3D Printing: Evaluating Product Safety and Liability Risks ...media.straffordpub.com/products/3d-printing-evaluating-product-safe… · 28/01/2016 · Presenting a live 90-minute

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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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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

7


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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Standards being formulated

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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

10


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


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Impact on

Manufacturing No entry barriers

Digital scans/digital

blueprints replace

products

Mass customization

possible

File sharing

ramifications

15

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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17

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

18

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

20

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.

21

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

22

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.

23

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

25

End User Perspective

Colin K. Kelly, Partner

ALSTON & BIRD LLP

26

“[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).

27

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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.”

29

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)

30

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)

31

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

32

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

34

“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)

35

Key Issue: “Are you a seller?”

36

§ 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)

37

§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)

38

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.

39

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).

40

Matthew Jacobson

REED SMITH LLP

3D Printing Software Company/Designer Perspective

41

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

42

• 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

44

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

45

Software company

3D digital designer

3D printing companies

Traditional manufactures

Need to Know Checklist

46

Product Liability and 3D Printing—Emerging Issues & Industry Specific Best Practices

•Medical Device and Health Care

•Automotive

•Aviation

47

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

48

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

49

• 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

50

• 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?

51

• 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?

52

• 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

53

• 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

54

3D Printing in the Auto Industry -Colin K. Kelly

55

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.

58

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?

59

3D Printing – Aviation -Brandan Mueller

60

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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62

Aerospace America, July-August 2015 edition


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64

Thank You

Matthew D. Jacobson Reed Smith

[email protected]

Colin K. Kelly Alston & Bird

[email protected]

Brandan P. Mueller Husch Blackwell

[email protected]

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3D Printing: Evaluating Product Safety and Liability Risks ...media.straffordpub.com/products/3d-printing-evaluating-product-safe… · 28/01/2016 · Presenting a live 90-minute