In a significant move to update the European Union’s product liability framework, the EU has adopted a new Product Liability Directive (“<span class="news-text_medium">PLD</span>”), set to replace the existing 1985 Directive. This shift, which comes after years of deliberation, aims to better address the evolving challenges posed by new technologies, including artificial intelligence (“<span class="news-text_medium">AI</span>”) and interconnected products. The PLD, approved by the EU Council on 10 October 2024, introduces several changes that businesses need to be aware of to ensure compliance.
A notable change in the PLD is its focus on strengthening consumer protection. While the previous Directive sought to balance risks between businesses and consumers, the PLD adjusts the balance in favor of the latter. This can be seen in the updated definitions within the PLD and the introduction of new presumptions in favor of the claimant, making it easier for consumers to hold producers accountable for defective products.
The PLD broadens the definition of what constitutes a "product". Products now include not only physical items but also software, including AI systems. This extension means that businesses manufacturing or integrating AI or software into their products must be aware that defects in these components can now lead to liability under the PLD. This also covers digital manufacturing files used in 3D printing and other related services that are integral to the functionality of a product.
While “defectiveness” remains defined as “a product failing to provide the expected level of safety”, the PLD adds specific criteria. For example, products will be considered defective if they fail to meet EU or national safety standards. The revised directive highlights that businesses must account for not only the product’s physical properties but also its interaction with other products and its ability to evolve over time.
The PLD introduces provisions specifically aimed at new technologies such as AI and the Internet of Things (“<span class="news-text_medium">IoT</span>”). It considers how products that learn or acquire new features after being placed on the market could be deemed defective. Similarly, the interconnectivity between products, such as smart home devices, is now part of the defectiveness assessment. Manufacturers will need to ensure their products cannot evolve into dangerous versions once they are in the market, a challenge for many businesses working with AI or IoT.
Another significant change is the disclosure obligations imposed on defendants. Under the PLD, manufacturers and other defendants must provide relevant evidence when requested, even if the claimant is still in the early stages of proving their case. This is a departure from the current regime and will place additional burdens on businesses to maintain thorough records and documentation.
The PLD also introduces rebuttable presumptions of defect and causation, making it easier for consumers to establish liability. If a product fails to meet mandatory safety requirements or if a manufacturer refuses to provide evidence requested by the claimant, the product may be presumed defective.
The PLD expands the types of damages for which consumers can seek compensation. In addition to physical damage, the directive now allows for compensation related to the destruction or corruption of data, as well as medically recognised psychological damage. Businesses will need to consider these new forms of liability when assessing their product risks.
Another notable change is the longer limitation periods for claims. The PLD extends the long-stop period for claims to 25 years in cases of latent personal injury, where the symptoms appear years after the product is in use. For businesses, this means they will need to keep records and insurance coverage in place for a longer period.
Although the UK is no longer part of the EU, the PLD will still impact businesses that operate within the EU, including those that sell products in the European market. Further, the UK may eventually update its own product liability regime, particularly in light of the government's Product Safety and Metrology Bill, which is set to modernise the UK’s product safety laws. The PLD could influence how the UK approaches product liability, especially as it continues to align with global standards.
Businesses affected by the PLD need to take proactive steps to ensure compliance. This includes reviewing product safety standards, updating risk assessments and preparing for possible changes in the legal landscape. Companies must also be ready to handle increased consumer claims, as the consumer-friendly nature of the new directive is expected to lead to more litigation in the coming years.
While the revised Product Liability Directive represents a step forward in protecting consumers, it also introduces new challenges and responsibilities for businesses. With changes to product definitions, defect assessments and liability presumptions, companies need to adapt to ensure they are not exposed to increased risks. The shift towards consumer protection is clear, and businesses must stay ahead of these developments to mitigate their exposure and comply with the new regulations.
