As part of our Spotlight series, Dennis C. Gucciardo, who counsels medical device manufacturers throughout the product lifecycle in the US Food and Drug Administration (FDA) regulatory context, shares insight into some important considerations when creating, reviewing, and implementing medical device product warranties.
What is sometimes overlooked regarding medical device warranties?
Even if the manufacturer wants to disclaim responsibility for certain risks or require the customer to bear certain costs, applicable regulations may supersede those intentions (and the manufacturer’s corresponding warranty language). For example, manufacturers are required to repair, replace, or refund radiation-emitting medical devices at no cost to the customer if the device experiences a defect.
One practical approach is to add some wiggle room to warranty provisions that may be subject to regulatory requirements. A caveat like “to the maximum extent permitted by applicable law” could help minimize the impact of those regulations.
Is there common warranty language that could be reframed in the medical device setting?
Manufacturers often refer to “Defects” in their contracts and warranties. Although lawyers familiar with drafting contracts understand that a defined term facilitates consistency and brevity (and should lead to the same rights and remedies under any other name), creative plaintiffs might point to the warranty language as a deemed admission by the manufacturer that a product is defective.
A less conspicuous name, such as “Issue,” could help minimize the volume, or success, of such arguments.
Continued maintenance and support of a product after the warranty expires is just good customer service, right?
Actually, these activities could have unintended consequences. For example, the FDA could view a manufacturer servicing a device after its shelf life or use life as changing the design of the device (and thus require reliability testing to verify the extension).
Note that the manufacturer is potentially susceptible to this risk even if the manufacturer doesn’t directly provide any post-warranty maintenance or support. The manufacturer should be clear with its distributors regarding permitted warranty claims and procedures.
As software, data, and artificial intelligence increasingly drive medical devices, what are some considerations?
Note that the warranty language itself often differs. Whereas the manufacturer might provide a warranty against any defects in material or workmanship with respect to hardware, the software warranty might be limited to substantial conformance with the applicable documentation as is common in the software industry in light of bugs and other imperfections. However, with respect to applications, calculations, or features that are critical to safety or efficacy, traditional software warranties may be inadequate.
Also, last year’s Consolidated Appropriations Act gave the FDA broad authority to regulate how medical devices address cybersecurity, including the discovery of post market vulnerabilities and how a manufacturer can resolve such vulnerabilities. Warranty provisions will need to consider the cybersecurity requirements the FDA may place on device manufacturers.
What’s something that medical device customers sometimes overlook?
Manufacturers often include a long list of exceptions to warranty coverage, and sometimes any one of these exceptions can void the entire warranty for a product. For example, real-life use of a medical device might require small adjustments or customizations during implementation. If the warranty becomes void upon any modification of the device, then the customer could lose warranty protection essentially on day one.
In addition, medical device customers need to understand they are purchasing a highly regulated product. Certain contractual provisions may not be “optional” or negotiable due to the regulatory requirements that apply to a medical device manufacturer.