Proposal for a new Product Liability Directive, COM (2022)

The growing importance of new digital technologies, including artificial intelligence (AI), over the past almost 40 years has considerably changed the way products are manufactured and distributed, so much so that a comprehensive revision of the legislation governing strict liability for defective products has become necessary. On 28 September 2022, the European Commission published its draft proposal for a new directive on liability for defective products, which is intended to repeal and replace the current Product Liability Directive (Council Directive 85/374/EEC) adopted in 1985. The legislative procedure is currently still pending and the Council is discussing the draft submitted.

The most important innovations at a glance are as follows:

• The draft directive aims to clarify that software and digital manufacturing files are deemed to be "products" within the meaning of the new Product Liability Directive. This clarification puts an end to the discussion about whether software can be considered as a "movable".
• Under the draft directive, the term "defectiveness" also applies to situations where the defectiveness of the product is due to a lack of software updates necessary to address cybersecurity vulnerabilities. In addition, interventions by regulatory authorities, such as issuing product recalls, may indicate that a product is defective. In the case of products that, if defective, entail a high risk of damage to people (e.g. life-sustaining medical devices), a product defect can be assumed to exist where the product in question is part of a series of products that has been proven to be defective.
• The draft directive also expands the notion of compensable damage to include the loss and falsification of data not used exclusively for business purposes. This also includes, for instance, the costs of recovering and restoring data. In addition, the upper and lower limits on liability currently applicable are to be removed.
• Alleviation of the burden of proof for injured parties: The current draft provides that under certain conditions there is a rebuttable presumption regarding both the defectiveness of the product and the causal link between the product defect and the damage suffered. This is the case if the defectiveness of the product is excessively difficult to prove because of technical or scientific complexity and if the claimant has provided sufficient evidence that the product contributed to the damage and it is likely that the product was defective. It is, of course, possible to furnish evidence to the contrary.

It remains to be seen what the final version of the new Product Liability Directive will look like and, above all, how it will subsequently be transposed into national law. Our AI Legal Lens blog will keep you up to date.