Legal aspects of kits for sale?

[Jonathan F.]

Hello

Seems like there are a few people in this group that have developed kits involving nixie-tubes and sell those kits.

I'm starting to think about developing my own kits via a kick-starter campaign. But it seems it's dead before it has begun.

I live in Switzerland, and would like to sell the kits over the world, so i did research about responsibility for products inside the EU and spoke to a local electrical safety authority.

Here is the problem:

It seems to be, that all electronic products have to fulfill EN 60950 and EN 60065 Norms. Since its a kit, its a "electronic toy" and has to fulfill the DIN 57869 Norm. And because of the fact that nixie tubes work with >50V, it needs even more safety rules.
Only the EMC does not seem a problem, because its just a PCB with out a case, so the EMC can't even be measured.

Now, only to get access to the norms is about 1000$, and i guess all the certificates wont be free!

In US, i did not yet study the rules, but i think you need to fulfill the "FCC"



So, i just want to ask, if all that kit makes take the risk to be responsible in case anything happens with the kit (e.g worst case someone dies) or if there is a way to avoid all the certificates and norms.

I think all those eastern europe ebay kit sellers don't have to worry, because "you won't get them" anyway. But in US or Europe i think you could run into serious problems.


Im happy to hear from you.

[David Forbes]

Jonathan,

I do not think that anyone offering Nixie clock kits is getting them
agency certified. Using an external power adapter eliminates the
mains-connected liability (as long as the adapter is certified), and the
internal high voltage is not much of a problem, if you design the PC
board so that HV is not easily accessible by fingers.

The important thing it to not set someone's house on fire.

Enforcement of EMC directives is so minimal in the USA, at least, that
the odds of it becoming a legal problem are very nearly zero. Still, it
makes sense to design in such a way that RF emission is as small as
possible, by making the switching power supply layout compact, and using
direct drive.

--
David Forbes, Tucson AZ

[gregebert]

I would argue that the unassembled kit itself is not capable of producing harmful voltages or electromagnetic interference, therefore it's not subject to regulation. It's about as harmful as a loaf of bread.

But, whoever assembles the kit and turns it on would assume responsibility. I would put a disclaimer in the instructions just to cover yourself.

[David Forbes]

That's all well and good, but you'll be arguing against a lawyer who gets 30% of
the money he extracts from you on behalf of his client. Best to be on the safe
side.

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David Forbes, Tucson, AZ

[Instrument Resources of America]

A disclaimer I don't believe would accomplish very much. A good lawyer
would argue defective design on the part of the engineer who designed
the item, or even supplying poor or questionable quality parts, or
anything else that a good lawyer could and would argue, to take any
responsibility from his client and place it elsewhere. Good
lawyer,,,,,,,,,,,,,hmmmmm,,,,,,,,,,,is that an oxymoron??? Ira.

[gregebert]

Disclaimers are industry-standard practice; take a look at any datasheet.

Component manufacturers have standard disclaimers in their datasheets, disavowing any liability for consequences of using their products. In addition, most have another specific disclaimer regarding life-support devices.

[Instrument Resources of America]

From what I'm being told, a disclaimer will only go so far in court. "IF" it can be proven in court that any particular item was poorly engineered or manufactured, and it caused some sort of problem, the disclaimer does no good. If a problem arose because of the way an item was used or implemented, well then, that's perhaps a different story. This is why we have an entire branch of law, called "product liability laws".     Ira.

On 5/5/2016 2:12 PM, gregebert wrote:

Disclaimers are industry-standard practice; take a look at any datasheet.

Component manufacturers have standard disclaimers in their datasheets, disavowing any liability for consequences of using their products. In addition, most have another specific disclaimer regarding life-support devices.

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[NeonJohn]

While I'm not a lawyer, I've spent many years working for 2 firms as an
expert witness.

What will happen after some guy touches a high voltage point, falls off
his stool, hits his head on the counter, breaks his neck and is now a
quadriplegic is this.

You will be served. Usually a work. Process servers LOVE to serve
people at work for maximum embarrassment. You'll have 30 days in most
states to answer the complaint. If you don't, the other side wins what
they ask for by default and they start taking your stuff, garnisheeing
your wages and so on. And a judgment is one of the few things you can't
bankrupt out from under. You can expect to have your wages garnisheed
pretty much for the rest of your life.

So you see a lawyer. He'll read the complaint, tell you a few things
about the probability of winning and so forth. Then he'll tell you that
he charges $350/hour and bills against a $5000 to $10,000 retainer, due
and payable immediately.

You could, of course try to represent yourself but that'd be like
leading a lamb to slaughter.

The next thing that will happen after you clean out your savings account
for the retainer is that there will be a deposition.

You'll meet with the other side and a court reporter in one of the
sides' conference room. You're sworn in and the fun begins. The
session will be video recorded in addition to the court reporter. All
these expenses that are adding up, you get to pay if you lose.

The plaintiff's lawyer will have a guy like me advising him. They'll
have a working version of the clock PCB all fired up and ticking away.

He'll ask you something to the effect "If I touch right here (a high
voltage point) will I be shocked? This is civil court. You can't take
the Fifth. Ultimately a judge will order you to answer and if you
don't, he will toss you in jail for contempt.

IF you answer "yes", pretty much game-over. He'll ask you to show him
in the manual where you warn the kit builder not to touch that point.

To add insult to injury, he may pick out a couple more points on the board.

If you say "no", the next question will be "sir, please touch that point
to assure us there is no hazard.

Now you have a dilemma. If you say that you were wrong and that the
point will cause a shock, you'll get grilled for a bit about which time
did you perjure yourself, your first answer or now? If you touch it and
get shocked, game over. If you refuse to answer, the lawyer will
speed-dial a judge on the speakerphone and request an order for you to
answer. If you refuse, it's off to jail we go. The judge can keep you
in jail as long as he wants to or until you comply with his order.

The lawyer will finish the deposition by asking about your
qualifications to design such dangerous hardware, what kits you've
designed and sold before and a few other things designed to make you
look bad.

Your lawyer can ask you questions in an attempt to rehabilitate your
case but most won't. The other side can cross-examine any answer you
give which opens up more doors for exploration.

That's used up your retainer so your lawyer will ask for another check.
He'll also ask your permission to negotiate a settlement. If the
victim was seriously hurt, if they will discuss settlement at all, it
will be high. If the guy wasn't seriously hurt, he might settle for
"just" $50k. Can you pay that?

If the case goes to trial, the (in TN) 6 man jury gets to see the
depositions. You will be compelled to testify (remember, no 5th in
civil cases) where the plaintiff's attorney will ask you all the same
questions all over again. Better remember your answers during
deposition or you'll face a perjury charge.

The jury will be composed of the 6 dumbest people in the county who
couldn't figure out how to get out of jury duty and then passed voir
dire. (OK, I'm overstating a bit but many trials have made me quite
cynical.) And unlike criminal cases, it takes only a majority of jurors
to find you guilty. So one juror can't hang the jury or convince the
others to change their minds.

When you lose, you might think that you'll appeal. In TN, like most
states, you have to post a cash bond equal to the value of the judgment
before you can appeal. Let's say the jury awarded a "measly" $1
million. A bonding company will require 10% of the amount as payment.
Can you come up with $100k? That only buys you the right to appeal.

By the time verdict time rolls around, your lawyer will have prepared
seizure orders, had them signed off by a judge and will have people
positioned to seize your car, your boat and anything else you own except
your house to satisfy the balance of his fees and the plaintiff's
expenses which the judge will award.

Basically you've just become a poor man.

There are a few things you can do to protect yourself. You should have
an umbrella liability policy attached to your homeowner's or renter's
insurance. I have a $5Mil one that costs me about $300 a year.

Second, you can do this activity under a C corp, though unless you have
several stockholders who aren't relatives, it's relatively easy to
"pierce the corporate veil" and get to you directly. Still the corp is
a good idea.

For any further advice, you need to talk to a plaintiff's defense
attorney for mitigation techniques.

If you're not very wealthy and don't have many assets, then you're
probably in pretty good shape. The plaintiff's attorney would look at
your financial profile and determine that you're not worth a suit.

Like I said, I'm not a lawyer. I'm the guy telling the lawyer what to
say and do. I've always worked for the defense, as I just couldn't see
myself working for the attorneys that file the ridiculous suits they file.

John

--
John DeArmond
Tellico Plains, Occupied TN
http://www.tnduction.com <-- THE source for induction heaters
http://www.neon-john.com <-- email from here
http://www.johndearmond.com <-- Best damned Blog on the net
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PGP key: wwwkeys.pgp.net: BCB68D77

[Instrument Resources of America]

Hello John. What a great explanation, and pretty much what I would
expect. Ira.

[Jonathan F.]

Thank you John for that explanation. It seems that i don't want to make kits anymore, i will document my projects that good, that it will be very easy to rebuild them.

Mainly, because i don't want to take the risk to be responsible. Another problem is, that according to my country's electric authority, it is even illegal to sell the kit in Switzerland or EU-Countries. If i sell a electronic part that is not approved, i can get punished even if nothing happens. The main problem is the HV here, it makes it a lot worse.

I'm now taking further reaseach how it behaves when i just sell a bare PCB without any parts. Maybe there is a way to declare it just as an electronic component like a resistor.

The law is really stupid somtimes:

If i sell a pcb, with a manual, and parts  -> I'm the "creator" and im responsible, even if someone else assembles the kit
If i sell a pcb, without anything -> I'ts just a part, the assembler will be the creator.

[Oscilloclock]

John, that's truly a great write-up, if not very scary.

Regarding your liability insurance: Do they demand to see your product, go through its design documentation, or at least see testing evidence before offering the policy? Or if they do cover you with no questions asked, is there risk that they won't cover you in the end if they also believe you sold a defective product?

And have you or anyone heard of anyone in the US prosecute a kit (or whole clock) maker outside the US?

-- Aaron

[NeonJohn]

Try to use such a unilateral disclaimer in court. It's been too long
and I've forgotten the technical term for the legal principle but
essentially it says that unless the disclaimer is part of the purchase
contract, it has no effect because both parties did not agree to the
disclaimer. You establish the terms of the sales contract when you
process your cart at Digikey or whatever.

My e-store has a little checkbox that must be checked to make a
purchase. It says that you have read and agree to my terms of sale.
Those terms DO include a disclaimer and by checking that box, you have
made it part of the sales contract.

John

[Dan Hollis]

How about inside the US?

-Dan

[NeonJohn]

On 05/06/2016 07:05 AM, Oscilloclock wrote:
> John, that's truly a great write-up, if not very scary.

Yeah. If we spent any time in a civil court room we'd probably be
afraid to leave our houses. My attitude is "damn the torpedos, full
speed ahead" with some mitigation strategies.

>
> Regarding your liability insurance: Do they demand to see your
> product, go through its design documentation, or at least see testing
> evidence before offering the policy? Or if they do cover you with no
> questions asked, is there risk that they won't cover you in the end
> if they also believe you sold a defective product?

The $5M blanket insurance policy that I have is a PERSONAL liability
rider and not a product liability one.

Product liability is a whole 'nuther ball of wax. My agent has told me
that for our Roy products at our anticipated sales volume for next year
AND if we got agency listing, the premium would be in the $30k/yr range.
He also said to forget getting it on a non-listed product. The
insurance companies rely on the listing companies to tear the product
down, analyze it for safety and destroy one or two.

So. I've talked to ETL about having Roy listed. The current model will
not pass because I did not observe sufficient clearance rules for high
voltage but I'm redesigning it for listing testing.

The ETL guy quoted me $11.5k and 3 units for the testing process. Two
units would be tested to destruction. Then there's the annual renewal
fee. My memory is fogged there but I believe the quote was $2.5k.

But that's not all. If I make ANY change to the listed unit, it has to
be evaluated again. Depending on the change, probably not a full blown
listing test but some sort of exam. I asked him whether, for example,
changing the case screws from Phillips head to hex head screws would
trigger the re-exam. The answer was yes.

Then there's the 4 times a year random factory audit. I don't recall
the price on that (my head was kinda spinning at that point). but it was
over a couple of kilobucks.

So to fully protect Tnduction from any liability from Roy, I'd spend
over $50k the first year and several $k each year following.

Now you know why people set up shell, valuless companies, have a product
manufactured in China, sell 'em quickly and shut down.

After my investigation, we had a board meeting and decided to "run
bare". That is, no insurance but also no assets to ward off product
liability attorneys.

Our products are made by a contract manufacturer (AKA "box builder").
All the equipment and furnishing are leased. Again there, there has to
be a diversity of sales or the court can rule it a sham to get out of
liability. I got a fried who already leases equipment to take ownership
of our equipment and then lease it back to us. The lease has to be at
"fair market value" or else it can be ruled a sham.

All the intellectual property is owned by one of the three core owners
and is licensed to the company. I have a few other things we do but
they rest on novel legal theory so I'm not going to discuss them.

>
> And have you or anyone heard of anyone in the US prosecute a kit (or
> whole clock) maker outside the US?

Not outside the US but yes, several here. One stands out. The Storz
Medical company manufactured what everyone regarded as the best
resectiscope (an instrument inserted into Mr Happy [uncross your legs
now] and has a little loop connected to coax cable that is used to burn
off bladder cysts.

There was another company that made the best borescopes. So Storz got
this brilliant idea to mate their rescectiscope to this borescope using
an adapter.

They did this by hiring a home shop machinist with little more
instruction than to make the two fit together and make the connection
waterproof. Then when the company received the adapters, they started
selling them with no outside testing.

This guy, having no medical manufacturing background, made the adapter
out of aluminum instead of surgical steel and used 1 O-ring on each end
for the seal.

A urologists in Cleveland, TN bought one of the setups. he had the
patient jacked almost to the ceiling and was looking almost straight up
to get at a polyp on the upper wall. Connected to the instrument was an
"electrosurg" or electronic surgical unit. Basically a hopped up wart
burner. About 500 watts max output.

The doc was concentrating so hard on the task at hand that he hadn't
realized that the adapter was leaking irrigation fluid and the fluid had
puddled in his eye socket.

When he stepped on the pedal to cut, the RF flowed down the stream of
fluid and into his eye. Skin effect let the current flow around his
eyeball until it came to the optic nerve. It severed the nerve,
instantly blinding the doc in that eye and ending his career.

That was the only case I ever work for the plaintiffs because Storz's
actions were so reckless.

To make a long story short, we cleaned their clocks. About a $50M
verdict, upheld on appeal. We cleaned out their US branch, cleaned out
the machinist, got some money from the aluminum supplier (I didn't agree
with that part) and several other sources.

Before I stop, I want to recommend a book

http://www.amazon.com/Every-Engineer-Should-Product-Liability/dp/0824768760/ref=sr_1_4?s=books&ie=UTF8&qid=1462646169&sr=1-4&keywords=product+liability+in+manufacturing

"What every Engineer Should Know about Product Liability".

We were given this book in the product liability classes I mentioned
before. This first edition is probably about 30 years old so find a
more current edition.

Before you give up and quit making things, remember that your product
does not have to be perfect. It just has to pass the "reasonable man" test.

John

[Jonathan F.]

Great story, kinda scary.

I took a look at some serious kits, and the all have a disclaimer, that mentions things like "The builder of this kit, is the creator, and has to assemble and use the kit that it meets the VDE etc". It looks like the person who assembles the kit, is the one that has the responsibility of it.  I will now look more into this, and ask the authority if that really possible.

Another thing is, if you buy an item in another country, and let it deliver (so import) it too your country, can the seller be blamed that the item is not meeting the buyers country laws? I' don't think so.


Here is a Off topic reference, one of my co-workers encountered.
He works as a road worker, and needed one of these blinky yellow lights on top of his car. He bought one of a licenced automotive-store in Germany. One day the police stopped him, and gave him a ticket, because this kind of light was not allowed in switzerland. As he told them, he was buying it from a licenced store and was not know, that it not meet swiss norms, they told him, it doesn't matter, they can't be blamed, because HE imported it, and he needs to check if the item is correct.

So i hope, it will be the same to other products, like a kit. So i could make my kit to our local requirements.

We all know, most of the kit builders know what they doing, and won't run to the police if they ever get shocked, because they touched a part they shouldn't. But today, there are to many people who are just about the money.... i think there was a famous example a few years ago, when someone who burned his finger at a hot cup of coffee, made a lawsuit against a very big fast food chain...

[Instrument Resources of America]

I would say this. The assembler of the kit bears the responsibility of EXACTLY and CORRECTLY, assembling and using the kit per the instructions provided. HOWEVER, the DESIGN, ENGINEERING, QUALITY of the parts supplied, and the INSTRUCTIONS for ASSEMBLY and USE, rest with the KIT CREATOR. I'm not a lawyer, but have had to read a lot of legalize, and small print, during my 40 years of being self employed. This is open for further discussion. I would actually like to hear more.   Ira.

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[Mark Moulding]

i think there was a famous example a few years ago, when someone who burned his finger at a hot cup of coffee, made a lawsuit against a very big fast food chain...

Actually, despite the ridiculous sound of that case, it was apparently a real, viable lawsuit; the plaintiff was a woman who was served a cup of coffee at McDonalds, which was excessively hot.  During the case, other cups of coffee were bought at the same drive-through, and were measured to be around 180-190 degrees (F, obviously - that's about 85 degrees C); employees admitted serving the coffee that hot because it kept down the complaints from customers about receiving cold coffee.  When it spilled, the woman, who was 79, suffered third-degree burns to her pelvic region, she was in the hospital for eight days, and required skin grafts.  Originally, the plaintiff sought to settle with McDonalds for $20,000; McDonalds refused, and ultimately the case went to to court, where she was awarded $200k in compensation, later reduced to $160k.  She was also awarded $2.7 million in punitive damages.  They should have settled...

I too am enjoying this thread, and am learning valuable things from it - thanks for the experienced among us for sharing!

~~

[Instrument Resources of America]

    My understanding of the Mickey D's case is that upon appeal McD's won the appeal. Good for them as I'm on the side of McD's. Anyone one that's dumb enough to not realize that HOT coffee is "HOT", number one, probably shouldn't being buying it, and certainly should not be putting it between their legs, near a really sensitive area. You wouldn't catch me doing that. LOL  That's what cup holders are for!!! Have a great Sunday, and happy Mothers day to all moms.  Ira.

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[NeonJohn]

On 05/07/2016 07:19 PM, Instrument Resources of America wrote:
> I would say this. The assembler of the kit bears the responsibility of
> EXACTLY and CORRECTLY, assembling and using the kit per the instructions
> provided. HOWEVER, the DESIGN, ENGINEERING, QUALITY of the parts
> supplied, and the INSTRUCTIONS for ASSEMBLY and USE, rest with the KIT
> CREATOR. I'm not a lawyer, but have had to read a lot of legalize, and
> small print, during my 40 years of being self employed. This is open for
> further discussion. I would actually like to hear more. Ira.

I'm exhausted from today's work and so don't feel like writing another
essay. Instead I suggest you google the legal concept of "Joint and
Several Liability.) In a nutshell, if you were involved in a jury-found
defective product, you may be sued. Many times the juries are asked to
assign percent responsibility for the tort. Their assignment of blame
is then used to assign liability for the award that follows.

[Instrument Resources of America]

Thanks John, I would certainly expect it to be that way. Have a good
evening. Ira.