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Since the Product Liability Directive 85/374/EEC came into force around 40 years ago, the range and nature of products have changed constantly. Whereas at that time manufacturers mainly sold physical products to end customers via various intermediaries, software now forms a significant share of the overall product landscape. The complexity of products has also increased significantly, and completely new distribution channels – particularly online – have emerged.

The new EU Product Liability Directive 2024/2853, which must be transposed into national law by 9 December 2026, seeks to address these developments. But what changes will it introduce, and which economic operators will be affected?

Overview

The principle of strict liability for defective products remains unchanged. The decisive factor continuous to be that the damage was caused by a defective product, whereby a product is considered defective if it does not provide the level of safety that a person is entitled to expect.

That said, the new EU Product Liability Directive introduces numerous adjustments that collectively shift liability risks towards businesses while strengthening the position of injured parties.

The new definition of ‘product’

Whereas the Product Liability Act currently covers only movable physical property, this definition will be significantly expanded to include all movables, in particular digital manufacturing files, such as 3D printing templates or construction plans, and software. This extends the scope of the Directive to include apps, cloud applications and AI systems, including their updates. It is irrelevant whether the software is integrated into a product, installed locally or used via a cloud service.

Only free and open-source software developed or supplied outside commercial activity falls outside the Directive’s scope, provided it is not integrated as a component into a commercial product. Digital information and content are also excluded, meaning that items such as e-books are not considered products.

Special rules apply to so-called ‘related services’ that are integrated into a product in such a way that its absence would prevent the product from performing one or more of its functions. Examples of such related services include the continuous supply of traffic data in a navigation system, a health monitoring service relying on a physical product’s sensors to track the user’s physical activity or health metrics, a temperature control service that monitors and regulates the temperature of a smart fridge, or a voice-assistant service enabling voice-controlled operation of one or more products.

Extension of compensable damages

The new EU Product Liability Directive clarifies that medically recognised psychological harm also qualifies as personal injury. More significantly, the destruction or corruption of data will also constitute compensable damage in future. In addition, the previously applicable deductible for property damage has been abolished, meaning that even minor property damage now falls within the scope of product liability.

Liable economic operators

The new EU Product Liability Directive significantly expands the group of parties potentially liable for compensation. Whereas previously only manufacturers or importers of a final product could be held liable, the new regime also includes component manufacturers, fulfilment service providers (e.g. warehousing, packaging, or dispatch service providers), and – to a limited extent – suppliers and online platforms as parties that could be held liable. In addition, any person who ‘substantially modifies a product and thereafter makes it available on the market or puts it into service’ also becomes liable.

New developments in the enforcement of claims

One of the most notable changes concerns procedural law: courts may now compel companies to disclose relevant evidence. This obligation to disclose evidence is intended to reduce information asymmetries in cases involving technically or scientifically complex products and to facilitate the enforcement of claims by injured parties. However, to protect confidential information and trade secrets, access to disclosed material may be restricted to certain authorised persons.

Furthermore, the new EU Product Liability Directive alleviates the claimant’s burden of proof where demonstrating defectiveness or causation is excessively difficult due to technical or scientific complexity and where the defect or causal link is probable. Also, product recalls may be taken into account when assessing a product’s defectiveness.

Implications for businesses

The new product liability law will significantly tighten the legal framework for many businesses. In particular, economic operators who previously could not be held liable for product defects may now fall within the scope of product liability for the first time. Companies are therefore well advised to familiarise themselves with the new product liability law at an early stage and to adapt their processes, particularly with regard to documentation, organisational structures and product monitoring, to the new requirements.

Do you have any questions about the new product liability law?

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