European product liability law changes could trigger more claims
Changes to the European Union’s product liability laws to recognise the impact of the new digital age could trigger increased consumer claims against life sciences manufacturers and suppliers of medical devices.
Products such as software, AI systems or product-related digital services are now explicitly covered by the liability rules. The move is also likely to impact the producers of pharmaceuticals, health-tracking software and other products.
As a result, manufacturers and suppliers will need to recognise the new risks and take steps to review their existing insurance to ensure they are adequately covered.
The Product Liability Directive (PLD) was first adopted in 1985 to deliver a common set of rules enabling harmonisation 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.
It has been used to bring claims for breast implants, vaccines, pacemakers and metal-on-metal hips, however, the EU recognised there were shortcomings that will now be addressed, most notably:
· it was legally unclear how to apply the PLD’s decades-old definitions and concepts to products in the modern digital economy and circular economy (e.g. software and products that need software or digital services to function, such as smart devices and autonomous vehicles).
· the burden of proof (i.e. the need, in order to obtain compensation, to prove the product was defective and that this caused the damage suffered) was challenging for injured persons in complex cases (e.g. those involving pharmaceuticals, smart products or AI-enabled products).
· the rules excessively limited the possibility of making compensation claims (e.g. property damage worth less than EUR 500 is simply not recoverable under the PLD).
As a result, the changes are designed to:
· ensure liability rules reflect the nature and risks of products in the digital age and circular economy.
· ensure there is always a business based in the EU that can be held liable for defective products bought directly from manufacturers outside the EU, in light of the increasing trend for consumers to purchase products directly from non-EU countries without there being a manufacturer or importer based in the EU.
· ease the burden of proof in complex cases and ease restrictions on making claims, while ensuring a fair balance between the legitimate interests of manufacturers, injured persons and consumers in general.
A 12-month transition period has been proposed with the new rules applying to products placed on the market after that date. The new provisions could enter into force as soon as late 2023 or early 2024 and could apply to products placed on the EU market from 2024 – 2025.