Key Changes in the EU Product Liability Directive and Their Implications

The revised EU Product Liability Directive introduces several pivotal changes that reshape the liability landscape for manufacturers and distributors.

Inclusion of Software and Digital Services

The directive explicitly includes software, digital manufacturing files, and AI systems within its scope. This means that defects in software, whether standalone or integrated into physical products, can trigger liability claims.

Expanded Definition of Defect

A product is deemed defective if it fails to provide the safety that a person is entitled to expect. This assessment now considers factors like software updates, cybersecurity measures, and compliance with safety regulations. Notably, the absence of necessary software updates can render a product defective.

Broader Range of Liable Parties

Liability extends beyond manufacturers to include importers, authorized representatives, fulfillment service providers, and, under certain conditions, distributors and online marketplaces. This ensures that there is always an entity within the EU that can be held accountable for defective products.

Removal of Financial Thresholds

The directive eliminates the previous €500 threshold for property damage claims and the €85 million cap on personal injury claims. This exposes companies to potentially unlimited financial liability, emphasizing the need for comprehensive risk management strategies.

Enhanced Consumer Rights

Consumers benefit from a rebuttable presumption of defectiveness in complex cases and have access to broader compensable damages, including psychological harm and data loss. These provisions aim to balance the scales in favor of consumers, facilitating easier access to justice.