Selling products in the United States can often feel like walking through a minefield, everything seems fine until you take one wrong step. For Israeli companies entering the U.S. market, product liability presents a real and tangible risk. A single malfunction, even a minor one, can ignite a wave of lawsuits — sometimes across all 50 states.
Unlike in many other jurisdictions, U.S. law imposes strict liability in many product defect cases. This means that a plaintiff in court is not required to prove negligence. It is enough to show that the product was defective and caused harm. Such a finding can open the door to numerous secondary claims and even class actions involving thousands of consumers.
In general, there are three principal categories of product liability in the United States. The first concerns design defects, where the product was designed in an unsafe or inherently flawed manner. The second relates to manufacturing defects, where the design was sound, but production errors rendered the product unsafe. The third is failure to warn, also known as a marketing defect, where instructions or warnings were unclear, incomplete, or missing altogether. Such omissions can expose a company to liability even when the product functions properly.
Several landmark cases illustrate the issue. For example, in Greenman v. Yuba Power Products, Inc. (1963), the California Supreme Court ruled that a manufacturer bears strict liability when a marketed product causes injury — even without proof of negligence. Other examples include electronic components that create fire hazards, or children’s toys that cause injuries due to inadequate safety warnings.
Israeli companies must understand that the U.S. legal system operates very differently from what they are accustomed to. The United States has a powerful and well-organized plaintiffs’ bar, a community of lawyers who build entire practices around finding consumers willing to sue manufacturers and distributors. They operate under contingency-fee arrangements, benefit from expansive class-action laws, and can seek punitive damages designed to punish rather than merely compensate.
For Israeli businesses operating in the U.S., this translates into significant exposure and elevated risk, requiring thoughtful legal and operational preparation.
Beyond legal awareness, operational discipline is essential. Every Israeli company selling tangible goods in the United States must maintain appropriate product liability insurance. This is not optional; it is a necessity. A detailed and well-maintained testing log can serve as the company’s strongest shield, as judges and juries expect tangible evidence that safety was taken seriously. It is also vital to establish distribution agreements with proper indemnification clauses to allocate liability appropriately. And when a potential hazard is discovered, companies must act swiftly and transparently to minimize both legal and reputational damage.
Navigating product liability in the United States is indeed a minefield — but one that can be traversed successfully with a well-crafted strategy. Rigorous testing, comprehensive documentation, clear legal agreements, proper insurance coverage, and proactive reputation management are essential tools.
Israeli technology and hardware companies that implement these practices and rely on expert legal and risk-management guidance will not only protect themselves from costly litigation but can also transform safety and reliability into a distinct competitive advantage.
Attorney Michael Ehrenstein is a founding partner at the American law firm Ehrenstein|Sager, which specializes in commercial law, complex litigation, and high-stakes international arbitration.
Legal Disclaimer: This article does not constitute legal or tax advice. Its purpose is to raise awareness of compliance issues in the U.S. Israeli businesses should consult qualified legal and tax professionals in the U.S. for guidance specific to their operations.