On December 9, 2024, the European Union's new Product Liability Directive (PLD) came into force, replacing the original 1985 directive. This updated legislation significantly broadens the scope of product liability to include digital products such as software and artificial intelligence (AI) systems.

The directive now explicitly includes software, digital manufacturing files, and AI systems, whether stand-alone or embedded in other products. This expansion reflects the increasing integration of digital features in modern products. (commission.europa.eu)

In certain complex cases, particularly those involving technical or scientific challenges, the burden of proof shifts to the defendant. This means manufacturers may need to prove their products are not defective, easing the claimant's burden. (clydeco.com)

The directive extends the liability period for latent personal injury claims up to 25 years, accommodating cases where symptoms emerge long after product use. (clydeco.com)

Liability now extends to digital services related to products, reflecting the increasing integration of digital features in modern products. (commission.europa.eu)

The directive imposes responsibilities on various economic operators, including manufacturers, importers, authorized representatives, fulfillment service providers, and online platforms, ensuring that victims have an entity within the EU from whom to claim compensation. (clydeco.com)

The original 1985 directive was established to compensate individuals who suffered physical injury or property damage due to defective products. However, technological advancements, the rise of digital products, and new business models necessitated an update to ensure consumer protection remains robust in the digital age. (commission.europa.eu)

The new PLD is expected to have profound societal impacts:

• Consumer Protection: By encompassing digital products and services, the directive ensures consumers are protected against defects in modern technologies, including AI systems and software.
• Legal Landscape: The shift in the burden of proof and extended liability periods may lead to an increase in litigation, potentially resulting in higher compliance costs for businesses. (ft.com)
• Innovation and Compliance: While the directive aims to protect consumers, it also challenges businesses to innovate responsibly and maintain rigorous compliance standards, especially in the rapidly evolving tech industry.

The business community has expressed concerns regarding the directive:

• Increased Litigation Risks: Companies fear that the reversal of the burden of proof could lead to a surge in lawsuits, increasing operational costs. (ft.com)
• Competitive Disadvantages: There is apprehension that the directive might expose EU companies to risks from competitors, particularly from regions with less stringent regulations, who could exploit the new rules to access sensitive information through litigation. (ft.com)

Bence Tuzson, Hungarian Minister of Justice, stated:

"The product liability rules that the Council adopted today are good news for consumers and producers. It will become easier for an injured person to claim damages in court. Manufacturers, on the other hand, will benefit from clear rules related to digital products and circular economy business models." (commission.europa.eu)

This directive marks a significant departure from the 1985 framework by:

• Inclusion of Digital Products: Recognizing software and AI systems as products subject to liability.
• Extended Liability Periods: Addressing long-term injuries that may manifest decades after product use.
• Revised Burden of Proof: Shifting certain evidentiary burdens to manufacturers in complex cases.

The EU's new Product Liability Directive represents a comprehensive effort to modernize product liability laws, ensuring they are fit for the digital age and the circular economy. While it strengthens consumer protections, it also presents new challenges for businesses, particularly in the tech sector, necessitating a careful balance between innovation and compliance.