35 years later: The Impact of the Proposed Changes to the European Product Liability regime. What every tech product company needs to know.

The European Commission has recently published its long-awaited proposal to update the European's strict "no fault" product liability regime under the Product Liability Directive ('PLD') to cover damage and physical harm caused by defective AI systems and the introduction of a new Artificial Intelligence Liability Directive to address non-contractual claims/negligence caused by AI systems ('AILD'). These proposals form part of a package of reform to introduce a liability regime for advanced technologies and AI systems. The proposed changes are of real significance to technology companies including manufacturers, distributors, software providers and others in the supply chain (including online market places in certain circumstances) for advanced technologies.

The proposals recognise the need to adopt product liability rules to the digital age and bring technology (including AI systems) into the strict liability regime broadening the liability net for claimants affected by advanced technologies and bringing with it the ability to bring claims against all players in the supply chain.   

These reforms appear to be designed to strike a balance between consumer protection and business innovation. However, arguably they will make it easier for claimants to pursue claims with a wider definition of "defect" to bring technology squarely within the strict liability regime, a larger pool of potential defendants, presumptions of causation to assist with the evidential issues of proving that a faulty AI system caused damage and disclosure obligations which will be a first for most European companies.

We will explore the main changes being proposed, how the proposals aim to ensure better protection for consumers, and the implications for technology businesses supplying products in the EU.