EU's New Product Liability Directive: Expanding Scope and Responsibilities for Software and Digital Product Manufacturers
Focus on Software: The new Product Liability Directive (ProdHaftRL) explicitly includes standalone and integrated software as "products," holding manufacturers liable for defects.
Broader Application: The directive expands beyond physical goods to encompass digital construction files and software, including Software-as-a-Service, impacting a wider range of businesses.
Component Liability: Manufacturers of software components integrated into larger products share liability with the final product's manufacturer, including for connected services like voice assistants.
Open-Source Exception: Free and open-source software developed outside of commercial activity is exempt, but the scope of this exception remains under debate.
Evolving Definition of "Defect": A product is defective if it doesn't meet justifiable safety expectations, considering factors like product learning capabilities, foreseeable use with other products, and cybersecurity deficiencies. Violating the Cyber Resilience Act (CRA) can now constitute a product defect.
Extended Manufacturer Control: Liability extends beyond the point of sale to when the product leaves the "control" of the manufacturer. As long as a manufacturer can provide updates, they retain control and potential liability.
Wider Net of Liable Actors: Besides manufacturers, importers, authorized representatives, fulfillment service providers, suppliers, and even online platform providers can be held liable if the primary manufacturer lacks an EU presence.
Expanded Damages: The scope of damages includes financial losses and potentially immaterial damages, recognizing data loss (even for non-professional use) and psychological harm. The €500 threshold for damage to property (other than the defective product) is removed, and the €85 million cap for death/injury is eliminated.
Shift in Burden of Proof: Courts can compel defendants to disclose evidence if the plaintiff presents a plausible case, and a product is presumed defective if it fails to comply with product safety requirements or if the defendant withholds relevant evidence.
Call to Action for Manufacturers: Manufacturers have two years to implement changes and minimize liability risks. Compliance with new safety standards like the CRA is crucial, and ongoing responsibility through updates and security patches is emphasized, especially for digital products.
Impact Beyond Manufacturers: Importers and other market participants are advised to assess their potential liability under the new directive.