On 28 September 2022, the European Commission published its proposal for a directive on liability of defective products revising the existing Product Liability Directive (PLD) that was adopted nearly 40 years ago. The proposal aims to bring the EU’s product liability regime up to speed with the digital age, the circular economy business models, the global value chains, and the need to ease the burden of proof for consumers seeking compensation for damages suffered because of defective products.

At the time the PLD was adopted in 1985, the Commission saw a need to harmonize the fragmented legal protection on damage caused by defective products. The PLD introduced a common set of rules enabling harmonization and an equal level of protection of consumers throughout the single market using the concept of no fault-based liability of producers for damage caused by defective products.

No fault-based liability means that the liability does not depend on fault or negligence of the manufacturer (also called 'strict liability', where producers are responsible for defective products, regardless of whether the defect is their fault). This form of liability differs from fault-based liability regimes where an injured person can make a claim for damages caused by products and services based on a person’s conduct by generally proving (i) the existence of a damage, (ii) a fault of the liable person, and (iii) a causality between that fault and the damage.

To be compensated under the PLD no-fault liability regime, the burden of proof for the injured person consists in showing only that

• the product was defective.
• he/she suffered a damage.
• there is a casual link between the damage and the product’s defectiveness.

Among its the main provisions, the proposal revising the existing PLD:

• clarifies that software must be considered a product in the scope of the directive;
• considers as product defectiveness the lack of software updates under the manufacturer’s control as well as the failure to address cybersecurity vulnerabilities;
• introduces liability for defective products when refurbished and placed back on the market as well as when manufactured outside the European Union;
• alleviates the burden of proof for victims under certain circumstances; and
• extends the nature of damage to psychological health and loss or corruption of data.

With the aim of not hampering innovation (i) free and open-source software developed or supplied outside the course of commercial activity as well as (ii) the source code of software are excluded from the definition of products covered under the proposal.

The next step is for the European Parliament and the Council to consider the proposal. In Parliament, the file has been assigned jointly (under Rule 58) to the Committee on Internal Market and Consumer Protection (IMCO) and the Legal Affairs Committee (JURI).

References:

• EP Legislative Observatory, Liability for defective products, 2022/0302 (COD)
• European Commission, Proposal for a Directive on Liability of Defective Product, COM(2022) 495
• European Commission, Adapting liability rules to the digital age, the circular economy and global value chains, June 2021
• European Parliament, Committee on Legal Affairs draft report with recommendations to the Commission on a Civil liability regime for artificial intelligence, 2020/2014 (INL)

Further reading:

• European Parliament, EPRS, New Product Liability Directive, Briefing, February 2023
• European Parliament, EPRS, Updating liability rules for defective products, Initial appraisal, January 2023
• European Parliament, EPRS, Aligning the Product Liability Directive with the circular economy and emerging technologies, Implementation appraisal, October 2022

Author: Stefano De Luca, Members' Research Service, legislative-train@europarl.europa.eu