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NEW LIABILITY RULES ON PRODUCTS AND AI TO PROTECT CONSUMERS AND FOSTER INNOVATION
16. 11. 2022. KNP LAW

NEW LIABILITY RULES ON PRODUCTS AND AI TO PROTECT CONSUMERS AND FOSTER INNOVATION

On September 28, 2022, the European Commission published two proposals to adapt their liability rules to conform with the digital age, the circular economy, and to take into consideration the impact of global value chains.

The first proposal by the Commission modernizes the existing rules on the strict liability of manufacturers for defective products from smart technology to pharmaceuticals.

The revised rules will give businesses legal certainty so they can invest in new and innovative products and will ensure that parties suffering injuries can get fair compensation when defective products - including digital and refurbished products - cause them damages.

The proposal seeks to:

  • Modernize liability rules for circular economy business models by ensuring that liability rules are clear and fair for companies that substantially modify products;
  • Modernize liability rules for products in the digital age, allowing compensation for injuries when products such as: robots, drones, and smart-home systems are made unsafe by software updates, AI or digital services that are needed to operate the product, as well as in cases where manufacturers fail to address cybersecurity vulnerabilities;
  • Create a more equal competition field between EU and non-EU manufacturers: when consumers are injured by unsafe products imported from outside the EU, they will be able to turn to the importer or the manufacturer's EU representative for compensation;
  • Put consumers on equal footing with manufacturers by requiring manufacturers to disclose evidence related to claims, by introducing more flexibility on the time restriction to bring claims, and by alleviating the burden of proof for damaged parties in complex cases, such as those involving pharmaceuticals or AI.

First time ever, the Commission also made a proposal for the targeted harmonization of AI related national liability rules.

In line with the objectives of the AI White Paper and with the Commission's 2021 AI Act proposal (setting out a framework for excellence and trust in AI) the new rules will ensure that the injured party(ies) will benefit from the same standards of protection when harmed by AI products or services, as they would if harm was caused under any other circumstances.

Injured parties will have more tools to seek legal reparation, by introducing a right of access to evidence from companies and suppliers, in cases in which high-risk AI is involved.

The new rules strike a balance between protecting consumers and fostering innovation by removing additional barriers for injured parties to access compensation, while laying down guarantees for the AI sector by introducing the right to fight liability claims based on a presumption of causality.

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