Product Liability Risk In Licensing Trademarks With Technology

A Connecticut Superior Court judge has upheld a jury verdict that once again demonstrates the product liability risks faced by trademark licensors, particularly those who license technology as well as their marks. In Hannibal Saldibar v. A.O. Smith Corp, the court upheld a $2.4 million judgment against the Tile Council of North America, which had licensed its trademarks and patented technology for dry-set mortar to tile manufacturers, in favor of the estate of Saldibar, a plaintiff who had allegedly developed mesothelioma as a result of asbestos exposure. The case is currently on appeal. As we had reported in our post on the Massachusetts case of Lou and others v. Otis Elevator Company here, a licensor that participates in the design, manufacture or distribution of products may sometimes be liable for defects in those products under the “apparent manufacturer” doctrine.

The Connecticut Products Liability Act defines a “manufacturer” to include an entity “not otherwise a manufacturer that holds itself out as a manufacturer”. The Tile Council argued that it was merely a trade association that had developed certain patented formulas, and that it did not fall within the ambit of the statute because it did not formulate products or control the ingredients utilized by manufacturers. The court was not persuaded by these arguments. In its decision on the Tile Council's motion for summary judgment, the court held that when the Tile Council had licensed its formulas to manufacturers, it had set out detailed specifications that included the percentage of asbestos and even specified a designated grade of asbestos fibre to be purchased from a particular supplier. The Tile Council had even recommended that mortar containing asbestos should be labeled with a warning: “DANGER CANCER HAZARD CONTAINS ASBESTOS FIBERS AVOID CREATING DUST.” This degree of control, together with the use of the Tile Council marks, crossed the threshold for liability. The Tile Counsel thus fell within the scope of the “apparent manufacturer” doctrine and the product liability statute.

The Court...