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Product Liability Directive gets updated for a digital world
The EU Product Liability Directive (85/374/EEC) (PLD) is being replaced with a new set of regulations nearly 40 years after it was originally signed into law. The regulation has been amended to better meet the demands of a digital world. It entered into force on 9 December 2024. Following a 24-month transition period, the regime will apply in EU Member States from 9 December 2026.
Since 1985, the PLD has been the law that determines compensation for EU citizens injured by a defective product. With recent advancements in technology and the movement towards a circular economy, the European Union has adopted a revised PLD that updates the existing liability rules to ensure better protection for consumers and greater legal certainty for economic operators.
Key measures
The updated PLD includes revised definitions and concepts to incorporate digital products and new technology. The most notable change was to the definition of “product,” which the PLD now considers “all movables, even if integrated into, or inter-connected with, another movable or an immovable; [product] includes electricity, digital manufacturing files, raw materials, and software.”
The new PLD also does away with the concept of “producer,” replacing it with “manufacturer” to describe the creator of a product. In addition, liability for defective products under the new rule goes beyond just the manufacturer. In certain cases, the importer of a defective product, the authorised representative of the manufacturer, and the fulfilment service provider can be held liable for defective products or components. This speaks to a broader trend of more parties in the supply chain having greater responsibility for the entire life cycle of a product.
The test to determine whether a product is defective has also been expanded beyond the existing specification that “a product shall be considered defective when it does not provide the safety that a person is entitled to expect.” Under the new PLD, a product can be deemed defective under the basis that it does not provide the safety “that is required under Union or national law.” According to legal experts with Cooley, this means that if a product fails to comply with relevant regulations, “it could automatically be considered defective for the purposes of a product liability claim.”
The updated regulation also accounts for the transition to a circular economy with more repairs and reuse of products. It states that manufacturers that modify products will be as liable as the original manufacturer for any product defects.
Finally, the PLD introduces several changes pertaining to damages. Notably, the definition of “compensable damages” now includes medically recognised damage to psychological health and destruction or corruption of data that is not used for professional purposes. The directive also removes the minimum threshold for compensation for property damage and the maximum limits for compensation claims.
Looking ahead
The new PLD regime will help bring clarity to a modern world, where industries have changed significantly in the past 40 years and many products have a digital component. However, it will also place a larger burden on manufacturers and others in the supply chain if claims of defective products rise and result in more legal fees and possibly fines for their business.
The changes also bring the EU product liability framework in closer alignment with that of the United States. This is in addition to a slate of other regulations that increase responsibilities and make it even more challenging to navigate the risk landscape. Businesses should use the 24-month PLD transition period to work closely with legal and brand protection experts to ensure they are complying with new requirements and are prepared for increased liability.
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