What is the product liability directive?
The product liability directive was designed to protect customers from damage caused by defective products. However, the directive originally came into force in 1985. As the development of technology has increased, so has the number of customers attempting to make a claim that such technology is defective. Unfortunately for these customers, emerging technologies fell outside of the product liability directive, leaving many unable to claim for the damage that had been done.
How was the product liability directive changed?
Having recognised that the product liability directive was failing customers in the digital age, the European Commission decided it was about time something was changed. To bring the product liability directive into the 21st century, the following additions have been made:
Digital manufacturing files
The definition of ‘product’ has been expanded to include digital manufacturing files. This means that any technology companies who have their software integrated into third party products are now at risk of customer claims.
Loss of data
The definition of ‘damage’ has been expanded to include loss of data. Whilst it is unclear how customers would need to prove the damage caused by loss of data, it is something that technology companies will need to keep in mind when storing customer data.
Artificial intelligence
The definition of a ‘defect’ has been expanded to cover the product’s ‘ability to continue to learn after deployment’. Recognising the rise in artificial intelligence products, this addition places responsibility on the manufacturers of these products, should any damage be caused to the customer.
Software updates
The length at which a claim can be extinguished has been increased, should a product be substantially modified. An example would be if a product had a software update, which impacted the cybersecurity and resulted in a data breach.
How can technology companies prepare for these changes?
Following these changes to the product liability directive, technology companies can expect to see an increase in the number of claims. However, there are a number of measures that you can put in place to limit the risk. With a team of risk management specialists, we are here to help you improve your current risk management measures, in line with the new directive. From reviewing quality control measures to revising product disclosure statements, we can provide you with a robust risk management strategy. We can even check your existing technology insurance to ensure it will continue to provide you with adequate coverage going forward.
If you would like the support of our risk management specialists in preparing for the new product liability directive, get in touch.