New EU Product Liability Directive brings additional obligations for companies

All EU member states are required to transpose the new EU Product Liability Directive (PLD) into their national legislation by the end of the implementation period. The directive substantially broadens the scope of product liability and updates the regulatory framework to meet the requirements of today’s technology-driven markets.

With the new directive, liability for damages will be extended to digital products and services, including software, artificial intelligence systems, algorithms and machine learning models that control the product's operations.

The directive aims to ensure effective legal protection for consumers in the digital environment and to increase the responsibility of companies for the safety of their products and services. It also clarifies responsibility chains, requiring companies to document processes more thoroughly and prioritise responsible practices.

A significant shift that benefits injured parties

Historically, product liability has served to safeguard consumers and enable compensation when a defective product causes bodily injury or property damage. Whereas under the old rule, claimants were required to prove both defectiveness and causation, the new directive introduces rebuttable presumptions that, in certain defined circumstances, allow courts to presume defectiveness and causation. This change represents fundamental change in favour of the injured party.

Responsibility throughout the product life cycle

Product liability now also extends to remanufactured, repaired, and upgraded products and their parts. Manufacturers and operators are responsible for the safety of a product throughout its life cycle, including when the product is reintroduced, updated with software, or is integrated into a circular economy business.  

The directive also highlights that manufacturers or service providers can be held responsible for any harm resulting from the digital services or software they offer. For instance, if system failures or data loss occurs, liability may fall on the manufacturer or service provider. Similarly, if a software update leads to product problems or data breaches, the manufacturer or service provider could be required to compensate for damages.