule of law ensures the availability of compensation to the injured party, and helps place the burden of such injury on parties who, unlike the consumer, have a better opportunity to control the defect or spread its costs through pricing.” Burch v. Sears, Roebuck & Co., 467 A.2d 615, 621 (Pa. Super. Ct. 1983) (internal citations omitted).
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Matthew Jacobson
REED SMITH LLP
3D Printing Software Company/Designer Perspective
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What counts as a “product”?
•Computer code?
•CAD models?
•Software program?
Product Liability and 3D Printing Software/Designs
If a “product,” than may be strictly
liable for
•Defective original design
•Defective digital file
•Corrupted copy of downloaded
digital file
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• Restatement (Third) of Torts—“tangible personal property
distributed commercially for use or consumption”
• Case law on code for 3D printing designs?
• Case law on code constituting a product?
Is Computer Code a Product? A Service? Something Else?
43
ClearCorrect Operating, LLC v. Int’l Trade Commission, No. 2014–1527, 2015 WL 6875205 (Fed. Cir. Nov. 10, 2015)
• 3D printing digital files are not material things
U.S. v. Aleynikov, 676 F.3d 71 (2d Cir. Apr. 11, 2012) • Computer source code was not a stolen “good” under NSPA • Need tangible property to be deemed a “good”
Am. Online, Inc. v. St. Paul Mercury Ins. Co., 207 F.Supp.2d 459 (E.D. Va. 2002), aff'd, 347 F.3d 89 (4th Cir. 2003)
• “Tangible” is something that can be touched—not an imperceptible piece of data or software that can only be perceived with the help of a computer
Computer Code in Other Contexts
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Whether something is tangible does not necessarily dictate whether it qualifies as a product for strict liability purposes
• Non-tangible items, such as electricity and aeronautical maps and charts have been held to be products
• On the other hand, information in books generally has not been held to be a product • Publishers not liable for “informational defects” in published material pursuant to the First Amendment
Tangible is Not the Be-All End-ALL
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Software company
3D digital designer
3D printing companies
Traditional manufactures
Need to Know Checklist
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Product Liability and 3D Printing—Emerging Issues & Industry Specific Best Practices
•Medical Device and Health Care
•Automotive
•Aviation
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3D Printing and the Impact of Medical Device and Health Care
Medical Device Companies
Pharmaceutical and
Consumer Health
Companies
Healthcare Organizations
Traditional Product
Manufacturers
3D Printer Manufacturers
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3D Printed Medical Devices/Drugs • FDA has cleared
through the 510(k)
process 3D printed
medical devices
• Hearing aids, dental
crowns, bone tether
plates, skull plates,
hip cups, spinal
cages, knee trays,
facial implants,
surgical instruments,
braces
• Bioprinting may be
the future
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• What is considered a product?
• Who is the manufacture?
• What is the marketplace?
• Did the product substantially change when it left the designer’s
control?
• Who has a duty to warn?
Tort Liability Questions Related to 3D Printing of Medical Devices
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• Majority rule traditionally holds that hospitals and physicians are not strictly liable for personal injuries arising from product defects
• What if hospitals start to incorporate a 3D printing center on-site?
• Is the hospital “engaged in the business of selling” the 3D printed product? • Is the hospital placing the product on the market? • Remains to be seen whether hospitals potentially become a “manufacturer” for purposes of either strict liability or negligence
Will Hospitals and Physicians Become Manufactures?
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• Duty to warn of reasonably foreseeable dangers
• 3D printed medical devices will need to be accompanied by adequate warnings • Learned intermediary doctrine
• Buckley v. Align Tech., Inc., No. 5:13-CV-02812-EJD, 2015 WL 5698751 (N.D. Cal. Sept 29, 2015) • If no traditional product “manufacturer” exists, who has duty to
warn?
Who Has a Duty to Warn?
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• Manufacturing facilities—clean and hygienic
• Manufacturing processes are controlled
• Controlling the product design
• Traceability at all stages of production
• Controlling production and process
• Controlling inspection
Current Good Manufacturing Practices/Quality Systems
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• Recalls probably limited to 3D printers and centrally
manufactured products
• No way to have quality control with either the CAD files or
the facility (if not centralized)
• How does one recall products that are not centrally
manufactured?
• Do all recalls become voluntary?
Recalls
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3D Printing in the Auto Industry -Colin K. Kelly
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Emerging Issues
Testing and prototyping is currently the most common use of 3D
printing by automobile manufacturers (huge cost savings and
ergonomic/quality control process improvements)
Resins and polymers used in most auto 3D “additive”
manufacturing have limits compared to metal parts so actual
printing of component parts are mostly interior or non-structural
Huge expansion in 3D “additive” metal printing technology is
potentially more important future area for auto industry
56
Component Parts
Many automobile companies and OEMs are using 3D printers to
manufacture component parts
Ford uses 3D printing technology to print the engine cover for the
new Mustangs, engine components for the Fusion, and the
exhaust manifolds for the F-150
The next-generation Mercedes-Benz S class is predicted to have
printed trim pieces such as air vents and speaker grilles
Audi recently announced that their use of metal-based 3D
printing is imminent, and had even produced a fully 3D printed
functional replica of the 1936 Auto Union Type C Grand Prix racer
57
Print Your Own Car: The Strati • Local Motors is working on
crash-testing a 3D printed car.
• The car is printed with carbon-
fiber-reinforced plastic body and
components using a 3D printer
machine.
• The car will likely cost between
$18,000-$30,000 depending
upon options
• Seats two and can drive up to 25
mph on a fully electrical battery.
• Some components are metal
and are added to the body but it
has only 49 parts to assemble.
• The car only lasts about five
years and can be recycled.
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Issues to Watch…. How will this impact the definition sellers for strict product defects in the
design, marketing and manufacturing by individuals?
NHTSA has been active in driver assisted technology (and recently
directed $4 billion dollars to safety initiatives in this area).
Will NHTSA get involved in setting forth new standards or regs governing
home printed component parts, replacement parts?
Stick to existing guidelines?
As more casual car enthusiasts/shade-tree mechanics print and swap
their own parts will the day come when auto-part stores are obsolete?
How will the insurance industry respond?
Cheaper policies for individual users?
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3D Printing – Aviation -Brandan Mueller
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3D Printing - Aviation
• One of largest growth sectors
for 3D printing
• FAA Considerations
• Approval of parts
• Approval of crafts
• Piloted
• Drones
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3D Printing - Aviation
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Aerospace America, July-August 2015 edition
3D Printing - Aviation
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3D Printing - Aviation
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Thank You
Matthew D. Jacobson Reed Smith
Colin K. Kelly Alston & Bird
Brandan P. Mueller Husch Blackwell
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