What is Japan's Product Liability Act and When Can Manufacturers Be Held Liable?

Japanese Attorney at Law - Bengoshi L.L.

• 7 min read

In an era of complex global supply chains and technologically advanced products, the issue of liability for harm caused by defective products is a critical concern for manufacturers, distributors, and consumers alike. Japan addressed this through its Product Liability Act (製造物責任法 - Seizōbutsu Sekinin Hō), enacted in 1994 and effective from July 1, 1995. This legislation provides a specific legal framework for claims arising from defective products, operating alongside general tort principles under the Civil Code.

The Product Liability Act (PLA) aims to enhance consumer protection by establishing a form of strict liability, focusing on the condition of the product itself rather than the manufacturer's negligence. It is largely understood to be based on the risk creation principle (危険責任の原理 - kiken sekinin no genri), where those who introduce products into the stream of commerce bear a heightened responsibility for the risks associated with them.

Scope of the Product Liability Act

The applicability of the PLA is defined by several key terms:

1. Applicable Harm (PLA Article 1)

The Act applies when "harm to life, body, or property is caused by a defect in a product." This means the PLA covers personal injury, death, and damage to property other than the defective product itself.

2. Definition of "Product" (製造物 - Seizōbutsu) (PLA Article 2(1))

A "product" under the PLA is defined as "movables which are manufactured or processed." This definition has several important implications:

  • Exclusions:
    • Real estate (immovable property) is not covered.
    • Services are excluded.
    • Unprocessed natural products, such as raw agricultural or marine products that have not undergone artificial processing, fall outside the scope.
    • Intangible items like computer software in itself are generally not considered "products." However, if defective software is embedded in a physical medium (e.g., a control system in a machine) and that defect causes physical harm, the situation can be more complex and might involve the PLA if the medium or the overall product is deemed defective.
  • Inclusions:
    • Components and raw materials are considered "products," even if they are subsequently incorporated into a larger, finished product. This means that manufacturers of components can also be subject to PLA liability, although specific defenses may apply to them (discussed later).

3. Liable Parties: "Manufacturer, etc." (製造業者等 - Seizōgyōsha-tō) (PLA Article 2(3))

The PLA identifies several categories of parties who can be held liable:

  • Any person who manufactured, processed, or imported the product as a business.
  • Any person who represents themselves as the manufacturer by putting their name, trade name, trademark, or other indication on the product (e.g., an own-brand retailer).
  • Any other person who, due to the indications on the product, can be recognized as the de facto manufacturer or plays a similar role in bringing the product to market.

The Basis of Liability: "Defect" (欠陥 - Kekkan) (PLA Article 3)

The cornerstone of liability under the PLA is the existence of a "defect" in the product.

Strict Liability Nature

Significantly, the PLA imposes liability based on the product having a defect at the time it was "delivered" by the manufacturer (i.e., put into the stream of commerce). The manufacturer's intent or negligence is not a requirement for liability under the PLA. This represents a shift from the traditional fault-based liability under the Civil Code for most torts.

Definition of "Defect" (PLA Article 2(2))

The PLA provides a comprehensive definition of a "defect" as "a lack of safety that the product ordinarily should provide," taking into account:

  • The characteristics of the product.
  • The ordinarily foreseeable manner of its use.
  • The time when the manufacturer, etc., delivered the product.
  • Other circumstances concerning the product.

The Supreme Court has applied this definition, for instance, in pharmaceutical cases like the Iressa drug harm litigation (Supreme Court, April 12, 2013, Minshu 67-4-899).

While the PLA uses this single, overarching definition, defects are often categorized for analytical purposes into:

  • Manufacturing Defects (製造上の欠陥 - Seizō-jō no Kekkan): Where an individual product unit departs from its intended design during the manufacturing process, making it unsafe (sometimes referred to as an Ausreißer or outlier).
  • Design Defects (設計上の欠陥 - Sekkei-jō no Kekkan): Where the product's design itself is inherently unsafe, meaning all units manufactured according to that design share the same flaw.
  • Warning or Instruction Defects (指示・警告上の欠陥 - Shiji/Keikoku-jō no Kekkan): Where the product is unsafe because it lacks adequate warnings about non-obvious dangers or sufficient instructions for its safe use.

The defect must have existed at the time the manufacturer, etc., "delivered" the product, which generally means the point at which it was put into the stream of commerce, not necessarily the time the victim acquired or used it.

Pleading and Proving a Claim under the PLA

Burden of Proof on the Victim

Under the PLA, the victim (plaintiff) generally bears the burden of proving the existence of a defect in the product and the causal link between that defect and the harm suffered.

Challenges and Judicial Approaches to Proving Defects

Proving a specific defect, especially its existence at the time of delivery, can be challenging for victims who may lack technical expertise or access to information about the manufacturing process. However, judicial interpretation and pre-PLA case law (which influenced the PLA's development) offer some avenues:

  • Distinction between "Defect" and "Cause of Defect": An influential pre-PLA Osaka District Court judgment (March 29, 1994, Hanrei Times 842-69, known as the TV fire case) drew a distinction between the "defect" itself (defined as the product lacking the reasonable safety that society expects) and the specific "cause of the defect" (e.g., a particular mechanical, physical, or chemical flaw). The PLA's focus is on proving the former – the lack of ordinary safety. This implies that the victim might not always need to pinpoint the exact technical malfunction but must demonstrate that the product, as marketed, failed to meet ordinary safety expectations, leading to harm.
  • Inferring Defect at Delivery from Defect at Time of Accident: The same Osaka case also indicated that, under certain circumstances, if a product is shown to be defective at the time of an accident, it might be possible to infer that the defect (or its latent cause) existed when the product was initially delivered by the manufacturer.

Elements a Victim (X) Typically Must Prove:

  1. The item causing harm (A) qualifies as a "product" under the PLA.
  2. Specific facts supporting an evaluation that a "defect" existed in product A at the time the defendant (Y) delivered it. (The term "defect" itself involves a normative evaluation based on proven facts).
  3. Infringement of X's right to life, bodily integrity, or property.
  4. The occurrence of damages (and their monetary amount).
  5. A causal link between the defect in product A and the infringement/damages.
  6. The defendant (Y) is a "manufacturer, etc." of product A as defined by the PLA.

Excluded Damages (PLA Article 3, Proviso)

A significant limitation is that the PLA does not apply if the damage occurs only to the defective product itself. Claims for such "pure economic loss" (e.g., the cost of repairing or replacing the faulty product itself, without further harm to other property or persons) are typically addressed under contract law principles, such as warranty claims or claims for non-conformity of goods.

Defenses Available to the Manufacturer, etc. (PLA Article 4)

Even if a prima facie case is made, the PLA provides specific defenses for manufacturers:

  1. No Defect at Time of Delivery: The manufacturer can always attempt to prove facts that negate the existence of a defect at the time the product was delivered (e.g., the defect was caused by misuse or alteration after delivery).
  2. Development Risk Defense / State-of-the-Art Defense (開発危険の抗弁 - Kaihatsu Kiken no Kōben) (PLA Article 4(1)):
    A manufacturer is not liable if they can prove that the defect could not have been discovered given the state of scientific or technical knowledge at the time they delivered the product. This is a crucial defense, particularly for industries involving cutting-edge technology or novel products like pharmaceuticals, where some risks may be unknown despite diligent research.
    • The "state of scientific or technical knowledge" is generally interpreted to mean the highest level of knowledge objectively accessible worldwide at the time of delivery, not merely the knowledge possessed by the specific manufacturer or prevalent in their particular industry segment. This high standard is intended to prevent the defense from unduly undermining the strict liability nature of the Act.
    • This defense is generally considered inapplicable to manufacturing defects, as these, by definition, involve a deviation from the intended design and existing knowledge.
  3. Component/Raw Material Manufacturer's Defense (部品・原材料製造業者の抗弁 - Buhin/Genzairyō Seizōgyōsha no Kōben) (PLA Article 4(2)):
    This defense applies when the allegedly defective product was used as a component or raw material in another (finished) product. The manufacturer of the component or raw material is not liable if they prove two conditions:
    • The defect occurred solely because they complied with design instructions given by the manufacturer of the finished product.
    • They were not negligent in relation to the occurrence of that defect (i.e., they had no reason to believe the design specifications were unsafe).
      An example would be a supplier manufacturing a specific electrical component strictly according to the detailed design specifications provided by a large machinery manufacturer, where the defect arises solely from that mandated design.

Time Limitations for Claims (PLA Article 5)

The PLA establishes specific time limits for bringing claims:

  1. Statute of Limitations (消滅時効 - Shōmetsu Jikō) (PLA Art. 5(1), first part):
    The right to claim damages under the PLA is extinguished if not exercised within three years from the time the victim (or their legal representative) becomes aware of:
    • The damage, AND
    • The party liable for compensation (the manufacturer, etc.).
      (It should be noted that broader Civil Code reforms are extending the limitation period for personal injury and death claims to five years, and this change is also anticipated for the PLA).
  2. Period of Repose (除斥期間 - Joseki Kikan) (PLA Art. 5(1), second part):
    Independently of the discovery-based limitation, the right to claim is also extinguished after ten years have passed from the time the manufacturer, etc., delivered the product. This is an absolute cutoff period.
  3. Special Rule for Latent Harm (PLA Art. 5(2)):
    For certain types of harm, the 10-year repose period is calculated differently. This applies to:
    • Damages caused by substances that accumulate in the human body and subsequently cause harm to health.
    • Damages where symptoms only appear after a certain latency period.
      In these cases, the 10-year period starts to run from the time the damage (i.e., the injury or illness) actually occurred or manifested, rather than from the date of product delivery.

Conclusion

Japan's Product Liability Act provides an important avenue for redress for individuals harmed by defective products, establishing a regime of strict liability that focuses on the product's lack of ordinary safety rather than requiring proof of the manufacturer's negligence. Key aspects include its specific definitions of "product" and "defect," the identification of liable parties ("manufacturer, etc."), and crucial defenses such as the development risk defense. While the burden of proving a defect and causation generally rests with the victim, judicial interpretations have sought to make this manageable. The Act complements, but does not replace, the possibility of bringing claims under general tort law (e.g., for negligence) under the Civil Code, offering victims multiple potential paths to compensation while providing certain statutory safeguards for manufacturers.