On November 18th, 2024, Directive 2024/2853 on Liability for Defective Products ("PLD") was published in the Official Journal of the EU.
PLD shall replace Directive 85/374, after 40 years from its entry into force, in order to align with the emergence of ground-breaking technologies, such as AI.
It is part of EU's AI Strategy (along with Regulation 2024/1689 known as "AI Act" and the Proposal for AI Liability Directive, known as "ALID").
The EU's updated product liability rules transform how businesses handle software and AI. Key takeaways:
- Software = Product: Software, including SaaS and cloud-based tools, is now considered a product. Defects can trigger liability, just like physical goods.
- AI Liability: AI developers are accountable as manufacturers. Liability applies to defects in AI systems, including those arising from self-learning capabilities or unsafe algorithms.
- Cybersecurity Risks: Failing to provide updates to address cybersecurity vulnerabilities makes manufacturers liable for damages caused by unsafe products.
- Open-Source Software: Open-source is excluded unless integrated into a commercial product, transferring liability to the manufacturer of the final product.
- Smart Services Included: Integrated digital services, like AI-driven health monitors, are treated as components, with liability for defects falling on manufacturers.
- Easier Claims for Complex Tech: Victims of AI or software-related damages need only demonstrate the likelihood of a defect and its link to the harm caused.
- Broader Scope: Includes digital manufacturing files and AI products that evolve post-sale, ensuring accountability across the product lifecycle.
Countdown to 2026: The Directive takes full effect on 9 December 2026. Businesses have two years to adapt to these groundbreaking rules, ensuring compliance and minimizing liability risks.
Stay ahead—innovate responsibly!
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