On 28 September, the EU Commission published a proposal to revise the Product Liability Directive. The planned directive regulates many things more clearly than its predecessor, some things from the digital world for the very first time. Our overview demonstrates: The details are quite something.
No deviating regulations permitted
Under the new Product Liability Directive, member states will no longer be allowed to deviate from the Directive’s requirements through national regulations in order to achieve a higher or even lower level of consumer protection. When the previous directive was implemented, this had happened at various points.
Unlike before, the definitions are no longer scattered throughout the text of the Directive, but have been grouped together under one article. Overall, the draft is based on the terminology of the New Legislative Framework. The term “related services” is defined for the first time, meaning digital services that are integrated into or linked to a product and would lead to the failure of one or more of its functions if missing. In accordance with Article 4(6)©, compensable damage now also includes damage to or loss of data. While data in a strictly professional scope are exempt, any consumer who deposits data on a carrier or device becomes a liability risk. This is because the data on the defective product itself are also protected.
Product defects now include effects due to self-learning functions and the effects of other products that can reasonably be expected to be used in conjunction with the product at issue. Here, the Internet of Things and the increasing inclusion of machine learning are addressed. When using such techniques, companies must therefore also keep an eye on the results of the learning process and check the interactions with other products that can occur before placing them on the market.
If the manufacturer of a product is located outside the EU, the importer of the product or the manufacturer’s authorised representative is to be liable for the damage incurred (Article 7(2)). If these two are also located outside the EU, the “fulfillment service provider” is liable, which, according to the definition in Article 4(14), can already be the one who only takes over the packaging and addressing of the product. Any person who merely modifies a product that has already been placed on the market or put into service is also considered to be a manufacturer if the modification is essential in light of European or national product safety law. Fulfilment service providers in particular should therefore be aware that they may be exposed to product liability risks for the first time.
Right to disclosure
In accordance with Article 8, if the claimant makes a plausible presentation of evidence and facts, there is a judicial possibility to require the defendant to disclose relevant evidence. Though there is a proportionality test and business secrets must be protected, the procedural possibilities are nevertheless clearly shifted to the disadvantage of defendant companies.
To substantiate the claim, the defectiveness of the product, the damage incurred and the causal link between the two must be proven. Under current law, the burden of proof rests with the claimant (§ 1(4) of the Geran Product Liability Act). In the future, defectiveness will be presumed if any of the following conditions are met:
- the defendant refuses to hand over the documents requested by the court;
- the plaintiff states that the product does not comply with mandatory requirements for its safety under national or Union law, which are intended precisely to protect against the risk of harm that has occurred;
- the plaintiff states that the damage was caused by an obvious malfunction of the product under normal or ordinary circumstances.
That the product defect also caused the damage is presumed if the plaintiff can show that the product has a defect and that the damage caused is typical of the nature and manner of such defect. Precisely because courts otherwise decide on the basis of free conviction, defendant companies will regularly have to provide evidence against these presumptions.
Liability may not be excluded or limited in amount either by contract or by law (Article 13). This would render obsolete the previous limitation to EUR 85 million, the deductible for property damage, and the limitation of potential claimants to the manufacturer in the terms of the German Product Liability Act. Companies consequently have unlimited liability.
On the one hand, the scope of the Product Liability Directive will be vastly extended to cover changeable (digital and self-learning) products and data in the future. At the same time, the presumptions make it easier for potential claimants to file actions and substantiate their claims. Such reversals of the burden of proof are known in the area of producer liability in accordance with § 823 of the Civil Code: Liability in accordance with the new Product Liability Directive, however, also allows access to persons remote from production. Each company should therefore ascertain the products with which it falls within the scope of the Directive and how it can leave the scope of the Directive again if necessary. Insurance policies may also require renewals as a result of the changes. Once again, it also shows how important it is for companies to pay attention to compliance with product safety regulations.back