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EU Council clarifies liability rules for software updates, machine learning
By Luca Bertuzzi | EURACTIV.com
18-04-2023 (updated: 19-04-2023 )
News Based on facts, either observed and verified directly by the reporter, or reported and verified from knowledgeable sources.
[Alexander Supertramp/Shutterstock]
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The Swedish presidency of the EU Council has circulated a third compromise text on the Product Liability Directive, clarifying the circumstances under which software providers would be held liable.
The proposal is intended to bring the EU product liability regime, which dates back to the mid-80s, up to speed with technological developments. The new regime would cover digital products like software, which includes Artificial Intelligence.
The Swedish presidency has circulated three compromise texts so far, meant to clarify the text rather than modify it substantially. The latest compromise, seen by EURACTIV, will be discussed at the Civil Law Matters Working Party, a technical body of the Council, on Wednesday (19 April).
The Product Liability Directive (PLD) aims to provide a legal framework to sue the manufacturer for people who suffered material damage, like a physical injury or damage to property, while using a certain product.
The Directive does not cover other types of damages like discrimination, privacy infringement and economic loss. However, the latest text now also specifies that this does not preclude seeking compensation for non-material damages on other legal grounds.
The liability affects any manufacturer involved in the production process, including those who provide a defective component of a larger product. In sum, liability includes anyone who puts their name or trademark on the product.
In case a substantial modification of the product, done independently of the original manufacturer, causes the defect, the liability would be transferred to those who did the modification.
However, if the substantial modification that makes the product defective is carried out by the original manufacturer or under its control, the manufacturer will still bear responsibility.
The same principles apply to substantial modifications made through software updates or upgrades or due to machine learning techniques of an AI model.
“A manufacturer that designs a product with the ability to develop unexpected behaviour remains responsible for behaviour that causes harm,” the compromise reads.
The PLD exempts manufacturers from liability if the defect that caused the damage could not be known due to the objective state of scientific and technical knowledge at the time the product was launched on the market.
However, a provision has been added allowing member states to adopt national rules that would make the manufacturers liable also in these cases.
On the substantial modification of a product that has been placed on the market, wording has been added to state that where EU or national rules do not qualify the concept, factors to take into account are changes to the product’s original performance, purpose or type that were not originally foreseen by the manufacturer, notably creating a new hazard or increasing the level of risk.
Moreover, a manufacturer can only be brought to court within 10 years since the product was launched on the market. In cases of substantial modification, that count restarts again, whilst more limited software updates do not change the timeframe.
However, if the damage symptoms are slow to emerge, a longer timeframe is envisaged, which the Council extended from 15 to 20 years.
At the same time, the text specifies that “this Directive does not itself impose any obligation to provide updates or upgrades to a product.”
The Directive also introduces harmonised rules on disclosing evidence for the liability cases it covers. The document specifies what this harmonisation does not cover: pre-trial procedures, how specific requests must be made, relations with third parties, declaratory actions, and sanctions against non-compliance.
In addition, the text clarifies that strict liability covers operators for damage caused by the properties of an organism that results from genetic engineering. The Swedish presidency also tried to clarify the complementarity of the special liability system for pharmaceutical products.
[Edited by Zoran Radosavljevic]
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The Swedish presidency of the EU Council has circulated a third compromise text on the Product Liability Directive, clarifying the circumstances under which software providers would be held liable.