EU Updates its Product Liability Regime: Important Considerations for Providers of AI Systems and Software
Summary
The new regime will have a sizable impact on the risk profile of companies involved at any stage of the product manufacturing supply chain, including, crucially, software developers and providers of AI systems. The current regime was formulated in 1985 and is ill-suited to the digital age, leading to inconsistencies and legal uncertainties as to when no-fault product liability applies. The new directive also seeks to correct obstacles for individuals being awarded compensation, in part because of the challenges in gathering evidence and due to restrictions on making claims. The Directive’s explicit inclusion of software and AI as products ensures these rapidly evolving technologies are subject to the same liability rules, addressing potential risks associated with their use. All EU companies will need to assess their supply chains afresh and revisit contractual protections to properly apportion the increased risk profile.