DIGITAL REGULATION TIMELINE – CONSULTATION ON AMENDMENTS TO THE PRODUCT LIABILITY DIRECTIVE IN RELATION TO THE USE OF AI

EU – NEW TECHNOLOGY

The public consultation on the need to adjust the Product Liability Directive in view of emerging technologies, such as the use of AI, has closed. The Commission's response is expected in the next couple of months.

Key date(s)

• 25 July 1985 – The European Council passes the Product Liability Directive ("PLD") which introduces strict liability for defective products in all EU member states.
• 7 December 2018 – The European Commission ("Commission") publishes a coordinated roadmap in relation to artificial intelligence ("AI") which includes discussion and evaluation of the PLD.
• 19 February 2020 – The Commission publishes its White Paper on AI and accompanying report.
• 19 May 2020 – Deadline for Member States, industry partners, researchers and the public to comment on the White Paper.
• 18 October 2021 – The Commission launches a public consultation on adapting liability rules to the digital age and AI.
• 10 January 2022 – The Commission closes the consultation and publishes a summary report.

Status

• AI is a fast developing technology that poses challenges for the existing EU product liability regulatory framework. In the Commission's 2020 AI White Paper, the Commission highlighted the current difficulties pursuing or enforcing liability claims involving AI and other digital innovations such as the circular economy and the internet of things. Proving the existence of a defect or causal relationship is challenging with a complex, unpredictable and intangible technology product.
• Following the publication of the 2018 roadmap and the 2020 AI White Paper, the Commission launched a consultation to gather comments on the White Paper from Members States and other stakeholders, such as social and industry partners, researchers and civil society organisations, with the deadline for comments closing on 19 May 2020. The following 2021 consultation focused more specifically on AI in the context of the PLD and its suitability as a regulatory framework, and closed on 10 January 2022. Adoption of any amendments to the PLD or new civil liability legislation is currently planned for the third quarter of 2022. The Commission has addressed the need to amend the PLD as part of a wider consultation on civil liability in the digital age.

What it hopes to achieve 

• The overarching aim of incorporating AI considerations into the PLD is to "ensure the internal market functions properly as well as ensuring a high level of consumer / victim protection". This is consistent with the current PLD and has two components. The first objective is to provide businesses with the legal clarity to invest, assess liability exposure and bring innovative products to market safely. The second objective is to reduce obstacles to getting compensation for damage and thereby protect injured parties and create trust in products.
• The purpose of the consultation was to confirm the relevance of issues identified by the 2018 evaluation of the PLD and gather views from citizens and stakeholders regarding the Commission's understanding of the problem and possible solutions.
• When updating the PLD to address the challenges of AI liability, the Commission is keen to avoid fragmentation of liability rules which may result if Member States attempt to address the legal uncertainty resulting from AI at a national level. It is hoped that the feedback provided through the consultation can help predict the impact of failing to harmonise AI liability laws, and how this situation can be avoided.

Who does it impact? 

If the amendments to the PLD proposed in the consultation are implemented, the Commission expects the following groups to be impacted:

• manufacturers, software developers and other businesses in the digital technology sector could see an increase in their liability for intangible products they produce and update but should benefit from investment stability, lower business risk-taking and public trust;
• small and medium-sized businesses which are particularly sensitive to changes in risk, liability and investment appetite will be strongly impacted;
• citizens and consumers as well as victim and industry associations should benefit from reinforced fundamental rights; and
• member state authorities required to adapt national legislation could benefit from simplification and reduced administrative burden.

Key points 

1. Intangibility of digital products

• • Under the current PLD it is unclear whether intangible items like software can be classified as "products". To delineate between products and services the consultation proposed extending strict liability rules to cover intangible products. The majority of consultation respondents agreed with this.

2. New Risks

• • New technologies like AI often have high connectivity. Data inputs can affect safety, cybersecurity risks, risk of digital asset damage and risk of data protection infringement. In general the feedback suggests strong to medium support for producers to assume liability for some of these new risks and kinds of damage.

3. Updates and circulation

• • Connectivity means AI can be updated after initial circulation which presents problems determining which update caused the damage and what degree of update constitutes a new product. The consultation suggests using the scope and functionality of the update to determine circulation.

4. Complexity and burden of proof
   • The complexity and semi-autonomous behaviour of digital products like AI presents challenges proving defects, identifying a causal connection between defect and damage and proving fault. Respondents recognised the difficulties associated with proving the conditions of liability and strongly supported an amendment to alleviate this burden.
5. Avoiding national liability fragmentation
   • The consultation proposed a number of amendments to address the risk that national courts may apply divergent solutions to the problems posed by AI. In general, stakeholders expressed clear support for AI-specific harmonised liability.

This blog post provides an overview of a key recent or upcoming development in digital regulation in the UK or EU as part of our horizon scanning timeline which can be found below.

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