The European Union’s new Product Liability Directive
The European Union’s new Product Liability Directive
The modernised Product Liability Directive (PLD), effective December 9, 2024, significantly reshapes the EU’s liability framework to address the unique challenges of digital products, including software, Artificial Intelligence (AI), and Internet of Things (IoT) devices.
Under the updated directive, software is classified as a product, making developers liable for defects regardless of fault, including those caused by third-party updates or modifications that alter functionality. Manufacturers are required to ensure compliance with safety standards throughout a product’s lifecycle, addressing risks like cybersecurity and data corruption, now explicitly recognized as damages.
Legal processes have been revised to favor claimants, with presumptions of defectiveness and reduced burdens of proof in cases of technical complexity or regulatory breaches. Additionally, companies must disclose critical information such as proprietary data like source code, during litigation, though safeguards for trade secrets are in place.
Coupled with the EU’s expanded class actions regime, these changes significantly increase litigation risks, particularly for developers of software and digital products. To mitigate these challenges, businesses must prioritise robust compliance strategies, proactive cybersecurity measures, and continuous product monitoring. BDO can assist with tailored legal, operational, and cybersecurity solutions to ensure compliance and reduce liability risks under the new PLD framework.