On Wednesday 28 September, the European Commission released details of its long-awaited proposal for the revision of the 1985 Product Liability Directive (PLD) that introduced a strict liability regime for defective products across member states. While for many years the PLD balanced the interests of manufacturers and consumers as regards compensation, it is now showing its age. Advancing technology has led to practical limitations, not least “how to apply the PLD’s decades-old definitions and concepts to products in the modern digital economy and circular economy”.
Specific areas of concern include liability relating to software, digital services, smart devices and autonomous vehicles. In addition, there have been perceived challenges for claimants in meeting the burden of proof in more complex cases regarding, e.g., pharmaceuticals, smart or AI-enabled products. Further issues have emerged regarding liability for product modifications and the import of products directly from outside the EU.
Following many years of reports, consultations and position papers, the just-published proposal for a revised directive extends the types of products that will be covered and makes substantial changes to the ways in which liability may be established. The revisions are aimed at complementing progress that has been made with new legislation in related areas such as product safety, contractual liability, digital content, data processing and environmental liability.
The Proposal defines a ‘product’ as now including software and ‘digital manufacturing files’, for example such as may control digital printers. The draft also provides for a service (such as information provision for a navigation system) to be treated as a component of a product. While the new definition of what is ‘defective’ (“does not provide the safety which the public at large is entitled to expect”) is substantially the same as in the PLD, there are now five more listed circumstances that may be taken into account in considering that issue. New elements include technological developments such as “the effect on the product of any ability to continue to learn after deployment”, and the intervention of regulatory authorities.
Claimants will also benefit from extensive new rules regarding the easing of the burden of proof in certain circumstances. These include a presumption that the product is defective where the claimant can show that it does not comply with mandatory safety standards, or that the damage was caused by an ‘obvious malfunction’ of the product in normal use.
Defect and causation may also be presumed by a national court under certain conditions where a claimant may face ‘excessive difficulties’ in proving these elements owing to technical or scientific complexities of the case. This is on the basis that since manufacturers are deemed to have expert knowledge and are better informed than the injured person, it should be for them to rebut the presumption. Factors to be considered are listed in recital 34 of the Proposal, and include the nature of the product (e.g., innovative medical devices) and complexities in relation to causal links, such as between a pharmaceutical or food product and the onset of a disease.
The type of damage for which claims may be pursued is extended beyond death, personal injury and property damage to include the loss or corruption of data.
With parallels to the common law discovery process, novel provisions also provide for the disclosure of evidence by a defendant when the claimant has presented sufficient facts and evidence to support a plausible claim. Other changes include a facilitation of group actions (claims may be brought by those acting on behalf of more than one person) and the extension of liability to EU-authorised representatives (of businesses established outside the EU) and fulfilment providers. A further change extends the ‘long stop’ claim expiry period of ten years to fifteen years in cases where the symptoms of a personal injury are slow to emerge.
While a fair balance between the interests of manufacturers and consumers is a stated aim of the directive, aspects of the new law will almost certainly make it easier for claimants to establish liability. Further, certain matters that have largely been the remit of a member state’s own rules of civil procedure (e.g., the disclosure process and burden of proof) are now covered by this EU initiative.
Along with wider factors such as the increased availability of litigation funding, manufacturers may anticipate both an increase and a change in the type of consumer claims they will face once the directive is transposed by each of the member states. Industries with an interest in tracking these developments include those whose products are specifically referenced in the Proposal and related works, including smart devices, autonomous vehicles, pharmaceuticals, apps, medical devices, navigation services, foods, and software.
The next steps for adoption of the Proposal are stated by the European Commission to be ‘ongoing’. Manufacturing industry will have time to assess its approach and prepare since transposition by member states is likely to be some years away. Please reference the Proposal and related Impact Assessment for details. We will provide further analysis of practical implications in due course.
